The Value Proposition Flashcards
What is the VP?
- The bundle of products and services that create value for a specific customer segment
- The value proposition is for a particular offering, not the entire firm
What is service dominant logic?
Service-dominant logic argues that firms cannot unilaterally develop, offer and deliver value to consumers… they can only imitate value propositions
How does the VP work in resource/service dominant logic?
- In compliance with goods-dominate logic, developing a value proposition consists of three main steps: choose the value, provide the value and communicate the value
- In the service-dominant logic perspective, value propositions are formed through activities of reciprocal exchange of knowledge between stakeholders rather than being predefined by a single firm
What is value?
- Many models define value as a consequence of some process (i.e. interaction - relationship - business model - value) but it is as much a cause:
- Value is expressed as ‘bias or interest’ resulting form irrational motor-affective processes. ‘To like or dislike an object is to create that object’s value’
- ‘Value’ is a verb as well as a noun
- It is embedded not in the product but in the outcomes the product allows the customer to achieve
- ‘Valuing’ is a process
What is realised value?
- The value actually received by an actor, as a consequence of an action or interaction in the pursuit of interest.
- The process by which the ‘suggested value’ of a value proposition is fulfilled or actualised by the customer and other actors involved
What is anticipated value?
- The value an actor hopes or expects to receive as a result of an action or interaction they are about to undertake in the pursuit of interest.
- Similar to expecations
How is value purposive action?
Purposive action is taken in the pursuit of a goal (or interest) based on a ‘mediating judgement’ that the action will achieve the goal. The goal object continues to be invested with value only so long as the ‘mediating judgement’ is believed to be true. This judgment may be adjusted in light of experience
What is the value cycle?
SEE NOTES
How is the question To whom should a business model provide value answered?
Six market domains: Stakeholder perspective on value propositions
What are the market domains?
- Customer Markets
- Recruitment Markets
- Referral Markets
- Influence Markets
- Supplier/Alliance Markets
- Internal Markets
What are customer markets?
Buyers, intermediaries and final consumers
What are recruitment markets?
- Potential employees & access channels
- A sub-system comprising all potential employees together with a network of recruitment entities, sources and access channels
- The VP is a means of identifying why job applicants would choose to work for one company rather than another
- It should comprise three elements: job and work characteristics; total rewards; and corporate image
- These VPs need to be adapted to target specific segments of the recruitment market
What are referral markets?
- Advocates for customers and non-customers
- This domain can be segments into advocate-imitated customer referrals and company initiated customer referalls
- Referral networks can be built to share client relationships with other parties. This network functions on a clear understanding of the VP offered by each member of the network
- Organisations often overlook the referee market sub-system, yet it can be a critical marketing element
What are influence markets?
- Stakeholder Bodies that Influence the Firm
- Some of the groups covered by this domain are: financial investors; unions; industry bodies; regulatory bodies; business press and other media; user groups; environmental groups; political and government bodies and competitors
- An organisation will not be able to affect all these groups. Developing an communicating a VP to the most important constituent members of the influence market requires managing relationships
- The diversity of these groups will require a more complex set of success measures than profit i.e. triple bottom line
What are supplier/alliance markets?
- Providers of Goods & Knowledge
- Alliance partners are a form of supplier that typically supply competencies and capabilities that are knowledge based
- These VPs provide an opportunity for suppliers and a company to engage in substantial knowledge sharing and co-creation
- The diversity of these groups will require a more complex set of success measures than profit i.e. triple bottom line
What are internal markets?
- Employees, Founders and The Team
- These VPs need to be looked at from the perspective of the employee as well as that of the organisation. Employees can be segments by function, level, geography and relation to cusomers
- Although renumeration was a major part of these VPs, recently we see company brand and corporate ethics becoming major differentiators
- Developing a VP for employees requires a process of: assessing the current VP; understanding the needs to the target market; understanding the competitive strength of the VP and determining elements for improvement
What are the two market domains approaches?
Firm vs system centred
How is value assessed?
- Use value
- Refers to the specific qualities of a product perceived by a customer in relation to their needs
- Exchange Value
- Refers to price, or the monetary amount realised at a single point in time when the exchange of the offering takes place
How do consumers spend their income?
- Consumers spend their income to maximise their CS
- Value judgements are made in advance of the consumption, so inferences are made based on cues such as beliefs, needs, experiences, wants, wishes and expectations
How is value created and what is ambiguous about it?
- The impact of organisational labour
- New Use Value derives from the actions of people inside (and through their interactions with those outside) the organisation
- How much exchange value has been added can only be determined at the point of sale
- The specific labour providing value often has causal ambiguity. This makes it difficult to replicate, but also risk to manage, as decisions can sometimes inadvertently change things that are critical to value creation
What is new use value?
New Use Value derives from the actions of people inside (and through their interactions with those outside) the organisation
What are the kinds of labour?
