wednesday, january 24: value and growth admin details takeaways last time value venue and voting...

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

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.

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.

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

Preferencej = Σ Bij Ii i=1

j=brand j B = belief about brand j on attribute iI = importance of attribute i

Customer Premises Switching Equipment

Attribute Imp. US THEM

Reliability .40 4 4

Easy-to-use .20 4 2

Functions .40 3 5

Customer Premises Switching Equipment

Attribute Imp. US THEM

Reliability .40 4 4

Easy-to-use .20 4 2

Functions .40 3 5

Preference scores: US: (4*.4)+(4*.2)+(3*.4) = 3.6 THEM: (4*.4)+(2*.2)+(5*.4) = 4.0


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 Type Growth 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




Which factors that our industry takes for granted should be eliminated?

6. Fading: declining weight










6. Fading: declining weight Which factors should be reduced well below the industry’s standard?













3. Unique: pioneer scores well Which factors should be raised above the industry standard?










3. Unique: pioneer scores well Which factors should be raised above the industry standard?


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


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


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)

2. Evaluate

4. Implement

5. Feedback/ Adaptation

1. UncoverGrowthOpportunities

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

wednesday, january 24: value and growth admin details takeaways last time value venue and voting...

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