ParCon Consulting, LLC

Understanding Value Propositions

A ParCon Learning Module
May 23, 2011
Revision 1.0

C O
A

N S U

L T I N G
C o m p a n y

L i m i t e d

L i a b i l i t y

Achieving Strategic Agility

Content Overview
I. II.

Introductions & Objectives What is a Value Proposition

III.
IV.

Some Examples of Value Propositions

Appendix

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SECTION ONE

Introductions and Objectives

ParCon, Learning Objectives

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Introductions and Objectives

Introduction of ParCon Consulting
Key Practice Areas
Agile Business Strategy Innovation and Growth Profit and Efficiency Disciplined Execution Portfolio Optimization Leadership & Team Performance
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Experience Across Industries Industries

Technology, Communications
Services Manufacturing, Industrial Finance, Insurance Agricultural Government Energy, Transportation

Sample Clients

ParCon Consulting Atlanta (HQ)

Boston
Austin San Diego

Introductions and Objectives

ParCons Team of Consultants
Your ParCon Consultant
Matthew Gill
Partner, Founder
Atlanta, GA

The ParCon Value Proposition

ParCons consultants are thought leaders with extensive experience committed to a rapid and cost effective transfer of critical capabilities that empower business leaders to drive innovative solutions that create meaningful and lasting value.

CAREER SUMMARY As Managing Partner of Atlanta based ParCon Consulting; Matt oversees the firms strategy and growth consulting practice. During a management career spanning 25 years, he held senior executive positions with Philips Electronics, ViewSonic and IBM Corporation and built a reputation as an executive capable of driving rapid growth and increasing operational efficiencies in competitive industries. In addition to his Fortune 500 experience, Gill has enjoys working with early stage & high growth companies as founder, CEO and board member. Today, Matt is a nationally recognized leader in strategic planning & management, strategy execution, and growth.
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ParCon Team Members

Stephen Scotchmer
San Diego, CA Sacramento, CA Boston, MA Boston, MA

Chuck McArthur
Barbara Theurkauf Terry Brown

Introductions and Objectives

Learning Objectives

Learning Module Objectives:

1.

Understand what a value proposition is and why its important Understand how your companys capabilities and selection of key customers influence your value proposition Look at examples of value propositions

2.

3.

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SECTION TWO

Understanding Value Propositions

Definitions, Models and FAQs

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Understanding Value Propositions

Why Companies Seek a Compelling Value Proposition

A compelling value proposition

Forces clarity around the unique combination of; needs, wants, desires and values that uniquely characterize your targeted customers, Provides the foundation for creating a compelling and differentiated offering that sets you apart from competitors, Helps you realize rapid gains in market share for important market segments by allowing you to focus your marketing and sales efforts, Allows you to customize your services and offerings; driving enhanced value creation, increased profit, and better customer satisfaction, Improve your operational efficiency by allowing the company to focus on the most important customers

"The aim of marketing is to know and understand the customer so well that the product or service fits him or her and sells itself.

Peter Drucker

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Understanding Value Propositions

Definitions and Conceptual Models

What is a value proposition?

A concise summation of the unique appeal of a product, solution, or business to a targeted set of customers or decision makers. Ideally, a value proposition differentiates the company or offering from its competition by clarifying the sum total of important benefits that customers care about and how the company can or will deliver them.

Visualizing Your Value Proposition

Your Business << The Connection >> Your Customers

What are our companys unique capabilities & competencies?

How do we identify opportunities and then articulate our value?

Who are our valued customers and what are their unmet needs?

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Understanding Value Propositions

Value Flows from What Your Company Excels at Doing
Creating sustainable value should flow from your capabilities and competencies

The Tree of Sustainable Value

Products, Services, Solutions:

The various products, services, solutions and business lines that make up a companies total offering.

Core Competencies:
A cluster of extraordinary (core) capabilities that a firm acquires from its founders, its people, and its experiences, after striving over years. Not easily imitated or even understood; they give a firm a unique competitive advantage in creating and delivering long-term value to customers.

Organizational Capabilities:
A companys abilities which tend to exist and function in isolation. While there are many capabilities required for a firm to function, they are only core if they differentiate a company strategically.

Resources:
The financial, intellectual, organizational assets that can be leveraged by an organization to conduct its business

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Understanding Value Propositions

Value Propositions are Unique to Each Set of Customers
Good value propositions are rooted in a deep understanding of the customer and market

Understanding the Customer

What is the Environment?:

Is the context within which the customer sees and understands your value proposition. It often includes things like competitive options, the level of noise the customer hears, social/political and economic influences which all impact their attitudes and biases.

Needs

Wants

What Motivates Buyers to Action?:

Action is precipitated by decision triggers. It is important to understand when and how a targeted customer might become attracted to your value proposition (identifying the point(s) of decision) and why.

