ADM 2315 - CHAP 7

DEVELOPING A VALUE PROPOSITION

1. CREATE VALUE ACROSS 3 DOMAINS

– Functional value-benefits and costs directly related to

product performance

– Psychological value-provide a good feeling?

– Monetary value-financial benefits and costs

2. TOTAL CUSTOMER BENEFIT

– The perceived value of the bundle of functional,

psychological, and monetary benefits customers

expect from a given market offering because of the

product, service, and image

3. TOTAL CUSTOMER COST

– The perceived bundle of functional, psychological,

and monetary costs customers will incur in evaluating,

obtaining, using, and disposing of the given market

offering

4. CUSTOMER VALUE PROPOSITION

– Based on the difference between benefits the

customer gets and the costs he or she assumes for

different choices

5. CUSTOMER VALUE ANALYSIS

– Reveals the company’s strengths and weaknesses

relative to those of various competitors

WHAT IS VALUE PROPOSITION?

A value proposition is a statement that clearly identifies the benefits a company's products and services will deliver to its customers.

HOW TO CREATE VALUE

1. CREATE VALUE ACROSS 3 DOMAINS

– Functional value-benefits and costs directly related to

product performance

– Psychological value-provide a good feeling?

– Monetary value-financial benefits and costs

TOTAL CUSTOMER BENEFITS

– The perceived value of the bundle of functional,

psychological, and monetary benefits customers

expect from a given market offering because of the

product, service, and image

5. CUSTOMER VALUE ANALYSIS

• Identify the relevant attributes and benefits that

customers value

• Assess the relative importance of these attributes and

benefits

• Assess the company’s and competitors’ performance on

the key attributes/benefits

• Monitor customer value over time

WHAT HAS TO HAPPEN WHEN DOING POSITIONING

1. Positioning

– The act of designing a company’s offering and image

to occupy a distinctive place in the minds of the target

market

2. Positioning requires marketers communicate similarities and differences between their brand and the competitor.

3. Deciding on positioning involves

   – choosing a frame of reference by identifying the

   target market and competition within it

   – identifying points of parity and points of difference

   within that frame of reference

A FRAME OF REFERENCE

1. Frame of reference

– Serves as a benchmark against which customers can

evaluate the benefits of a company’s offering

– Use close substitutes as beginning point

– The range of a company’s actual and potential

competitors, however, can be much broader than the

obvious ones

POINTS OF DEIFFERENCE AND POINTS OF PARITY

1. POINTS OF DIFFERENCE (PODs)

– Attributes/benefits that consumers strongly associate

with a brand, positively evaluate, and believe they

could not find to the same extent with a competitive

brand

– Stong brands often have multiple points of

difference(Nike, Apple)

– Eg. Energizer batteries, velveeta (the cheesiest), I

can't believe it's not butter

• POD criteria

– Desirable

– Deliverable

– Differentiating

2. POINTS OF PARITY (POPs)

– Attribute/benefit associations that are not necessarily

unique to the brand but may in fact be shared with

other brands

– POP FORMS:

• Category-viewed as essential

• Correlational-potentially negative.if

your brand is exceptionally good at

one thing like low price, then it

cannot be seen as high quality at the

same time in the mind of the

consumer

• Competitive-are associations

designed to overcome perceived

weaknesses of the brand in light of

competitors’ points-of-difference. So

their POD will suggest your brand’s

POP

CREATING A SUSTAINABLE ADVANTAGE

1. COMPETITIVE ADVANTAGE

   – The ability to perform

   in one or more ways

   that competitors

   cannot or will not

   match

2. 3 CORE STRATEGIES

– Differentiate on an existing attribute

– Introduce a new attribute

– Build a strong brand

COMMUNICATING THE POSITIONING

1. POSITIONING STATEMENT

– Communicating an offering’s category membership

along with points of parity and points of difference,

and developing a narrative to convey the offering’s

positioning

2. CRAFTING A POSITIONING STATEMENT

– Attributes that describe the offering versus benefits

delivered by the attributes

3. POSITIONING AS STORYTELLING

– Narrative brandling

▪Setting

▪Cast

▪Narrative arc

▪Language