**5. Value creation through platforms**

#### **5.1. Value concept of a platform**

The concept of value creation is at core of what a firm does, since only superior value creation vis-à-vis rival opens up the opportunity for superior profitability. Value created is the difference between the consumer's perceived benefit from a given product and the firm's cost for providing that product. In other words, value is the difference between the benefit that consumers get from using a product and the costs that are incurred to produce the product.

Platforms create value in two principal ways. The first way, which corresponds to transaction platform, facilitates transactions between different types of individual and organizations that would otherwise have been difficult finding each other. Examples include Uber, Google search, Amazon Marketplace, and eBay. This is sometimes called multisided platform [11]. There are also innovation platforms, which consist of technological building blocks that are used as a foundation on top of which a large number of innovators can develop complementary services or products. These complementary innovators can be anyone, anywhere in the world, and together they form what is called an innovation ecosystem around the platform.

Within any platform ecosystem, the users value is important because they provide the foundation for the value creation process and business concept of the platform. The business model is then built on this primary layer of the established. Marketing strategy that is built on this platform has to clearly understand the nature of the value within the platform before synchronizing the business concept within this. Marketers should understand how to match between the value proposed and the platform structure. Segmentation is thus important especially when communicating in multi-platforms.

#### **5.2. Align digital and physical platforms to enhance value**

The alignment of organization's physical-world strategy and its e-strategy requires strategic decisions to be made on issues such as branding, pricing, IT, and channel conflict. Guiding question is what we should do regarding our physical operations and our digital operations. Concerning the channel issue, when adding the electronic channel, we need to determine how to align it with the existing physical channel conflict and setting prices for different channels. In this first issue, if the old and new channels compete for the same group of customers, then this is likely to result in a conflict because of cannibalization effect. The old channel is expected to remain important and the likelihood of a channel conflict is high, then it is essential to address this conflict early on and to find ways to reconcile the interests of the two channels. This can be achieved for instance by creating one unified profit center. For example, in a digital-based grocery, we should

access to a larger and more diverse array of knowledge flows, the company occupying an influence point has an opportunity to predict what is going to happen by seeing signals before anyone else does. That company is also better positioned to shape these flows in ways that can strengthen its position and provide greater influence. When you are in the center of flows,

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Where would these influence points tend to emerge on platforms? These points often provide a significant and sustainable functionality to the broader platform or ecosystem. For example, the broker positions in a market platform. It is also better if the functionality of these influence points evolves rapidly over time because it creates incentives for other participants to stay in

The first key step in establishing a platform marketing strategy is to conduct an internal and external environmental analysis. The external environment analysis will provide the insight on the existing opportunity and threat. The opportunities are promising factors or trends in the external environment that the firm can exploit for its own advantage. The threats are unfavorable external factors or trends that may present challenges to performance. The goal is to establish a match between the firm's strength to attractive opportunities in the environment, while eliminating or overcoming the weaknesses and minimizing the threats. The internal analysis will provide an insight on the organization strength and weaknesses. Strength includes internal capabilities, resource, and positive situational factors that may help the firm to survive. Weaknesses include internal limitations

Once the firm has performed a SWOT analysis, it can proceed to goal formulation and develop specific goals for the planning period. Goals are objectives that are specific with respect to magnitude and time. Most business units tend to have a mix of objectives, including profitability, market share improvement, innovation, reputation, and sales growth. The reasons for firm to utilize single or multiple platforms for its marketing functions have to be clearly established. Careful designing of the objectives will provide guidance in terms of the required

Goals indicate what a business unit wants to achieve; strategy is a brave blueprint for arriving there [16]. Every business must purpose strategy for achieving its goals, consisting of a

marketing strategy and a compatible technology strategy and outsourcing strategy. Some specific questions could be, for example, whether your business has a product.

The following are key steps in creating a platform strategy [17]:

and negative situational factors that may interfere with the company's performance.

small moves, smartly made, can indeed set very big things into motion.

close contact with the occupier of the influence point.

*6.2.1. SWOT analysis*

*6.2.2. Goal formulation*

platform approach.

*6.2.3. Strategy formulation*

**6.2. Approach for developing the marketing platform strategy**

