Chapter Eight

Alternative Value
Propositions
© 2007 John Wiley & Sons

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Chapter 8 - Alternative Value Propositions PPT 8-1

 Business Strategy Challenges

• A real customer value proposition?

• A perceived customer value proposition?
• Is the value proposition feasible?
• Is the value proposition relevant to customers?
• Does it represent a sustainable point of
difference?
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-2

 Strategic Options
Emotional/ Being
Being
Emotional/ Global Attribute/
Self-Expressive Global Attribute/
Self-Expressive Benefit
Benefits Benefit
Benefits
Brand
Brand
Familiarity
Familiarity Design
Design

Value
Quality
Quality Propositions Systems
Systems
Solutions
Solutions
© 2007 John Wiley & Sons

Value
Value Corporate
Corporate
Social
Social
Niche Customer Programs
Programs
Niche Customer
Specialist
Specialist Intimacy
Intimacy

Chapter 8 - Alternative Value Propositions Figure 8.3 PPT 8-3

 Niche Specialist

Concentrating
Concentrating
Resources
Resources
and
and Energy
Energy

Competing Support
Supportaa
© 2007 John Wiley & Sons

Competing
WithLimited
With Limited Strategic
Strategic
Resources
Resources Position
Position

Chapter 8 - Alternative Value Propositions PPT 8-4

 Product Quality Dimensions

1. Performance
2. Conformance to specifications
3. Features
4. Customer support
© 2007 John Wiley & Sons

5. Process quality
6. Aesthetic design

Chapter 8 - Alternative Value Propositions Figure 8.2 PPT 8-5

 Signals of High Quality

• High quality needs to be communicated

• Communication by signals
• Signals:
– Tomato Juice—thickness
– Cars—sound of door closing
– Banking—professional attitude of people
© 2007 John Wiley & Sons

– Supermarkets—produce

Chapter 8 - Alternative Value Propositions PPT 8-6

 Stock Market Reaction to
Brand Equity (BE) & ROI

40%
ROI Change
30% BE Change
Stock Return

20%

10%

0%

-10%

-20%
Large Loss Loss Gain Large Gain
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions Figure 8.3

 The Value Option
TheValue
The Value
Option
Option
Imperatives
Imperatives

Low-Cost
Low-Cost Cost Value
Value
Culture
Culture Advantage Perceptions
Perceptions
© 2007 John Wiley & Sons

No-Frills
No-Frills Scale
Scale Experience
Experience
Products/
Products/ Operations
Operations Economies
Economies Curve
Curve
Services
Services Effect
Effect

Chapter 8 - Alternative Value Propositions Figure 8.4 PPT 8-8

 Creating a Cost Advantage
(or Avoiding a Cost Disadvantage)

• No-Frills Product/Service

• Operations

• Scale Economies
© 2007 John Wiley & Sons

• The Experience Curve

Chapter 8 - Alternative Value Propositions PPT 8-9

 Key Learnings

• Business strategies usually cluster around a limited number of

value propositions, such as superior attribute, appealing design,
offering complete system solutions, social responsibility, a familiar
brand, a superior customer relationship, a specialist niche, superior
quality, and superior value.
• A value proposition needs to be communicated effectively and
supported by a cost advantage, which can be based on a no-frills
offering, operations, scale economies, and/or the experience curve.
© 2007 John Wiley & Sons

• Superior quality, which has been shown to drive stock return, has to
be continuously addressed through processes and programs and
transferred into quality perceptions.

Chapter 8 - Alternative Value Propositions PPT 8-10

 Ancillary Slides
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-12

 “Ever since Morton’s put a little girl in
a yellow slicker and declared, “When
it rains, it pours,” no advertising
person worth his or her salt has had
any excuse to think of a product as
having parity with anything.”
-Malcolm MacDougal,
© 2007 John Wiley & Sons

Jordan Case McGrath

Chapter 8 - Alternative Value Propositions PPT 8-13

 “If you don’t have a competitive
advantage, don’t compete.”
-Jack Welch, GE
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-14

 “You can’t depend on your eyes when
your imagination is out of focus.”
-Mark Twain
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-15

 “Be willing to make decisions. That’s
the most important quality in a good
leader. Don’t fall victim to what I call
the ‘ready-aim-aim-aim syndrome.’
You must be willing to fire.”
-T. Boone Pickens
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-16

 “The first man gets the oyster, the
second man gets the shell.”
- Andrew Carnegie
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-17

 “Never follow the crowd.”
- Bernard M. Baruch
© 2007 John Wiley & Sons

Chapter 8 - Alternative Value Propositions PPT 8-18