- Generic Labour
- Homogenous across competing firms. Can created new use value, but will not result in profit differentials
- Differential Labour
- Heterogenous across competing firms and is the source of uniqueness and profit
- Entrepreneurial Labour
- Differential labour focused solely on the artful deployment of resource inputs to achieve superior profits
- Unproductive Labour
- Destroys value by being performed and consuming resources when not required by competing firms. When it surpasses the other forms of labour firms fail
What is most important about the VP canvas?
The FIT between the value map and the customer profile is the most important aspect
What constitutes the value map?
- Products & Services
- Gain Creators
- Pain Relievers
In the VP canvas, what are products and services?
- Bundles of offerings that make up the VP
- A list of offerings that help customers complete their tasks. These also include supporting offerings that help them derive value from core offerings
What form can products and services in the VP canvas take?
- Physical/Tangible goods
- e.g. manufactured products
- Intangible products
- e.g. copyrights and services such as after-sales assistence
- Digital products
- e.g. music downloads, online recommendations
- Financial products
- e.g. invesmtned funds and insurances or financing of purchases
What are gain creators?
- Describe how your offerings create benefits and satisfy user expectations
- Outcomes that meet or exceed customer expectations
- Outperform current offerings from the venture or its competitors
- Make life easier through improved usability, accessibility, more services or lower cost of ownership
- Fulfil desires that customers have
What are pain relievers?
- Describe how your offerings alleviate pain or otherwise reduce negatives
- Savings in terms of time, money or efforts
- Improvements through new features, better performance or enhanced quality
- Reduced difficulty ending challenged, making things easier, eliminating obstacles
- Remove negative social consequences such as loss of face, power, trust or status
How do we find out what customers value?
The Innovation Process
How is innovation as context?
- Two initial questions:
- Understanding the cultural and socioeconomic meaning that users derive from the outputs of the innovation process
- Understanding the strategic objectives and imperatives that are being pursued through an innovation process
- This question focuses on recognising the interests of the project owners. It aims to better set targets and indicators
- i.e. objectives
How is innovation as implementation?
- The STAGE/GATE
- A conceptual and operational map for moving new products form idea to launch and beyond, improving effectiveness and efficiency
- Takes a project management approach to the innovation process
- New Product Development Funnel
What are the benefits of the stage/gate
- Quality focus
- Built in control and key points in the development process
- Market orientation
- Including multiple user and need focused activities in the early stages
- Better homework
- The system encourages team members to gather data for adequate decision making
- Parallel processing
- Activities within stages can be undertaken simultaneously, reducing lead times
- Better evaluations
- Using project appropriate criteria to determine viability at each gate
- Visible road map
- Lay out a clear picture of suggested activities for the innovation process
Where do initial ideas come from in the stage/gate?
Creativity
How is innovation as creative?
- The design perspective
* Design Thinking Process
What is the design thinking process?
- An approach to innovation, that stems from the Design Discipling, and seeks to help public and private institutions identify, create and reach their desired future state
- Looks at problems from the perspective of user needs, aimed at developing meaningful solutions that integrate the human, tech and business domains
What is the design object?
In the design thinking process, the intersection of art, business and engineering
- Considerations
- Form
- Function
- Usability
- Context
What is the process of the design thinking process?
- Combines two modes of thinking
- Analytical
- i.e. think slow
- Seeks inductive and deductive proof
- Exploits existing knowledge, with a focus on past data
- Required suspension of prejudice
- Goal is reliability
- Intuitive
- i.e. think fast
- Seeks to know without reasoning
- Explores new knowledge, with a focus on what could be
- Aims to create the future
- Requires suspension of disbelief
- Goal is validity
What are the additional innovation skills?
- Empathy
- Focusing on the person, to create inherently desirable solutions
- Integrative thinking
- Capable of seeing the salient and contradictory aspects of a complex problem
- Optimism
- Assume that, regardless of how challenging, a solution will be better than the status quo
- Experimentalism
- Overcoming traditional boundaries into unexpected directions
- Collaboration
- Incorporating multiple perspectives, diverse knowledge and experience
How are users best understood?
In order to develop meaningful experiences for users, it is important to consider their characteristics in a holistic, systemic and dynamic manner
What are the additional models of the innovation process?
- Double diamond, design and scope
- Iterative Loop
- Innovation Process
- Inspiration, Ideation and Implementation as Integral
What are the key points of the inspiration, ideation and implementation as integral model?
- Moving forward but doubling back as you learn
- POV statement is a key staring point for a design thinking process, combining user, need and benefits. Similar to the VP canvas
What is declaring a POV statement?
- Based on the information gathered during Understanding and Empathising stages, and combines:
- The User
- Children in developing countries…
- The Need
- …where there aren’t enough resources…
- The Benefit
- …could benefit from ___
