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© 2011, Strathclyde Institute for Operations Management Value Propositions.

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Presentation on theme: "© 2011, Strathclyde Institute for Operations Management Value Propositions."— Presentation transcript:

1 © 2011, Strathclyde Institute for Operations Management Value Propositions

2 © 2011, Strathclyde Institute for Operations Management Customers perceive value in brand/image, total care and total service, quality, performance, good value for money, and new/ innovative products. Customers demand value for their money, but they also look for satisfaction of their expectations. The creation of mutual value for both the organisation and customers is reflected in the value propositions. What is it?

3 © 2011, Strathclyde Institute for Operations Management The value proposition describes why the customers prefer your products and services rather than your competitors. The value proposition is defined as an implicit promise a company makes to customers to deliver a particular combination of values. Each proposition searches for the unique value that can be delivered to a chosen market. Thus, the value propositions help organisations to focus on a selected market and narrow their operational focus (Treacy and Wiersema, 1993). The establishment of a value proposition brings the re-adaptation of culture, infrastructure, technology, resources and measurements. The value proposition shapes the entire organisation. What is it?

4 © 2011, Strathclyde Institute for Operations Management High Value Organisations Country Investor Employees Financial Value Strategic Value Social Value GDP impact Sustainable employment Intellectual capital development Employee capability development Min. environmental impact Return adjusted for risk Long term growth Adaptability Sustainability Ethical action Using people at the highest level Pay, wages Funding of retirement Life long learning Opportunities for growth Personal development Social interaction Work-life balance Adapted from Livesey, 2006

5 © 2011, Strathclyde Institute for Operations Management Competitive Maturity Time The Super Agile Collaborative Industrial System Processes Products Organisation Quality Operating Philosophy Materials Management Facilities FinanceInformation People The Agile Enterprise Now Processes Products Organisation Quality Operating Philosophy Materials Management Facilities FinanceInformation People 1980s Just-In-Case Company Processes Products Organisation Quality Operating Philosophy Materials Management Facilities FinanceInformation People 1990s The Lean Enterprise Processes Products Organisation Quality Operating Philosophy Materials Management Facilities FinanceInformation People Quality Price Functional performance Delivery speed Delivery reliability Product support Styling/design Image Customer support Responsiveness Innovative product Differentiation & Focus Customer Value Propositions Bundled Value Propositions Evolution of Customer Value

6 © 2011, Strathclyde Institute for Operations Management Product leadership: propose best products to their customers (new designs and/or new technology) at the right time. Operational excellence: propose standard products to their customers, at the best price with least inconvenience. Customer intimacy: propose the best total solution to their customers. Competitive Positions

7 © 2011, Strathclyde Institute for Operations Management A Product Leader company offers leading products or new application of existing products and/or services. It focuses on creativity, fast commercialisation of ideas, and recognition of obsolete products before their competitors. They build support processes to minimise the time to market of new products. Its products are pushed to selected markets where price is not a constraint and innovation and fashion are more in demand. Product Leadership

8 © 2011, Strathclyde Institute for Operations Management Operationally Excellent organisations compete on the delivery of a combination of quality, price and easy purchase. They focus on standardisation, simplification and control of operations, what means that these companies are smooth running. Emphasis is made on product reliability, durability and convenience; unnecessary production costs are cut down and the quality of the products is improved, this results in lower cost and good services. Operational Excellence

9 © 2011, Strathclyde Institute for Operations Management Customer Intimacy focussed organisations deliver not what the market wants, but specific solutions to small number of customers. They offer an integrated and customised solution. They cultivate a strong relationship with its few customers and personalise basic service and even customise products to meet particular customers needs. Since these organisations meet a wide range of customer needs, they need a broad set of skills and styles to get the job done. Thus, their employees are adaptable, flexible and multi- talented. Customer Intimacy

10 © 2011, Strathclyde Institute for Operations Management Hard and Soft Dimensions of Value Creation

11 © 2011, Strathclyde Institute for Operations Management Generic Customer Value Propositions 1. Premium 2. Premium/ Competitive 3. Competitive 4. Competitive/ Leader 5. Leader 1. Original 2. Original/ Customized 3. Customized 4. Customized/ Basic 5. Basic 1. Excellent 2. Excellent/ Average 3. Average 4. Average/ Acceptable 5. Acceptable 1. Comprehensive 2. Comprehensive/ Standard 3. Standard 4. Standard/ Minimal 5. Minimal 1. Restricted 2. Restricted/ Selective 3. Selective 4. Selective/ Universal 5. Universal 1. Prestigious 2. Prestigious/ Respected 3. Respected 4. Respected/ Functional 5. Functional FEATURESREPUTATION 1. Premium 2. Premium/ Competitive 3. Competitive 4. Competitive/ Leader 5. Leader 1. Original 2. Original/ Customized 3. Customized 4. Customized/ Basic 5. Basic 1. Excellent 2. Excellent/ Average 3. Average 4. Average/ Acceptable 5. Acceptable 1. Comprehensive 2. Comprehensive/ Standard 3. Standard 4. Standard/ Minimal 5. Minimal 1. Restricted 2. Restricted/ Selective 3. Selective 4. Selective/ Universal 5. Universal 1. Prestigious 2. Prestigious/ Respected 3. Respected 4. Respected/ Functional 5. Functional PRICEQUALITY SERVICE & SUPPORT AVAILABILITY Finkelstein et al, 2007 Technological Integrators Socialisors Price Minimisers Process Simplifiers Technology Leaders Brand Leaders Martinez and Bititci, 2006

