Module 5 - Building your Value Proposition Robert Preston Breakout is an Epi-V initiative, delivered by Transitions.

Drill Faster Last longer Go further Superior durability Superior durability Superior stability Superior stability Superior drilling Superior drilling New Technology for record-breaking performance “depth of cut and incomparable wear resistance deliver extended operating life and accelerated rates of penetration that can save you days”

Where does does the value proposition reside 3 Customer Analysis Internal Analysis Competitive Analysis Definition of market segments Target Markets Value Proposition Differentiating factors Strategic Positioning Marketing Strategy / Plans 1) 2) 3) 4)

Price ($) Perceived Value AA BB CC A  WeightingAttributesProducts ABC 25Durability Reliability Delivery Service quality Perceived value(41.6)(32.6)(24.9) Equilibrium price$2.5$2.0$1.5 If company A reduces price they will gain market share, would B and C? Value Pricing

1. Conceptualise value What is value What constitutes a customer value proposition What makes value proposition persuasive 5 ?

Six steps to achieving superior value 6 1. Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

Six steps to achieving superior value Must haves Segmented target markets defined Knowledge of customer value creation in practice Integrated implementation, not marketing spin 7 1. Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

8 “Price is what you charge and value is what others think its worth” Warren Buffett

Why a Value Proposition 9 Value delivered Perceived value What benefits the seller promises the customer What the customer is willing to pay for the perceived benefits Seller Buyer value transfer

1. Conceptualise value 10 Titanium dioxide A pigment that;- whitens, brightens and opacifies improves dispersability by reducing the time to reach 7 hegman fineness from 30 to ten mins using a Cowles high-speed dispenser Improves gloss from 78 to 86 60° gloss units Needs a common denominator ?

1. Conceptualise value 11 “ Value in business markets is the worth in monetary terms of technical, economic, service, and social benefits a customer business receives in exchange for the price it pays for a market offering”

1. Conceptualise value 12 Some guiding principles 1.Value is expressed in monetary terms, dollars per unit, euros per hour 2.Market offering are represented in technical, economic, service, and social benefits 3.Price is only what the customer pays for the perceived value, it is not a value 4.Customer value is comparative concept, there is always an alternative

Six steps to achieving superior value Must haves Clear definition of differentiated customer value benefits Value word equation Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

Defining superior customer value benefits 14 Low High Relative level Key attributes of product, service, delivery benefits Company 1 Company 2 Questions 1.What factors should be raised well beyond the industry standards ? 2.What factors should be created that the industry has never offered ? 3.What factors should be eliminated that the industry has for granted ? 4.What factors should be reduced below the industry standards ? Plotting the value attributes of the business relative to its competitors determines areas of competitive advantage and differentiation

Three value propositions 15 Value proposition Value Proposition consists of Answers the customer question Has the potential pitfall It requires All benefits customers receive from our offering “Why should our firm purchase your offering Benefit assertion Knowledge of own market offering All favourable points of difference an offering has relative to the next best alternative “Why should our firm purchase yours instead of our competition” Value presumption Knowledge of own offering and next best alternative 1. All benefits 2. Favourable points of difference 3. Resonating focus The one or two point of difference whose improvement will deliver the greatest value to the customer for the foreseeable future “What is most worthwhile for our firm to keep in mind about your offering” Customer value research & insight Knowledge of how own market delivers superior value to customers, compared to the next best alternative

Three value propositions Value proposition 1. All benefits All benefits customers receive from our offering “Why should our firm purchase your offering Benefit assertion Knowledge of own market offering 2. Favourable points of difference All favourable points of difference an offering has relative to the next best alternative “Why should our firm purchase yours instead of our competition” Value presumption Knowledge of own offering and next best alternative 3. Resonating focus The one or two point of difference whose improvement will deliver the greatest value to the customer for the foreseeable future “What is most worthwhile for our firm to keep in mind about your offering” Requires customer value research & insight Knowledge of how own market delivers superior value to customers, compared to the next best alternative 16 Value Proposition consists of Answers the customer question Has the potential pitfall It requires

Questions the value proposition must answer What does the value proposition consist of? What customer question is the suppliers attempting to answer with the value proposition? What is required for a suppliers to construct the value proposition and for the sales force to deliver it? What is the potential pitfall of the value proposition? 17

Six steps to achieving superior value Must haves Processes in place to demonstrate, record and document value creation Customer cooperation Case studies, case studies, case studies Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

The need to quantify how customer value is created Example ; Pump suppler kW spent  number of operating hours per year  $ per kW hour  number of years  systems solution in operations (our solution) kW spent  number of operating hours per year  $ per kW hour  number of years  systems solution in operations (market average) *kW spent = unit horse power  (horsepower into electricity)  1/unit efficiency 19

GE Value calculator 20

3. Substantiate value propositions 21 Credibility is achieved by not telling fairy stories but working with the customer to document the actual value created

Breakout session – design a value proposition using the supplied product

Six steps to achieving superior value Must haves Create naked solutions with options...no more free engineering Sell on value, not price Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

Core offering Tailor market offerings – augmenting offerings 24 Core offering Services Availability assurance Emergency response Installation/deployment Training Maintenance Disposal Manpower Engineering Project management Specification changes Technology integration

Six steps to achieving superior value Conceptualise value 2. Formulate value propositions 3. Substantiate value propositions 4. Tailor market offerings 6. Profit from value provided 5. Transform sales effort

26 Strategic Positioning…bringing it all together

Strategic Positioning 27 Customer Analysis Internal Analysis Competitive Analysis Definition of market segments Target Markets Value Proposition Differentiating factors Strategic Positioning Marketing Strategy / Plans 1) 2) 3) 4)

The Chosen Battle Ground

Competitor My Business Competitor Market Share My Business Mind Share versus The Chosen Battle Ground

Market Share What we do talks Promotes Comparison, not differentiation Under values our offer Price competition One of the pack Mind Share Talks to the customer Promotes know how Takes ownership of a selected context Promotes differentiation Promotes leadership versus The Chosen Battle Ground

Strategic Positioning The building blocks Corporate objectives Segmentation Value Proposition Brand behaviour / Customer Relationships Visual brand application Measurement & evaluation