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Chapter 8 - Alternative Value Propositions PPT 8-1

Alternative Value Propositions

Chapter Eight

Copyright © 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

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Business Strategy Challenges

• A real customer value proposition?• A perceived customer value proposition?• Is the value proposition feasible?• Is the value proposition relevant to customers?• Does it represent a sustainable point of

difference?

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Strategic Options

Value Propositions

Figure 8.3

BeingGlobalBeingGlobal

Emotional/Self-Expressive

Benefits

Emotional/Self-Expressive

Benefits

BrandFamiliarity

BrandFamiliarity

QualityQuality

ValueValue

NicheSpecialist

NicheSpecialist

CustomerIntimacy

CustomerIntimacy

CorporateSocial

Programs

CorporateSocial

Programs

SystemsSolutions

SystemsSolutions

Attribute/Benefit

Attribute/Benefit

DesignDesign

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Niche Specialist

ConcentratingResourcesand Energy

ConcentratingResourcesand Energy

CompetingWith LimitedResources

CompetingWith LimitedResources

Support aStrategicPosition

Support aStrategicPosition

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Product Quality Dimensions

1. Performance

2. Conformance to specifications

3. Features

4. Customer support

5. Process quality

6. Aesthetic design

Figure 8.2

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Signals of High Quality

• High quality needs to be communicated• Communication by signals• Signals:

– Tomato Juice—thickness– Cars—sound of door closing– Banking—professional attitude of people– Supermarkets—produce

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Stock Market Reaction to Brand Equity (BE) & ROI

-20%

-10%

0%

10%

20%

30%

40%

Large Loss Loss Gain Large Gain

ROI Change

BE Change

Sto

ck R

etu

rn

Figure 8.3

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Chapter 8 - Alternative Value Propositions PPT 8-8Figure 8.4

The Value Option

No-Frills Scale ExperienceProducts/ Operations Economies CurveServices Effect

No-Frills Scale ExperienceProducts/ Operations Economies CurveServices Effect

ValuePerceptions

ValuePerceptions

CostAdvantage

CostAdvantage

Low-CostCultureLow-CostCulture

The ValueOption

Imperatives

The ValueOption

Imperatives

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Chapter 8 - Alternative Value Propositions PPT 8-9

Creating a Cost Advantage(or Avoiding a Cost Disadvantage)

• No-Frills Product/Service

• Operations

• Scale Economies

• The Experience Curve

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Chapter 8 - Alternative Value Propositions PPT 8-10

Key Learnings

• Business strategies usually cluster around a limited number of value propositions, such as superior attribute, appealing design, offering complete system solutions, social responsibility, a familiar brand, a superior customer relationship, a specialist niche, superior quality, and superior value.

• A value proposition needs to be communicated effectively and supported by a cost advantage, which can be based on a no-frills offering, operations, scale economies, and/or the experience curve.

• Superior quality, which has been shown to drive stock return, has to be continuously addressed through processes and programs and transferred into quality perceptions.

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Ancillary Slides

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“Ever since Morton’s put a little girl in a yellow slicker and declared, “When

it rains, it pours,” no advertising person worth his or her salt has had any excuse to think of a product as

having parity with anything.”-Malcolm MacDougal,Jordan Case McGrath

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“If you don’t have a competitive advantage, don’t compete.”

-Jack Welch, GE

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“You can’t depend on your eyes when your imagination is out of focus.”

-Mark Twain

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“Be willing to make decisions. That’s the most important quality in a good leader. Don’t fall victim to what I call the ‘ready-aim-aim-aim syndrome.’

You must be willing to fire.”

-T. Boone Pickens

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“The first man gets the oyster, the second man gets the shell.”

- Andrew Carnegie

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“Never follow the crowd.”

- Bernard M. Baruch