3. The Proposition: Creating Superior Customer Value Flashcards
What is the basis of a companies‘ success?
A companies’ success is largely based on the ability to articulate and execute why it is different and better than the competition.
Service-Dominant Logic
Differentiation of resources:
-Operand resources (e.g. raw material)
-Operant resources (e.g. skills, knowledge, technology), more relevant for SD logic
Foundational premises of Service-Dominant logic
-Service is the fundamental basis of exchange (economic behavior)
-Indirect exchange masks the fundamental basis of exchange
-Goods are distribution mechanisms for service provision
-Operant resources are the fundamental source of strategic benefit
-All economies are service economies
-Value is co-created by multiple actors, always including the beneficiary
-Actors cannot deliver value but can participate in the creation and offering of value propositions—A service-centered view is inherently beneficiary oriented and relational
-All social and economic actors are resource integrators
-Value is always uniquely and phenomenologically determined by the beneficiary
-New value co-creation is coordinated through actor-generated institutions and institutional arrangements
Definitions of value proposition
-GD Logic: Value proposition is a clear, simple statement of the benefits, both tangible and intangible, that
the company will provide, along with the approximate price it will charge each customer
-SD Logic: Value proposition is treated as a promise created either by the firm independently or together with
customers and other actors through resource integration based on knowledge and competencies
Three alternatives to create a value proposition
-All benefits: list up all benefits the customer receives
-Favorable points of difference: compare all favorable points from customer’s POV to the next best
alternative from a competitor
-Resonating focus: select one or two points of difference with greatest value to customer (key needs) → most
complex but also most effective
Competitive customer value proposition: 4 key dimensions ́
-Economic value: Products’ objective monetary worth to a customer, the lowest price or the best tradeoff
-Functional Value: Perceived utility derived from functional, utilitarian or physical performance, designed to meet customer needs
-Emotional Value: Perceived utility to arouse feelings e.g. joy creating a unique experience for the customer
-Symbolic Value: Created from representing something (self-expressive aspects) other than the obvious function of the product
-Products, services and technologies are not value per se but drivers of value creation
Value proposition:
Products & Services as gain creators or pain relievers → fulfill customers’ jobs
Definition of relationship marketing:
Relationship marketing identifies and establishes, maintains and enhances and, when necessary, terminates relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfillment of promises.
Relationship types:
-Transactional exchanges
-Value-added exchanges
-Collaborative exchanges
Patterns of collaborative exchange:
-Strong and lasting commitment from all partners
-Trust and openness play central roles for close and regular exchange between customer and supplier
-Fixed visits of executives and technical personnel can strengthen relationship
-Operational linkages and information-sharing mechanisms should be designed and implemented to support exchange
Value drivers in collaborative relationships:
Product quality, service support, delivery, supplier know-how, time- to-market, personal interaction, price, process costs.
Customer feedback
Customer feedback is essential for value creation → Minimal changes help to increase perceived product quality → Simple primotypes and try-outs are necessary
Cooperation rules:
-Guideline for overall objectives set, clear communication at all value chain stages
-Equal treatment of all partners
-Common negotiation and definition of specification according to overall objective
-Weekly meetings with lead engineering groups and monthly meeting for full vehicle to engage in discussion
