Core Reading Flashcards
A Business is a Value Delivery System
Key Concepts
- Customer Value
- Superior Value Proposition
Customer Value
The difference between the maximum amount they are willing to pay and the actual price.
Superior Value Proposition
A clear statement of the benefits provided to customers and the price charged.
(companies must ensure that customers perceive significantly more benefit than the cost)
On what basis do customers make buying decisions?
Benefits of the product and its price.
Developing a Value Proposition
- Identifying Customer Needs
- Customer Segmentation
Identifying Customer Needs
Determine the specific benefits that customers want and are willing to pay for.
Customer Segmentation
Divide potential buyers into segments based on their desired benefits and willingness to pay, then assess the opportunities to deliver superior value to each segment.
Frank Perdue and Value Proposition
Transformed the chicken business by producing a more tender chicken with a consistently golden colour, allowing him to charge a premium for this superior product.
Canon AE1 and Value Proposition
Identified a new market segment seeking high-quality, easy-to-use cameras at a mid-price range.
Value Delivery System
- Customer-Oriented Stages
- Implementation
Customer-Oriented Stages
Break down the business system into stages: choosing the value, providing the value, and communicating the value.
Implementation
Managers should ensure that the chosen value proposition pervades every layer of the organization.
Strategic Planning
- Value Maps
- Long-Term Strategy
Value Maps
Help to recognize specific value propositions that appeal to various segments, and to compare the total benefit and price of competing products.
Long-Term Strategy
Segments and value propositions that promise the best results should be selected.