Values

Desires

Who Are Our Ideal Customers?:

The unique set of customers you elect to pursue based on well considered criteria like; size, profitability, market growth, etc. Each segment has a combination of needs, wants, desires & values that you should understand and address in your value proposition.

Target Customer

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Understanding Value Propositions

What are the Dimensions of a Good Value Proposition
A value proposition is a succinct summation of how your offering meets the needs of your customer.

The Customer Value Proposition

Tangible Offerings:
The unique products, services, or solutions that are of interest to your target customers

Economic Value:
The price to acquire, life-time cost to own or enjoy, impact on revenues, costs or risks, or other tangible benefits that will be experienced by your customer

Customer Experience:
The quality, utility, brand, service, image, sense of community, or meaning your customer wants to experience

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Understanding Value Propositions

Frequently Asked Questions

Do companies have only one value proposition?

It strictly depends on the company. Many companies have limited products targeted at a single set of customers these typically have one value proposition. Companies that are larger or more complex typically have more than one value proposition because they want to address more than one customer segment or offer a broader array of products and services.

What is the relationship between a value proposition and a core competency?

We tend to view these as two sides of the same coin. Competencies (and capabilities) are inward focused elements of that drive a firms competitive advantage while the value proposition is an outward focused positioning based on the unique needs of an identified market segment.

Do you need to understand your core competencies to create a good value proposition?
In an ideal world, a company would understand both their core competencies and their customers very well. This allows the firm to link its unique competitive advantage with the value is will deliver to its chosen customers. In the real world, it is more important to start with understanding your customers and work backwards to your firms unique capabilities. Eventually core competencies will emerge because the markets will reward certain elements while ignoring others.

How long does a value proposition last?

The longevity of a value proposition depends on both the customers (or markets) and your firm. Significant changes in either can make a value proposition obsolete very quickly. Stability can mean that your value proposition can last many years or decades. The danger comes when you miss those changes that signal that its time for a major overhaul of your value proposition. Buggy whips anyone?

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SECTION THREE

Examples and Samples

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Examples and Samples

Examples of the Four Types of Value Proposition The Four Flavors of Value
Almost every value proposition ultimately comes in one of four flavors
Coca-cola is a unique product with its formula famously being a closely guarded secret. This secret formula combined with exclusive use of the coca-cola brand name means that nobody else can ever produce a coca-cola product, merely imitations of it. Thus, Coca-cola is a completely unique product. McDonalds stands for friendliness, cleanliness, consistency, and convenience. Its is this convenience or speed and the fact you always know what youre going to get which is McDonalds value proposition. Ken Croc, Founder

Our product is unique

We Make it Easier

Our price is the lowest

Dells value proposition is simple. Dell will deliver a low-cost, customized computer direct to your door. Dell can keep its prices down because of its just-in-time ordering system which minimizes stock and the need to calculate demand in advance.

We Own the Problem

IBM positions ourselves as trusted experts in technology who will work collaboratively with you. Essentially, your problem becomes our problem, and your success is our success. Its is probably this trustworthiness which leads to the adage, no one ever got fired for buying IBM.

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Appendix: Optional Slides For Client Presentations

The slides that follow may have been referenced during your presentation

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Proprietary and Confidential

Appendix
Defining Relevant Terms
Core competencies can be viewed as a cluster of extraordinary capabilities or related 'excellences' that a firm acquires from its founders, its people, and its experiences, after striving over years. Not easily imitated or often understood; they can give a firm unique competitive advantages in creating and delivering long-term value to customers. See ParCons core competency module for more insight Organizational capabilities tend to be easier to articulate and are often elements of a firms success. However they tend to exist and function in isolation and are often not extended throughout the organization. While there are many capabilities required for a firm to function, they are only core if they differentiate a company strategically. Value proposition is a concise summation of a companys unique appeal to a targeted set of customers or decision makers that differentiates the company from its competition by clarifying the sum total of important benefits that customers care about and how the company can or will deliver them. Market intelligence is the mechanism that a firm uses to systematically gather, interpret and make decisions about; who to target, why, how, and what unmet needs it intends to address. The Environment is the context within which the customer sees and understands your value proposition. It often includes things like competitive options, the level of noise the customer hears, social/political and economic influences which all impact their attitudes and biases. Decision triggers are critical in helping you understand when and how a targeted customer might become attracted to your value proposition (identifying the point of decision) and why.

Target customers are the unique customers you decide to pursue based on well considered criteria like; size, profitability, market growth, etc. Each has segment has a combination of needs, wants, desires & values you need to understand and address in your value proposition.

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Appendix
Would You Like to Learn More?
If you found this presentation helpful, ParCon Consulting has additional presentations and capabilities that may also be of value. The following may be of interest to you.
I. II. III. IV. IV.

Developing a Compelling Value Proposition for Your Business. Understanding Core Competencies and Organizational Capabilities Defining Your Organizations Core Competencies Defining and Prioritizing Markets and Customers Developing Customer Archetypes

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