1. © 2007 John Wiley & Sons 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.

2. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-2 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?

3. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-3 Strategic Options Value Propositions Figure 8.3 Being Global Being Global Emotional/ Self-Expressive Benefits Emotional/ Self-Expressive Benefits Brand Familiarity Brand Familiarity 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

4. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-4 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

5. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-5 Product Quality Dimensions 1.Performance 2.Conformance to specifications 3.Features 4.Customer support 5.Process quality 6.Aesthetic design Figure 8.2

6. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-6 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

7. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions Stock Market Reaction to Brand Equity (BE) & ROI Stock Return Figure 8.3

8. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-8 Figure 8.4 The Value Option No-FrillsScaleExperience Products/OperationsEconomiesCurve ServicesEffect No-FrillsScaleExperience Products/OperationsEconomiesCurve ServicesEffect Value Perceptions Value Perceptions Cost Advantage Cost Advantage Low-Cost Culture Low-Cost Culture The Value Option Imperatives The Value Option Imperatives

9. © 2007 John Wiley & Sons 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

10. © 2007 John Wiley & Sons 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.

12. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-12 Ancillary Slides

13. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-13 “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

14. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-14 “If you don’t have a competitive advantage, don’t compete.” -Jack Welch, GE

15. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-15 “You can’t depend on your eyes when your imagination is out of focus.” -Mark Twain

16. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-16 “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

17. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-17 “The first man gets the oyster, the second man gets the shell.” - Andrew Carnegie

18. © 2007 John Wiley & Sons Chapter 8 - Alternative Value Propositions PPT 8-18 “Never follow the crowd.” - Bernard M. Baruch