Key Account Management - Value Proposition/Cost Analysis

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Presentation for MRKT 4160 class. Key Account Management principles of Value Proposition and Cost Analysis.

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Key Account Management - Value Proposition/Cost Analysis

  1. 1. Value Proposition and Cost Analysis <ul><li>Renit, Linnea, Amaan </li></ul>
  2. 2. Value Proposition <ul><ul><li>A promise of value that will be delivered </li></ul></ul><ul><ul><li>The value a customer feels they will receive </li></ul></ul>
  3. 3. Examples of Value Propositions <ul><li>1. Newness </li></ul><ul><li>2. Performance </li></ul><ul><li>3. Design and Usability </li></ul><ul><li>4. Brand and Status </li></ul><ul><li>5. Creativity </li></ul>
  4. 4. Real Life Example: DDB- Doyle Dane Bernbach  <ul><li>Company Background </li></ul><ul><ul><li>Founded in 1949 </li></ul></ul><ul><ul><li>DDB delivers big, game changing creative ideas and business results year after year. </li></ul></ul><ul><li>Company Beliefs </li></ul><ul><ul><li>DDB believes in the power of creativity to touch hearts, change minds and build brands.   </li></ul></ul><ul><ul><li>Media has become the most influential channel, and it is DDB's mission to instigate &quot;share value&quot;.   </li></ul></ul>
  5. 5. DDB- Doyle Dane Bernbach <ul><li>Accounts </li></ul><ul><ul><li>Charity Accounts: not paid </li></ul></ul><ul><ul><ul><li>Street to Home </li></ul></ul></ul><ul><ul><ul><li>Crime Stoppers </li></ul></ul></ul><ul><ul><li>Agency of Record (3-5 year agent campaigns) </li></ul></ul><ul><ul><ul><li>Canadian Tourism Commission (largest account) </li></ul></ul></ul><ul><ul><ul><li>BC Hydro (Vancouver office) </li></ul></ul></ul><ul><ul><ul><li>BC Lotteries (Vancouver office) </li></ul></ul></ul><ul><ul><ul><li>BC Dairy Foundation (Vancouver office) </li></ul></ul></ul>
  6. 6. Remember this?... http://youtu.be/JJmqCKtJnxM
  7. 7. Value Proposition: DDB <ul><ul><li>Creativity that delivers business rewards </li></ul></ul><ul><ul><ul><li>ie: Salty Campaign actually generated an increase in sales for Knorr </li></ul></ul></ul><ul><ul><li>Share value: consumer wants to play with/interact with communication </li></ul></ul><ul><ul><ul><li>ie: Best Buy pass the present to interact with Mom audience </li></ul></ul></ul>** source: http://www.ddb.com
  8. 8. Cost Analysis <ul><li>Determines if the investment is a sound one </li></ul><ul><li>Provides a basis for comparing projects. </li></ul>
  9. 9. Cost Analysis <ul><li>Calculations of costs and benefits: </li></ul><ul><li>    -Tangible costs and benefits + Intangible costs and benefits </li></ul><ul><li>2. Discount the future value of benefits </li></ul><ul><li>3. Compare the cost and benefit  </li></ul><ul><li>4. Compare net rate of return </li></ul>
  10. 10. Cost Analysis <ul><li>Criticisms: </li></ul><ul><li>1. You cannot always attach a value to some costs or benefits </li></ul><ul><li>    ie; environmental, social, etc. </li></ul><ul><li>2. You cannot always evaluate costs/ benefits for everybody affected </li></ul><ul><li>    ie; future generations, animals, etc. </li></ul>
  11. 11. Cost Analysis: DDB <ul><ul><li>Track time to the exact minute </li></ul></ul><ul><ul><li>Estimate based on anticipated amount of work and research </li></ul></ul><ul><ul><li>Based on clients budget </li></ul></ul>
  12. 12. Customer Profitability <ul><ul><li>The amount of profit associated with each customer/client </li></ul></ul><ul><ul><li>Allows a firm to identify which customers are or will be profitable and which are or will not be </li></ul></ul>Customer Profitability (CP) = Revenues earned from relationship - Costs associated with relationship
  13. 13. Customer Profitability: DDB <ul><ul><li>Profitability on clients: cost + 15-20% </li></ul></ul><ul><ul><ul><li>Ex: $100,000 in time (labour) and $15,000 towards in-house expenses </li></ul></ul></ul>
  14. 14. Questions... ** *http://www.ariad.ca/images/knorr_small.jpg

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