Strategic market management chapter 8

Alternative Value Propositions Chapter Eight Copyright © 2010 John Wiley & Sons, Inc.. Strategic Options Value Propositions Figure 8.1 Being Global Being Global Emotional/ Self-Expressi

Alternative Value

Propositions

Chapter Eight

Copyright © 2010 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

7

Business Strategy Challenges

• A real customer value proposition?

• A perceived customer value proposition?

• Is the value proposition/strategy feasible?

• Is the value proposition relevant to customers?

• Does it represent a sustainable point of

difference?

Strategic Options

Value Propositions

Figure 8.1

Being Global

Being Global

Emotional/

Self-Expressive Benefits

Emotional/

Self-Expressive Benefits Brand

Familiarity Familiarity Brand

Quality

Value

Niche Specialist

Niche Specialist Customer Intimacy Customer Intimacy

Corporate Social Programs

Corporate Social Programs

Systems Solutions

Systems Solutions

Attribute/

Benefit

Attribute/

Benefit

Design

7

Niche Specialist

Concentrating Resources and Energy

Concentrating Resources and Energy

Competing With Limited Resources

Competing With Limited Resources

Support a Strategic Position

Support a Strategic Position

Product Quality Dimensions

2 Conformance to specifications

4 Customer support

5 Process quality

6 Aesthetic design

Figure 8.3

7

Signals of High Quality

• High quality needs to be communicated-quality

dimensions

• Communication by signals-attributes

• Signals:

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

Chapter 8 - Alternative Value Propositions

Stock Market Reaction to Brand Equity (BE) & ROI

Figure 8.2

7

The Value Option

Products/ Operations Economies Curve

Products/ Operations Economies Curve

Value Perceptions Value

Perceptions

Cost Advantage

Cost Advantage

Low-Cost Culture

Low-Cost Culture

The Value Option Imperatives

The Value Option Imperatives

Creating a Cost Advantage

(or Avoiding a Cost Disadvantage)

• No-Frills Product/Service

• Operations

• Scale Economies

• The Experience Curve

7

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 The value proposition should be real,

believed, feasible, relevant, and sustainable.

• 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.

Ancillary Slides

7

“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

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

-Jack Welch, GE

7

“You can’t depend on your eyes when

your imagination is out of focus.”

-Mark Twain

“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

7

“The first man gets the oyster, the

second man gets the shell.”

- Andrew Carnegie

“Never follow the crowd.”

- Bernard M Baruch