October 2008 Value Proposition www.stankirkwood.com (Make a comment)

Customer Expectations Business Blueprints ™ Copyright: www.stankirkwood.com What does every customer want when making a purchase?

Customer Expectations Business Blueprints ™ Copyright: www.stankirkwood.com What are you looking for when you go to buy a car, a television, computer, house,….?

Customer Expectations Business Blueprints ™ Copyright: www.stankirkwood.com You want the greatest return on your investment

Customer Expectations Business Blueprints ™ Copyright: www.stankirkwood.com What is Return on Investment from a customer’s perspective?

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Value Proposition

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com “ What the customer gets for what the customer pays .” Wikipedia

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com “ A business or marketing statement that summarizes why a consumer should buy a product or use a service.” Investopedia

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com How do customers define Value Proposition?

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Good, Fast and Cheap

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com How did suppliers meet customer expectations?

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Good, Fast and Cheap: Pick Two * http://www.sixside.com/fast_good_cheap.asp *

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Good, Fast and Cheap, pick two - If you want Good and Fast it will not be Cheap If you want Good and Cheap it will not be Fast If you want Fast and Cheap it will not be Good

Good, Fast and Cheap, pick two -

If you want Good and Fast it will not be Cheap

If you want Good and Cheap it will not be Fast

If you want Fast and Cheap it will not be Good

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Good, Fast and Cheap, pick two Imagine if you are a supplier who can make all three come true at the same time? You will have the compelling Value Proposition and you will win in the market place

Dell Computers Business Blueprints ™ Copyright: www.stankirkwood.com Michael Dell – net worth $17.3 billion Offered computers to customers: Good – quality on par or better than competitors Fast – customize PCs delivered in days Cheap – equal to or lower than competition. Became most profitable supplier of PCs in world

Michael Dell – net worth $17.3 billion

Offered computers to customers:

Good – quality on par or better than competitors

Fast – customize PCs delivered in days

Cheap – equal to or lower than competition.

Became most profitable supplier of PCs in world

Wal-Mart Business Blueprints ™ Copyright: www.stankirkwood.com Wal-Mart – from one store in Arkansas to: 2,055,000 employees $397 Billion in annual sales Why? Good – quality on par or better than competitors Fast – product available on shelves Cheap – equal to or lower than competition Became largest corporation in world

Wal-Mart – from one store in Arkansas to:

2,055,000 employees

$397 Billion in annual sales

Why?

Good – quality on par or better than competitors

Fast – product available on shelves

Cheap – equal to or lower than competition

Became largest corporation in world

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Good, Fast and Cheap - Only three of the four components of the Value Proposition There is one more component

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Desirability

Desirability Business Blueprints ™ Copyright: www.stankirkwood.com Desirability in a House: - May be style - May be landscaping - May be number of bathrooms - May be open floor plan

Desirability Business Blueprints ™ Copyright: www.stankirkwood.com Desirability in a Car: - May be styling of car - May be options - May be speed - May be gas mileage

Desirability Business Blueprints ™ Copyright: www.stankirkwood.com If a car is: Good - has few problems Fast - available immediately Cheap - affordable But It is ugly Will you buy it?

If a car is:

Good - has few problems

Fast - available immediately

Cheap - affordable

But

It is ugly

Will you buy it?

Desirability Business Blueprints ™ Copyright: www.stankirkwood.com Not if you can help it. Your decision will depend on how you view the four components of the Value Proposition.

Relative Value Business Blueprints ™ Copyright: www.stankirkwood.com Weight of Value Proposition (VP) Components depends on customer segment Quantify the importance of each Value Proposition Component Lead Time Quality Price Desirability VP Components Car 25 25 25 25 All things equal 10 10 5 25 40 15 15 25 70 50 25 10 Empty Nester Family of five College graduate

Value Proposition Attributes Business Blueprints ™ Copyright: www.stankirkwood.com Value Proposition Components are made up of VP Attributes which can be further decomposed into VP Elements. Sun Roof GPS Leather Seats Options Spoiler Mag Wheels Curved bumper Styling Desirability Elements Attributes Component

Management by Design Business Blueprints ™ Copyright: www.stankirkwood.com The key to the Value Proposition effort: Defining and quantifying the Value Proposition so that you can measure and manage it. DQM ² = Define, Quantify, Measure and Manage You are creating a critical path for your company

Management by Design Business Blueprints ™ Copyright: www.stankirkwood.com Defining and quantifying the Value Proposition creates a critical path for your company Provides clarity of purpose Identifies where to focus resources

Defining and quantifying the Value Proposition creates a critical path for your company

Provides clarity of purpose

Identifies where to focus resources

Business Blueprints ™ Market Performance Focus on what is Important! Which Market will you go after? Copyright: www.stankirkwood.com

Focus on what is Important!

Which Market will you go after?

Business Blueprints ™ Customer Performance Focus on what is Important! Customers use your products and services. Which customers will you appeal to? Copyright: www.stankirkwood.com

Focus on what is Important!

Business Blueprints ™ Product Performance Focus on what is Important! Your products and services must have a compelling Value Proposition. Copyright: www.stankirkwood.com

Focus on what is Important!

Value Proposition Business Blueprints ™ Copyright: www.stankirkwood.com Several important ideas to remember: You should be intentionally designing your products and services based upon the Value Proposition The market place establishes the base line for Value Proposition The market place keeps changing which means the relevance of every design keeps changing All designs become obsolete over time

Several important ideas to remember:

You should be intentionally designing your products and services based upon the Value Proposition

The market place establishes the base line for Value Proposition

The market place keeps changing which means the relevance of every design keeps changing

All designs become obsolete over time