Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

Admin Details Course handout, submitted to the copy shop Out of all the written assignments, only 4 have to be turned in: A4, A7, A11 and A21 (Xerox case) or A22 (Dell Case) Next week (Jan. 31) 1 chapter (R3. Dickson chapter 1) 1 short case (A5. JNJ Stent) 1 longer case (A6. Reatta) Nothing written due

Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

Key Takeaways: Last Week Success in well-defined competitive games (Intergalactic Widgets) with complete information requires trying to see the world from your competitor’s perspective. See if you can encourage cooperation. If not, then defect in every period. In real markets, a third option exists -- redefine the game and the market by creating superior customer value (e.g., Formule 1, Walter, Milliken, Compaq Servers).

Key Takeaways: Last Week Good strategic thinking in today’s hypercompetitive environment is hindered by natural biases and organizational constraints. Getting good requires discipline in approaching and diagnosing problems and an emphasis on experimentation and speed. Learning how to make good strategic decisions takes practice -- that’s what simulations are all about.

Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

Value Venue and Voting There are 3 awards to be given today: Jack Welch Award: For the best illustration of truly unique value/innovation. Insight.Com Award: For the most insightful presentation of value concepts; provides the most insight into the meaning of unique value Picasso Award: For the best design.

Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

Impressions of Value What are your impressions of unique value in the marketplace? How do companies tend to create value? What is “value innovation?” (core philosophical premises?) Is it consistent with Gale’s suggested pursuit of superior relative competitive value?” How prevalent is value innovation? How do companies come upon ideas for creating unique value?

Customer perceptions of value… are multi-dimensional have dimensions that can be organized into categories have dimensions that constantly change over time (e.g., Compaq servers) are linked directly to customer decision-making and action can be measured. are different for different segments of the market in the end, are the core determinant of growth and financial performance

Customer Preference n Preference j = Σ B ij I i i=1 j=brand j B = belief about brand j on attribute i I = importance of attribute i

Customer Premises Switching Equipment Attribute Imp. US THEM Reliability Easy-to-use Functions

Customer Premises Switching Equipment Attribute Imp. US THEM Reliability Easy-to-use Functions Preference scores: US: (4*.4)+(4*.2)+(3*.4) = 3.6 THEM: (4*.4)+(2*.2)+(5*.4) = 4.0

Customer perceptions of value… are multi-dimensional have dimensions that can be organized into categories have dimensions that change over time are linked directly to customer decision-making and action can be measured are different for different segments of the market in the end, are the core determinant of growth and financial performance

Levitt’s Model Generic Product Expected Product Potential Product Augmented Product

Categorizing Attributes/Benefits Attribute TypeGrowth Questions 7. Basic: stakes of the game (we think) 6. Fading: declining weight 5. Key: makes the difference (today) 4. Pacing: getting momentum 3. Unique: pioneer scores well 2. Desired: known, not ready 1. Latent: not apparent yet

Categorizing Attributes/Benefits Attribute TypeGrowth Questions 7. Basic: stakes of the game (we think) Which factors that our industry takes for granted should be eliminated? 6. Fading: declining weight 5. Key: makes the difference (today) 4. Pacing: getting momentum 3. Unique: pioneer scores well 2. Desired: known, not ready 1. Latent: not apparent yet

Categorizing Attributes/Benefits Attribute TypeGrowth Questions 7. Basic: stakes of the game (we think) Which factors that our industry takes for granted should be eliminated? 6. Fading: declining weight Which factors should be reduced well below the industry’s standard? 5. Key: makes the difference (today) 4. Pacing: getting momentum 3. Unique: pioneer scores well 2. Desired: known, not ready 1. Latent: not apparent yet

Categorizing Attributes/Benefits Attribute TypeGrowth Questions 7. Basic: stakes of the game (we think) Which factors that our industry takes for granted should be eliminated? 6. Fading: declining weight Which factors should be reduced well below the industry’s standard? 5. Key: makes the difference (today) 4. Pacing: getting momentum 3. Unique: pioneer scores well Which factors should be raised above the industry standard? 2. Desired: known, not ready 1. Latent: not apparent yet

Categorizing Attributes/Benefits Attribute TypeGrowth Questions 7. Basic: stakes of the game (we think) Which factors that our industry takes for granted should be eliminated? 6. Fading: declining weight Which factors should be reduced well below the industry’s standard? 5. Key: makes the difference (today) 4. Pacing: getting momentum 3. Unique: pioneer scores well Which factors should be raised above the industry standard? 2. Desired: known, not ready 1. Latent: not apparent yet Which factors should be created that the industry has never offered?

Sources of Utility (value) “Platform” Delivers: Product Form Utility Service Information Utility Experiential Utility Relationship Utility Delivery Time Utility Place Utility Mktg Program Information Utility Transaction Utility Relationship Utility

Customer perceptions of value… are multi-dimensional have dimensions that can be organized into categories have dimensions that change over time are linked directly to customer decision- making and action can be measured are different for different segments of the market in the end, are the core determinant of growth and financial performance

Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

As a manager, what do I do now? Think broadly in defining define the dimensions of value. In seeking growth: prompt your team with good questions focused on customer value Always ask “worth what you paid for it” Benchmark competitors but don’t let competitors define or constrain you. Using the results: important to align the organization (e.g., processes, reward structure)

Wednesday, January 24: Value and Growth Admin details Takeaways last time Value venue and voting Impressions of value As a manager, what do I do now? Course model and conclusions

2. Evaluate 4. Implement 5. Feedback/ Adaptation 1. Uncover Growth Opportunities Model of the Firm 3. Design Programs: -choose the value -design/create the value -communicate the value -deliver the value

Next Week R3. Dickson, chapter 1 A5. JNJ stent case A6. Reatta case

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