module 5 - building your value proposition robert preston breakout is an epi-v initiative, delivered...
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Module 5 - Building your Value PropositionRobert Preston
Breakout is an Epi-V initiative, delivered by Transitions.
Drill Faster
Last longer
Go further
Superiordurability
Superiorstability
Superiordrilling
New Technology for record-breaking performance
“depth of cut and incomparable wear resistance deliver extended operating life and accelerated rates of
penetration that can save you days”
Where does does the value proposition reside
3
Customer Analysis
Internal Analysis
Competitive Analysis
Definition of market segments
Target Markets
Value Proposition
Differentiating factors
Strategic Positioning
Marketing Strategy / Plans
1) 2) 3) 4)
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.51.0
1.5
2.02.5
3.0
Price ($)
10
20
40
50P
erce
ived
V
alu
eA
B
C
A
Weighting Attributes ProductsA B C
25 Durability 40 40 2030 Reliability 33 33 3330 Delivery 50 25 2515 Service quality 45 35
20Perceived value (41.6)(32.6)(24.9)Equilibrium price $2.5 $2.0 $1.5
If company A reduces price they will gain market share,would B and C?
Value Pricing
1. Conceptualise value
• What is value
• What constitutes a customer value proposition
• What makes value proposition persuasive
5
?
Six steps to achieving superior value
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
Six steps to achieving superior value
Must haves
• Segmented target markets defined
• Knowledge of customer value creation in practice
• Integrated implementation, not marketing spin
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
8
“Price is what you charge and value is what others think its worth”
Warren Buffett
Why a Value Proposition
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Valuedelivered
Perceived value
What benefits the seller promises the customer
What the customer is willing to pay for the perceived benefits
Seller Buyer
value transfer
1. Conceptualise value
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Titanium dioxide
• A pigment that;-
• whitens, brightens and opacifies
• improves dispersability by reducing the time to reach 7 hegman fineness from 30 to ten mins using a Cowles high-speed dispenser
• Improves gloss from 78 to 86 60° gloss units
Needs a common denominator ?
Needs a common denominator ?
1. Conceptualise value
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“Value in business markets is the worth in monetary
terms of technical, economic, service, and social
benefits a customer business receives in exchange for
the price it pays for a market offering”
1. Conceptualise value
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Some guiding principles
1.Value is expressed in monetary terms, dollars per unit, euros per hour
2.Market offering are represented in technical, economic, service, and social benefits
3.Price is only what the customer pays for the perceived value, it is not a value
4.Customer value is comparative concept, there is always an alternative
Six steps to achieving superior value
Must haves
• Clear definition of differentiated customer value benefits
• Value word equation
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
Defining superior customer value benefits
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Low
High
Rel
ativ
e le
velKey attributes of product, service, delivery benefits
1 2 3 4 5
Company 1
Company 2
Questions1. What factors should be raised well
beyond the industry standards ?
2. What factors should be created that the industry has never offered ?
3. What factors should be eliminated that the industry has for granted ?
4. What factors should be reduced below the industry standards ?
Plotting the value attributes of the business relative to its competitors determines areas of competitive advantage and differentiation
Three value propositions
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Valueproposition
Value Proposition consists of
Answers the customer question
Has the potential pitfall
It requires
All benefits customers receive from our offering
“Why should our firm purchase your offering
Benefit assertion
Knowledge of own market offering
All favourable points of difference an offering has relative to the next best
alternative
“Why should our firm purchase yours instead of
our competition”
Value presumption
Knowledge of own offering and next best alternative
1. All benefits2. Favourable points
of difference3. Resonating focus
The one or two point of difference whose
improvement will deliver the greatest value to the
customer for the foreseeable future
“What is most worthwhile for our firm to keep in mind
about your offering”
Customer value research & insight
Knowledge of how own market delivers superior
value to customers, compared to the next best
alternative
Three value propositions
Valueproposition
1. All benefits
All benefits customers receive from our offering
“Why should our firm purchase your offering
Benefit assertion
Knowledge of own market offering
2. Favourable points of difference
All favourable points of difference an offering has relative to the next best
alternative
“Why should our firm purchase yours instead of
our competition”
Value presumption
Knowledge of own offering and next best alternative
3. Resonating focus
The one or two point of difference whose
improvement will deliver the greatest value to the
customer for the foreseeable future
“What is most worthwhile for our firm to keep in mind
about your offering”
Requires customer value research & insight
Knowledge of how own market delivers superior
value to customers, compared to the next best
alternative
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Value Proposition consists of
Answers the customer question
Has the potential pitfall
It requires
Questions the value proposition must answer
• What does the value proposition consist of?
• What customer question is the suppliers attempting to answer with the value proposition?
• What is required for a suppliers to construct the value proposition and for the sales force to deliver it?
• What is the potential pitfall of the value proposition?
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Six steps to achieving superior value
Must haves
• Processes in place to demonstrate, record and document value creation
• Customer cooperation
• Case studies, case studies, case studies
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
The need to quantify how customer value is created
Example ; Pump suppler
• kW spent number of operating hours per year $ per kW hour number of years systems solution in operations (our solution)
• kW spent number of operating hours per year $ per kW hour number of years systems solution in operations (market average)
• *kW spent = unit horse power 0.746 (horsepower into electricity) 1/unit efficiency
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GE Value calculator
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3. Substantiate value propositions
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Credibility is achieved by not telling fairy stories but working with the customer to document the actual value created
Breakout session – design a value proposition using the supplied product
Six steps to achieving superior value
Must haves
• Create naked solutions with options...no more free engineering
• Sell on value, not price
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
Core offeringCore offering
Tailor market offerings – augmenting offerings
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Core offering
ServicesAvailability assuranceEmergency responseInstallation/deploymentTrainingMaintenanceDisposalManpower
EngineeringProject managementSpecification changesTechnology integration
Six steps to achieving superior value
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1. Conceptualise
value
2. Formulate value
propositions
3. Substantiate value
propositions
4. Tailor market offerings
6. Profit from value provided
5. Transform sales effort
26
Strategic Positioning…bringing it all together
Strategic Positioning
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Customer Analysis
Internal Analysis
Competitive Analysis
Definition of market segments
Target Markets
Value Proposition
Differentiating factors
Strategic Positioning
Marketing Strategy / Plans
1) 2) 3) 4)
The Chosen Battle Ground
Competitor
Competitor
Competitor
Competitor
Competitor
My Business
Competitor
Market Share
My Business
Mind Shareversus
The Chosen Battle Ground
Market Share
• What we do talks
• Promotes Comparison,
not differentiation
• Under values our offer
• Price competition
• One of the pack
Mind Share
• Talks to the customer
• Promotes know how• Takes ownership of a
selected context• Promotes
differentiation
• Promotes leadership
versus
The Chosen Battle Ground
Strategic Positioning
The building blocks
• Corporate objectives
• Segmentation
• Value Proposition
• Brand behaviour / Customer Relationships
• Visual brand application
• Measurement & evaluation