Building Effective Value Propositions
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When is it optimal for a firm to consider buying technology?

  • When technology has already been developed and time savings are important (correct)
  • When there is a high potential for risk in technology development
  • When the firm's culture promotes R&D efforts
  • When the R&D area is close to current skills

    • The NIH syndrome is the primary driver of decision-making regarding R&D efforts.

    False

    What is the main focus of a technology map?

    Managing technology resources

    A firm may choose to __________ technology when it is risk-averse and the R&D area is not close to current skills.

    <p>buy</p> Signup and view all the answers

    Which of the following is NOT a reason for partnering with another firm?

    <p>A long-term partnership is undesirable</p> Signup and view all the answers

    Match the decision-making options with their descriptions:

    <p>License = Allowing other firms to use technology for a fee Commercialize = Transforming know-how into revenue through sales Sell proof of concept = Offering a demonstration of feasibility Sell final products = Providing complete products ready for market</p> Signup and view all the answers

    Marketing risk involves the risk associated with production costs.

    <p>False</p> Signup and view all the answers

    What are two of the five possible options for a firm's 'what-to-sell' strategy?

    <p>Sell or license know-how only, Sell commercial-grade components to OEMs</p> Signup and view all the answers

    Which strategy is recommended when the components are incompatible with current industry standards?

    <p>License the technology</p> Signup and view all the answers

    Selling a complete solution is appropriate if the market has insufficient funds.

    <p>False</p> Signup and view all the answers

    What does a technology map help in managing?

    <p>Technology resources</p> Signup and view all the answers

    The major corporate buyers often require a second __________.

    <p>source</p> Signup and view all the answers

    Match the following conditions with their corresponding terms:

    <p>Insufficient funds = Sell the solution Tight window of opportunity = License the technology Market potential smaller than planned = Proof of Concept Low likelihood of profitability = Commercialize</p> Signup and view all the answers

    Which of the following is NOT a step in managing technology resources according to the technology map?

    <p>Market Research</p> Signup and view all the answers

    Killing projects is an acceptable action in managing technology.

    <p>True</p> Signup and view all the answers

    What should a firm do when it experiences increasing returns characterized by direct network externalities?

    <p>Sell or commercialize solutions</p> Signup and view all the answers

    When the technology does not fit the mission, the strategy might involve ________ to make it an industry standard.

    <p>selling</p> Signup and view all the answers

    Match the following components with their corresponding actions:

    <p>Proof of Concept = Sell Complete Solution = Commercialize Components = Sell Full Product = License</p> Signup and view all the answers

    What is the Sunk Cost Effect?

    <p>The reluctance to reverse decisions that led to negative outcomes due to prior investments.</p> Signup and view all the answers

    What is one way to potentially mitigate the Sunk Cost Effect in joint ventures?

    <p>Establishing a maximum sunk cost limit.</p> Signup and view all the answers

    The Confirmatory Bias leads individuals to interpret information that contradicts their expectations.

    <p>False</p> Signup and view all the answers

    In product management, the process of tailoring features to attract specific market segments is known as __________.

    <p>customization</p> Signup and view all the answers

    Which of the following is a characteristic of a modular product?

    <p>It consists of independent smaller subsystems.</p> Signup and view all the answers

    Match the following biases with their definitions:

    <p>Sunk Cost Bias = Reluctance to abandon projects with prior investments Confirmatory Bias = Interpreting information to support prior expectations Groupthink = Peer pressure to conform to decisions, leading to poor choices</p> Signup and view all the answers

    Platforms and derivatives offer a common architecture that may result in new product spin-offs.

    <p>True</p> Signup and view all the answers

    Name one potential risk associated with the Sunk Cost Effect.

    <p>Escalation of commitment to failing projects.</p> Signup and view all the answers

    __________ involves making a decision based on preconceived notions rather than objective data.

    <p>Confirmatory Bias</p> Signup and view all the answers

    What is a common strategy used in ongoing product management?

    <p>Creating a common architecture for derivative products.</p> Signup and view all the answers

    Which type of value proposition focuses on the unique benefits of a product?

    <p>Favorable Points of Difference</p> Signup and view all the answers

    Value propositions are only developed for one specific market segment.