12 © 2011, Strathclyde Institute for Operations Management Generic Customer Value Propositions 1. Premium 2. Premium/ Competitive 3. Competitive 4. Competitive/ Leader 5. Leader 1. Original 2. Original/ Customized 3. Customized 4. Customized/ Basic 5. Basic 1. Excellent 2. Excellent/ Average 3. Average 4. Average/ Acceptable 5. Acceptable 1. Comprehensive 2. Comprehensive/ Standard 3. Standard 4. Standard/ Minimal 5. Minimal 1. Restricted 2. Restricted/ Selective 3. Selective 4. Selective/ Universal 5. Universal 1. Prestigious 2. Prestigious/ Respected 3. Respected 4. Respected/ Functional 5. Functional FEATURESREPUTATION 1. Premium 2. Premium/ Competitive 3. Competitive 4. Competitive/ Leader 5. Leader 1. Original 2. Original/ Customized 3. Customized 4. Customized/ Basic 5. Basic 1. Excellent 2. Excellent/ Average 3. Average 4. Average/ Acceptable 5. Acceptable 1. Comprehensive 2. Comprehensive/ Standard 3. Standard 4. Standard/ Minimal 5. Minimal 1. Restricted 2. Restricted/ Selective 3. Selective 4. Selective/ Universal 5. Universal 1. Prestigious 2. Prestigious/ Respected 3. Respected 4. Respected/ Functional 5. Functional PRICEQUALITY SERVICE & SUPPORT AVAILABILITY Finkelstein et al, 2007 Technological Integrators Socialisors Price Minimisers Process Simplifiers Technology Leaders Brand Leaders Martinez and Bititci, 2006

13 © 2011, Strathclyde Institute for Operations Management Provide breakthrough over generations of continuous new designs, new features. Their core competence resides on the long term vision, the research and development of new product designs and the ability to make technical changes in the production processes. These firms have capacity to innovate within short product lifecycles, and try to reduce the time-to-market in new products. The development of flexible manufacturing capabilities is essential. Since these products are new in the market, their prices are generally high; then, the prices start declining at the same time that the product lifecycle descends. Innovators

14 © 2011, Strathclyde Institute for Operations Management Their objective is to expand the market reinforcing the solid brand image of the product and company. The companys offer is a mix of physical attributes of the product, brand, service and even price. Price represents a label of certain social status. Their core competencies reside in the development of creative new concepts: creating stylish products, exploiting of brand recognition of the companys name, building emotional links with a social status, linking feeling with images, and so on. These organisations are very market oriented. Consequently strong investment is placed on high publicity on superior media, market research and market development. Their customers pay premium prices to get status by the product acquisition to feed some feelings, such as superiority, ego, social acceptance, etc; in other words their customers buy a lifestyle. Brand Managers

15 © 2011, Strathclyde Institute for Operations Management Their objective is to make the production process efficient to drive down operational costs. They focus on producing high quality products in the most cost-effective way by reducing waste. Their operations and processes are highly optimised, standardised and the product variations are controlled, therefore, their operational facilities are much specialised to produce a particular type of products. Research and development of new products is poor or is focused on modifications or improvements of current products. Strong investment is directed to build capabilities to produce different volumes with the same quality, because they have to cope with production fluctuations. Their customers pay for ordinary and reliable products at reasonable prices. Price Minimisers

16 © 2011, Strathclyde Institute for Operations Management Their objective is to build a streamlined process to make life uncomplicated for customers in a creative, novel and profitable way, e.g. direct deal between the company and its customers. Simplifiers pay strong attention to the processes of getting order by building capabilities to provide fast and easy transactions available to most people, using conventional and un-conventional resources i.e. internet, catalogues, TV marketing. Their main advantage resides in a superior order fulfilment process, like the co-ordination and integration of different operations. If they have to assemble some parts of the product; they look for simple product designs and/or standard parts to reduce the lead-times so as to improve responsiveness. Simplifiers customers evade risks by buying convenient and available products. They appreciate ease to deal with the companies. Simplifiers

17 © 2011, Strathclyde Institute for Operations Management Their objective is to tailor specific and continuous solutions for carefully selected customers on the basis of long term relationships. They compete by offering customised products and personalised services. These types of organisations support their customers processes, helping them to identify and provide new solutions. In the product development, they collaborate together with the customers to bring the optimum solution for that particular customers problem. The capabilities of technological integrators are focussed on multi-skilled workforce and builds flexible facilities to craft different products for different customers. They have capacity to configure any specific need and are able to adopt the customers strategy. They are focused on the relationships with the clients, therefore they do not spend too much on publicity and promotions. They are getting known by internal networking (i.e. customers recommendations to other companies). Their customers pay for customised product and services as they buy total solutions. Technological Integrators

18 © 2011, Strathclyde Institute for Operations Management Their objective is to build confidence and trustiness on the customers. There is a sensitive fulfilment of customers needs supported by careful delivery, reliability, and honesty, but also for excellent personal service. Business, especially service businesses can retain customers by building reciprocal relationships founded on safeguarding and affirming customers security, fairness and self-esteem. The main product is the service rather than in the artefact by itself. They are mainly getting known by word-of-mouth and local advertisement. Customers pay for flexible products and/or services and interpersonal relationships. They are buying trust from the company. Socialisors

19 © 2011, Strathclyde Institute for Operations Management

20 As an organisation you need to... Invest in making of your value proposition distinctive Invest in best resources to deliver your offer Invest in process that are critical to delivery of your value proposition Invest in the best network to deliver your offer Continuously refine your focus and ability to deliver

21 © 2011, Strathclyde Institute for Operations Management For further information contact us


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