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Customers first - another look at value innovation
The document discusses value innovation and how it can help businesses enhance customer engagement and improve pricing strategies by focusing on what customers value. It outlines various qualitative research methods for understanding customer needs and emphasizes the importance of aligning product offerings with perceived value to avoid commoditization. The project Valerie aims to create a systematic approach to value-based innovation, focusing on value detection, creation, and capture through stakeholder engagement and customer insights.
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Customers first - another look at value innovation
- 1. CUSTOMERS FIRST another lookat value innovation Andries Reymer Business innovation coach kmo-connect beurs, Lotto Arena
- 2. Master in ProductDevelopment University of Antwerp 2006 Since 2016 at AMS as Business Innovation Coach. I assist companies in broad innovation trajectories. Currently working on a ’Value Based’ project. Previously worked for KOMONO, PHILIPS, SIRRIS.
- 3. Expertise Center Business Designand Innovation
- 4. Answer some ofthe most difficult questions facing managers: •How does one design global operations so they are at once effective and equitable? •How does one can stay focused on the customer and navigate through a myriad of ways to connect, engage and communicate with customers. •What is the purpose of a corporation beyond the creation of shareholder value? •…. What we do: applied research
- 5. In this deck •WHAT • WHY • HOW
- 6.
- 7. costscosts priceprice valuevalue customer surplus value profit COMPANIES WHOSTRIVE FOR SUCCES COMPETE BY SHIFTING MEANING Barco
- 8. Compentence blindness Company expertstend to focus on features of products that are interesting for them, but not always for customers. By doing so, they can miss the next big thing that will disrupt their business.
- 9. Commoditized customers Going fromcommoditized customers, only focussed on price towards engaged customers chosing a product or service based on the value it brings for them.
- 10. Qualitative user researchQualitativeuser research
- 11. Methods Brief Explanation Observation Theresearcher gets close enough to study objects to observe (with/without participation) usually to understand whether people do what they say they do, and to access tacit knowledge of subjects Interview This involves asking questions, listening to and recording answers from an individual or group on a structured, semi-structured or unstructured format in an in-depth manner Focus Group Discussion Focused (guided by a set of questions) and interactive session with a group small enough for everyone to have chance to talk and large enough to provide diversity of opinions Other Methods Rapid assessment procedure (RAP), free listing, photo ethnography, diary, visual anthropology, pile sort, ranking, life history (biography) …
- 12. can give youinsight in what people do or think but won’t tell you about. Because, qualitative user research
- 13. Going from assumptionsto validated facts
- 14. Context Water is wortha lot if you’re stuck in the desert for some days. When your basementWhen your basement is flooded you wantis flooded you want to pay to get rid ofto pay to get rid of the water.the water. In the supermarketIn the supermarket where water iswhere water is abundant, you’reabundant, you’re choice is deliberate.choice is deliberate.
- 15.
- 16. “Beauty is inthe eye of the beholder” Shakespeare
- 17. “Beauty is inthe eye of the beholder” Andries Reymer Value
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- 19. 80% of innovationsfail Most innovations fail because their creators are “Putting the ‘wow’ before the ‘why'” Mark Payne. Cofounder, Fahrenheit 212
- 20. Source: IDEO Meaningfull innovationconsiders not only the technical feasibility, but values the desirability and viability aswell.
- 21. Source:Doblin,DeloitteDevelopment There is morethan one way to innovate.
- 22. revenue from innovation Withthe aim of RAISE
- 23.
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- 25. Customer value The onlybase to formulate your price in this flow is your product and the cost it represents. The value and the reaction of the customer is only a consequense of this price.
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- 27. Cost plus Changing costs Changingforecast? 100k -> 50k Obsolete stock? Bad engineering? Changing exchange rates? Declining value Discounts for over stock? No innovation -> commodity?
- 28. Competition based Predictability competition Whatdo you know from competitors? Do you know their roadmap? Is their direction the right one? Action -> reaction! Price war No differentiation -> commodity? Race to the bottom -> price pressure!
- 29. Customer value In areversed flow you have insights from your customers needs and the elements your customer values. This gives you insight in their willingness to pay what gives you a good angle towards your pricing.