    <p>False</p> Signup and view all the answers

    Match the following critical mistakes firms make with their descriptions:

    <p>Don’t focus = Ignoring core customer needs Don’t listen = Failing to gather feedback Don’t quantify = Lacking measurable outcomes Don’t research = Neglecting market analysis Don’t remember behavioral = Overlooking consumer habits</p> Signup and view all the answers

    What is versioning in product strategy?

    <p>The practice of offering a range of products built on a common core</p> Signup and view all the answers

    Advertising does not influence consumer expectations.

    <p>False</p> Signup and view all the answers

    What is the purpose of a value proposition?

    <p>To capture the essence of why a customer chooses a product.</p> Signup and view all the answers

    The _____ Proposition is a statement that captures the essence of why a customer chooses a product.

    <p>Value</p> Signup and view all the answers

    Match the following studies with their focus:

    <p>Deighton's study = Advertising effects on expectations Hoyer and Brown's study = Brand influence on preferences Montague’s study = Cognitive associations of brands Hoeffler and Ariely's study = Initial anchors in consumer behavior</p> Signup and view all the answers

    Which factor does NOT help in setting consumer expectations?

    <p>Weather conditions</p> Signup and view all the answers

    Product Differentiation Curve refers to how a product varies from its competitors.

    <p>True</p> Signup and view all the answers

    What are the three key questions that formulate a value proposition?

    <p>Who are our customers? How do we deliver that value? What value do we offer our customers?</p> Signup and view all the answers

    The _______ allows companies to differentiate their product offerings to cater to specific customer segments.

    <p>Product Differentiation Curve</p> Signup and view all the answers

    What is one benefit of versioning strategies?

    <p>Addressing distinct consumer segments</p> Signup and view all the answers

    Study Notes

    R&D and Corporate Strategy

    • Proximity of R&D to existing corporate skills is important for effective innovation.
    • Maintaining confidentiality regarding position and strategies fosters competitive advantage.
    • A strong internal culture that encourages R&D efforts enhances innovation outcomes.
    • The NIH syndrome is not the primary factor influencing decision-making in R&D contexts.

    Make-or-Buy Decision Framework

    • Criteria for purchasing technology include pre-developed technology, risk aversion, and potential for synergy with branded components.
    • Opting to partner is favorable when the partner offers multiple essential components, has additional resources, and a long-term relationship is advantageous.

    Technology Mapping Steps

    • Step 1 involves identifying necessary technology for development and implementation.
    • Step 2 includes making decisions about technology additions, considering licensing versus commercialization.
    • Ongoing product management emphasizes product modularity, derivative platforms, and customization to target diverse segments.

    Ongoing Product Management Strategies

    • Modularity allows for complex products to be built from smaller, independently created subsystems.
    • Platforms and derivatives help in creating a common architecture that encourages product spin-offs.
    • Customization caters to specific market segments by adding specialized features.
    • Project termination can be hindered by biases, such as the sunk cost effect, confirmatory bias, and groupthink.

    Sunk Cost Effect

    • The sunk cost effect results in reluctance to abandon projects due to previously invested resources, often complicating project exit strategies.
    • Clear contractual limits on potential sunk costs can mitigate escalation of commitment in joint ventures.

    Confirmatory Bias

    • Individuals are prone to interpret new information in ways that confirm existing beliefs, which may influence decision-making processes and product assessments.

    Versioning Strategy

    • Versioning involves creating a range of products based on a core design to serve distinct consumer segments effectively.
    • It enhances market reach and caters to varying customer needs through differentiation.

    Value Proposition Development

    • Crafting a compelling value proposition requires understanding customer demographics, assessing how value is delivered, and articulating the unique offerings.
    • Value propositions can take multiple forms, such as “All Benefits,” “Favorable Points of Difference,” and “Resonating Focus.”

    Common Mistakes in Value Propositions

    • Firms often fail to:
      • Focus on core benefits for the customer.
      • Listen to customer feedback effectively.
      • Quantify value derived from products.
      • Conduct adequate research to inform decisions.
      • Consider behavioral science in understanding consumer choices.

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    Description

    This quiz explores the three types of value propositions: 'All Benefits', 'Favorable Points of Difference', and 'Resonating Focus'. Understand how to tailor value propositions for different market segments and the importance of developing unique propositions for each product. Test your knowledge of marketing strategies and value creation!

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