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- 9. Area&G ©©right&2010&Urbany&and&Davis … A ladder shows how features of our service are linked to customers’ deeper values. The secretary below, for example, appreciates Fed Ex’s on-time delivery because it gives her a sense of control and peace of mind. This understanding contributed to developing effective advertising for FedEx. Attribute Functional Conse- quence Psycho- social conse- quence Personal Value Why do you rate satisfaction On-time delivery So highly for FedEx? Why is on-time delivery Recipient knows
- 10. important to you? we’re reliable What do you get when the recipient knows Less worried, avoid we’re reliable? looking bad to boss Why is less worry In control, important to you? peace of mind START HERE! ©"copyright"2010"Urbany"and"Davis There"are"two"generic"types"of"� growth"strategies." Numerator:"� """""""""""B V"""="""" """""""""""P ENHANCE"BENEFITS:"
- 13. segments"who"may"seek" simpler,"less"expensive"value." 4.2"Identify"customer" segments"which"may"be"too" expensive"to"serve"proSitably. Let�s"extend"our"thinking"about"growth"to"recognize"that"we " can"grow"by"enhancing"beneSits"or"lowering"costs"in"current" or"new"markets." ©"copyright"2010"Urbany"and"Davis Worksheet 3 The Value Equation as a Strategic Tool The value equation is a simple way of pictorializing what a firm offers the customer. Ultimately, value is what the consumer basis his/her purchase decision on. For example, a meal purchased at McDonalds has a very different set of benefits and costs than a meal purchased at Ruth’s Chris Steak House. Yet both serve the same utility; a meal. Likewise, BMW and Hyundai both make automobiles that serve the same utility; they get you from point A to point B. But the features, benefits, and costs are very different between the two. Yet value is created, in different ways, for each of their respective purchasers (market segments).
- 14. The equation looks like this: The equation can help a firm conceptualize strategic decisions. The greater the value the firm can offer the customer relative to its competitors, the more likely the firm is to create greater sales and thereby profits. From the diagram you can see two generic growth strategies; increase benefits and/or reduce costs. Also, the cost side of the equation includes the customer’s total costs to acquire, some elements of which the firm may have little or no control over. An example might be a trip to the store to make the purchase. The problem most firms run into is that they don’t understand the customer’s perceptions. They think they do but they really don’t. Customer perception is what drives their view of Value, and ultimately their purchase decision. It is vitally important that firms understand what their customer’s actually value. Also, markets are dynamic and what the customer values can change over time. Strategy Plan Prepared By: Anna Berrett, Jaycee Hatch, Aubree Matheson, and Emily Peterson I
- 15. Karie Anne’s Frozen Desserts was started by a BYU-I student, and was inspired by Rita’s Ice. He named after his wife In 2014 he sold it to a local cache valley family Evaluate target market of dessert customers by focusing on most important customer attributes Main street in Logan, Utah W ? Maximize profits and meet customer needs W ? W ?W ? C S :
- 16. Our goal is to grow Karie Anne’s Frozen Desserts by creating more value for frozen dessert customers than Zeppe’s does. K C A Importance to customers? How our customers rate US? How our customers rate THEM? Model area?A,B,C,D,E,F or G? 1 Seasonal Operation Hours High 1 1 G 2 High Quality Product (Unique Consistency) High 3 1 A 3 Catering Options - Mobile Truck High 1 3 C 4 Variety of Flavors & Desserts High 3 3 B 5 Online & Social Media Presence Medium 2 3 B 6 Unique Experience (Food Truck Store Front) Medium 3 2 E 7 Convenient Location Medium 3 2 A
- 17. 8 Family-Run Business Low 3 1 E 9 Loyalty Programs Low 3 1 E 10 Low Price Low 2 3 F Open Year Round Firm Core Competencies (E): Competitor Core Competencies (F): Customer Needs/Wants (G): Mobile Truck for catering Lower Price Quality (Unique Consistency) Location Variety of Flavors Online & Social Media Presence Punch cards
- 18. and loyalty program Family run business Food truck store front (B) (A) (C) (D) Open Year Round Firm Core Competencies (E): Competitor Core Competencies (F): Customer Needs/Wants (G): Mobile Truck for catering Lower Price Quality
- 19. (Unique Consistency) Location Variety of Flavors Online & Social Media Presence Punch cards and loyalty program Family run business Food truck store front (B) (A) (C) (D) Permanent Store ● Rent Local space ● Provide year-round service ● (Expand to area G)
- 20. (potentially opening more locations in the future) O f G #1 O f G #2 Mobile Catering ● Purchase additional food truck in order to offer mobile catering for events and weddings, etc. ● (Compete in area C) Resources And Assets Capabilities Activities Value Networks 1. Year-Round Location with Store Front
- 21. - Customer loyalty and demand - Presence in Logan - Reputation - Management and operations - Ability to grow without sacrificing quality - Find reasonable location - Hire more employees - The Dealio/Hooked - Real Estate Agent - Lynn’s Audio 2. Catering /Mobile Segment
- 22. - Company Image of Food Truck - Quality Reputation - Location in Logan, where there are constantly weddings and events - Customer experience - Quality employees - Networking and growth - Market to customers about catering events - Purchase new truck. - Hire more employees - Student workers who can spread the word - Current
- 23. Customers - Social Media followers R O #1 - Incremental Income Statement O #1 - Balance Sheet O #1 Incremental Statement of Cash Flows O #2 - Incremental Income Statement O #2 - Balance Sheet O #2 - Incremental Statement of Cash Flows F R ?
- 24. Expand into Mobile/Catering Segment ● The permanent storefront, doesn’t align with Karie Anne’s strategy ● Fixed costs of permanent store are too high, incremental revenues would not be sufficient to cover fixed costs. ● They will be able to pay off their loan of $43,000 within the first year and remain profitable, whereas Option 2 requires a loan of $60,000 and they won’t be able to pay off the loan. ● They will have an incremental net income of $54,000 in just the first year, with growing income in years following. Q ? 3 Circles Assessment of Presentation Group_________________ ____(10) Introduction: Who, what, where, why. ____(10) Context Statements: Product/Service Segment Competition
- 25. ____(40) Attributes: Complete – are these the top 10? Importance Ranking How Known ____(20) 3 Circles diagram depicted? ____(35) Selections What was the Rationale? ____(20) Sheet 3: Resources/Assets Capabilities Activity Sets Value Networks ____(30) Financial Analysis/Ranking: ____(25) Final Recommendation: Does it fit the analysis presented? ____(10) Presentation Skills: Professional, format, flow, time.