Chapter 6: Adapt Your Value Proposition PDF

Stuvia - Koop en Verkoop de Beste Samenvattingen Chapter 6: Adapt your value proposition If your company does not take advantage of a new opportunity to offer value to your customers, someone else will. From Value proposition defined by industry Optimize your business model as long as possible Judg...

Stuvia - Koop en Verkoop de Beste Samenvattingen Chapter 6: Adapt your value proposition If your company does not take advantage of a new opportunity to offer value to your customers, someone else will. From Value proposition defined by industry Optimize your business model as long as possible Judge change by how it impacts your current business Market success allows for complacency To (digital) To Digital Value proposition defined by changing customer needs Evolve before you must, to stay ahead of the curve Failures are learned from, early and cheaply ‘’only the paranoid survive’’ The fifth and final domain of digital transformation is your business’s value to its customers. This chapter explores how businesses manage to adapt their value proposition, why every business should adapt before it needs to, and why many firms fail to do so. It compares different concepts for thinking strategically about your value to the market. And it examines the organizational barriers that may be preventing your business from adapting how it serves customers Three routes out of a shrinking market position There may be many reasons that businesses face a declining market. • • • New technologies can bring rapid changes in customer needs, the appearance of substitute offerings, or a decline in the relevance of a once-valued product or service Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen The dynamics and challenges of each route are: 1. New customers (Same value) - This can be extremely difficult in an era where markets are already relatively flat and open (with even small businesses using digital communications to sell around the world). But in some cases, creative thinking can identify a new customer or use case for the same value that your business has been offering. 2. New value (Same customers) - The second route out of a shrinking market is to continue serving your same customers but to adapt your value proposition to stay relevant to their changing needs. - For example, what real estate agents have done as they continually find new ways to stay relevant to home sellers and buyers. - And what the recorded music industry did once it begrudgingly teamed up with Apple to launch the iTunes Store for music consumers 3. New value & New customers - A third route out of a shrinking market may be possible with both new value and new customers. - Usually, this may come when a dramatic shift in the value proposition succeeds in capturing a new market of customers In the digital age, a mature business that is facing decline is less likely to uncover some previously unreached markets for its same products and services. Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen Adapt before you must Only those firms that adapt their value propositions even when they appear to be doing good will survive. Five concepts of market value Value proposition is just one of several strategic concepts available for thinking about your offerings and value to the market. But it is a particularly useful, and underutilized, concept. To better understand the concept of value proposition, let’s compare it with four of the most common ways of thinking about market value. 1. Product: Product thinking is useful when making decisions about design, launch dates pricing, and other factors as you prepare to go to the market. 2. Customer: thinking about your business in terms of your customers – who they are and how they differ from each other. 3. Use case: about the context within which a customer utilises your product or service 4. Job to be done: Concern is the purpose of the customer using a product 5. Value proposition: concept that defines the benefits received by a customer from a company’s offering. Tool: the value proposition roadmap ➢ The Value Proposition Roadmap is a tool that any organization can use to assess and adapt its value proposition for its customers. You can use it to identify new and emerging threats as well as new opportunities to create value for your customers The Value Proposition Roadmap uses a six-step process to map out new options for your business: Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen Step 1: Identify key customer types by value received - The first step is to identify your key customer types, distinguished by the different kinds of value they receive from your business. Step 2: Define current value for each customer type - This starts with a list of value elements—the various benefits that each customer type gains from the relationship with your business. Then, write a summary statement of the value that this type of customer receives from your business—the overall value proposition Step 3: Identify emerging threats Now that you understand your current value to customers, it is important to understand emerging threats that could undermine it. - They could do so by competing with the value you offer, substituting for it, or simply making it less important to your customers. - Not just factors you know will undermine your business, but simply ones that might have that potential. 3 sources to consider for potential threats to your current value proposition - 1. New technologies: Emerging technologies that seem relevant to your industry (e.g., the MP3 compression format for the recorded music industry). 2. Changing customer needs: changes in consumers’ habits, lifestyles, and social behaviours (e.g., due to new regulations, Mohawk Fine Papers its clients did not have to print their documents anymore, thus not needing Mohawk’s paper). Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen 3. New competitors and substitutes: an asymmetric competitor may enter from another industry Step 4: Assess the strength of current value elements Assess the strength of the specific elements of value that you provide. For each element that you listed, ask 3 questions: • Are there any ways that this is a source of decreasing value to the customer? • Are there any ways that this is a source of increasing value to the customer? • What is the overall verdict based on the two questions above? Step 5: Generate new potential value elements To generate new value elements that you could offer to your customers, look in three areas: 1. New technologies 2. Trends in your customers sociocultural or business environment: customer lifestyle and business trends may provide opportunities for you to create value, even with the same products. 3. Unmet customer needs: get close to your customers and observe them directly. You’re sure to find some unmet needs that no one is fulfilling. Step 6: Synthesize a new forward-looking value proposition Synthesize everything you’ve learned about your value proposition for each customer type. Organizational challenges of adapting your value proposition - Adapting a business’s value proposition requires the business to step outside the inward-looking habit of focusing on its own products and processes and, instead, to take the point of view of the customer. - A larger or longer-established organization may find it much harder to gain a clear view of its value to the customer and of the opportunity, and necessity, to adapt while it still has the change 1. Dedicating leadership - Someone needs to be in charge of acting on the new opportunities. - If an idea is praised for its potential, there should be Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen someone in charge of turning these innovative ideas for new customer services into a reality. 2. Allocating talent and treasure - Another challenge is the need to allocate the necessary human and financial resources away from existing areas of business and into new, unproven ventures. - Financial resources need to be allocated carefully to support the evolution to new value propositions. 3. Avoiding myopia - Perhaps the biggest challenge to adapting the value proposition of an organization is that it requires looking beyond the conventional wisdom of its current business. - ‘’that’s not how we do things around here’’ = Wrong - Avoiding myopia requires a business to take the customer’s point of view rather than - its own. Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen?