Transcript pps

Chapter Eight
© 2007 John Wiley & Sons
Alternative Value
Propositions
Copyright © 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in
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Chapter 8 - Alternative Value Propositions
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Business Strategy Challenges
© 2007 John Wiley & Sons
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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
Emotional/
Self-Expressive
Benefits
Being
Global
Attribute/
Benefit
Brand
Familiarity
Design
Value
Propositions
© 2007 John Wiley & Sons
Quality
Value
Niche
Specialist
Chapter 8 - Alternative Value Propositions
Customer
Intimacy
Systems
Solutions
Corporate
Social
Programs
Figure 8.3
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Niche Specialist
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Concentrating
Resources
and Energy
Competing
With Limited
Resources
Chapter 8 - Alternative Value Propositions
Support a
Strategic
Position
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Product Quality Dimensions
1. Performance
2. Conformance to specifications
3. Features
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4. Customer support
5. Process quality
6. Aesthetic design
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Figure 8.2
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Signals of High Quality
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• High quality needs to be communicated
• Communication by signals
• Signals:
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–
–
–
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
© 2007 John Wiley & Sons
Stock Return
40%
ROI Change
30%
BE Change
20%
10%
0%
-10%
-20%
Large Loss
Chapter 8 - Alternative Value Propositions
Loss
Gain
Figure 8.3
Large Gain
The Value Option
The Value
Option
Imperatives
© 2007 John Wiley & Sons
Low-Cost
Culture
No-Frills
Products/
Services
Chapter 8 - Alternative Value Propositions
Cost
Advantage
Operations
Scale
Economies
Figure 8.4
Value
Perceptions
Experience
Curve
Effect
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Creating a Cost Advantage
(or Avoiding a Cost Disadvantage)
• No-Frills Product/Service
• Operations
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• Scale Economies
• The Experience Curve
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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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© 2007 John Wiley & Sons
“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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© 2007 John Wiley & Sons
“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.”
© 2007 John Wiley & Sons
-T. Boone Pickens
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“The first man gets the oyster, the
second man gets the shell.”
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- Andrew Carnegie
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“Never follow the crowd.”
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- Bernard M. Baruch
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