- 30. Research is ongoing, wantto get involved? More information here: PROJECT VALERIE
- 31. Business value Price realization Theresearch focusses on 2 major topics: price orientation and price realization.
- 32. Price orientation Customer insight Perceivedvalue Next best alternative Willingness to pay Value for money Next best alternative
- 33. Price realization Sales Pricing team Sellingvalue Engineering Creating true value Cost to serve
- 34. We developed ascan to position yourself in this grid as an indication on your price setting and price getting capabilities. Price realization Business value
- 35. Curious? You want tolearn more? Get in touch! andries.reymer@ams.ac.be
- 36. Project Valerie The projectstarts by building buying personas, mapping the stakeholders, discovering insights with your customers up to price and sales learnings. A new methodology is developed to create value step by step.
- 37. VALUE BASED INNOVATION 1.VALUE DETECTION 2. VALUE CREATION 3. VALUE CAPTUREProject Valerie The methodology is based on 3 phases: value detection, creation and capture. And on 3 business elements: product, service and brand.
- 38. 1,99€ Launch of newprivate label yoghurt with initial price setting of: Case Research by MIT-Sloan mgmt review
- 39. Case Considered tobe a commodity in between competitors: all having the same characteristics. They found one unique feature that their target audience, mothers buying yoghurt for their little children, could relate to: the yoghurt was perceived as healthier due to the low sugar content. This gave them the opportunity to position and price the product completely different. Just below the A-brand but well above their competitors.
- 40. LOW IN SUGAR CaseThe health benefit was highlighted and the price was set 40% higher: 2,49€Sales numbers were higher than expected and revenu was 600% more than anticipated.
- 41. So if yourecognize this, know that we can help you!
- 42. www.antwerpmanagementschool.be Andries Reymer Mobile +32472 175 504 andries.reymer@ams.ac.be Andries Reymer @AndriesReymerGet in touch!
- 43.
Editor's Notes
- #5 Such broad, multifaceted questions do not easily lend themselves to scientific experiment or validation.
- #8 2 sides of looking to cost, price and value Internal vs external Company vs customer
- #14 BY qualitative user research
- #15 BY qualitative user research
- #16 BY qualitative user research
- #26 PROBLEMS WITH cost based? PROBLEMS WITH competition based?
- #27 Costs + margin = price
- #28 Costs + margin = price
- #29 What do they do?
- #31 A good farmer knows to not drain the soil, he has to shift his crops every year Blue ocean strategy !
- #32 2 AXES Price orientation = prijs goed kunnen vastleggen – idealiter op waarde gebaseerd Cost – based = wat met variabele kosten/vaste kosten? 100k verkocht – 50k verkocht… Concurrent – based = price war – brand value! Value – based = ideaal! Waarde detectie – perceived value – willingness to pay Price realization = krijgen wat je er voor vraagt Is samenspel tussen marketing en sales. Waarde moet uitgedragen worden door sales – moeten eigen waarde geloven Waarde moet gecommuniceerd worden door marketing – consument moet waarde kennen en geloven Systemen en procedures moeten sales houvast geven – geen adhoc kortingen - negotiation power – etc;
- #33 PerWillingness to pay? Next best alternative? Value for the customer?
- #34 Setting up pricing team – ongoing challenge! Setting up salesforce – selling value! (Discounts only in certain cases: limited in time – action to buy – cash in!) Value thoughout the company – selling value! Engineering value for the customer
- #37 Doorlopen methodologie Staps gewijs naar resultaat Analyseren wat is – richting wat gewenst is Divergeren – convergeren
- #38 Methodology 3 PHASES DETECTION – limited CREATION – focus of innovation CAPTURE – innovation is not common
- #39 Large European supermarket – private label of yohurt delivering heath benefits. They decided to launch at 1,99€ with a cost of 1,29€ In comparison A branded product was 2,99€ MIT-Sloan mgmt review
- #40 Competition based pricingunder A brand = 2,99€ Competition = equal Selling way more than expected Why?!
- #41 Changed packing – higher focus on health benefit Despite increase in price of roughly 40% Sales volumes exceeded targets MIT-Sloan mgmt review