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ParCon Consulting, LLC

Understanding Value Propositions
A ParCon Learning Module
May 23, 2011
Revision 1.0

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Achieving Strategic Agility Content Overview I. Some Examples of Value Propositions Appendix Copyright ParCon Consulting. II. LLC | Page 2 . Introductions & Objectives What is a Value Proposition III. IV.

LLC | Page 3 . Learning Objectives Copyright ParCon Consulting.SECTION ONE Introductions and Objectives ParCon.

Transportation Sample Clients ParCon Consulting Atlanta (HQ) Boston Austin San Diego . LLC | Page 4 Experience Across Industries Industries Technology. Communications Services Manufacturing. Insurance Agricultural Government Energy.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 Copyright ParCon Consulting. Industrial Finance.

Copyright ParCon Consulting. he held senior executive positions with Philips Electronics. strategy execution. LLC | Page 5 ParCon Team Members Stephen Scotchmer San Diego. CEO and board member. Gill has enjoys working with early stage & high growth companies as founder. During a management career spanning 25 years. CA Boston. MA Chuck McArthur Barbara Theurkauf Terry Brown . Matt is a nationally recognized leader in strategic planning & management. GA The ParCon Value Proposition ParCon’s 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. CA Sacramento. Founder Atlanta. MA Boston. CAREER SUMMARY As Managing Partner of Atlanta based ParCon Consulting. Today. and growth.Introductions and Objectives ParCon’s Team of Consultants Your ParCon Consultant Matthew Gill Partner. Matt oversees the firm’s strategy and growth consulting practice. In addition to his Fortune 500 experience. ViewSonic and IBM Corporation and built a reputation as an executive capable of driving rapid growth and increasing operational efficiencies in competitive industries.

Copyright ParCon Consulting. LLC | Page 6 . Understand what a value proposition is and why it’s important Understand how your company’s capabilities and selection of key customers influence your value proposition Look at examples of value propositions 2.Introductions and Objectives Learning Objectives  Learning Module Objectives: 1. 3.

SECTION TWO Understanding Value Propositions Definitions. LLC | Page 7 . Models and FAQs Copyright ParCon Consulting.

LLC | Page 8 . driving enhanced value creation. desires and values that uniquely characterize your targeted customers.”  Peter Drucker  Copyright ParCon Consulting. and better customer satisfaction. Helps you realize rapid gains in market share for important market segments by allowing you to focus your marketing and sales efforts. wants. increased profit.Understanding Value Propositions Why Companies Seek a Compelling Value Proposition A compelling value proposition…  Forces clarity around the unique combination of. needs. Provides the foundation for creating a compelling and differentiated offering that sets you apart from competitors. Allows you to customize your services and offerings. 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.

solution. or business to a targeted set of customers or decision makers. 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. LLC | Page 9 . Visualizing Your Value Proposition Your Business << The Connection >> Your Customers What are our company’s unique capabilities & competencies? How do we identify opportunities and then articulate our value? Who are our valued customers and what are their unmet needs? Copyright ParCon Consulting. Ideally.Understanding Value Propositions Definitions and Conceptual Models  What is a value proposition? A concise summation of the unique appeal of a product.

its people. they are only core if they differentiate a company strategically. and its experiences. LLC | Page 10 .  Organizational Capabilities: A company’s abilities which tend to exist and function in isolation.  Core Competencies: A cluster of extraordinary (core) capabilities that a firm acquires from its founders. Solutions: The various products. While there are many capabilities required for a firm to function. services. solutions and business lines that make up a companies total offering. intellectual. after striving over years. organizational assets that can be leveraged by an organization to conduct its business Copyright ParCon Consulting. they give a firm a unique competitive advantage in creating and delivering long-term value to customers.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. Not easily imitated or even understood.  Resources: The financial. Services.

desires & values that you should understand and address in your value proposition. It often includes things like competitive options. profitability. social/political and economic influences which all impact their attitudes and biases. Each “segment” has a combination of needs. 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. Needs Wants  What Motivates Buyers to Action?: Action is precipitated by decision triggers. wants. etc. Values Desires  Who Are Our Ideal Customers?: The unique set of customers you elect to pursue based on well considered criteria like. Target Customer Copyright ParCon Consulting. market growth.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. LLC | Page 11 . the level of noise the customer hears. size.

or other tangible benefits that will be experienced by your customer  Customer Experience: The quality. sense of community.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. brand. or solutions that are of interest to your target customers  Economic Value: The price to acquire. or meaning your customer wants to experience Copyright ParCon Consulting. service. image. impact on revenues. services. LLC | Page 12 . costs or risks. utility.  The Customer Value Proposition Tangible Offerings: The unique products. life-time cost to own or enjoy.

Understanding Value Propositions Frequently Asked Questions  Do companies have only one value proposition? It strictly depends on the company. Competencies (and capabilities) are inward focused elements of that drive a firm’s competitive advantage while the value proposition is an outward focused positioning based on the unique needs of an identified market segment. Significant changes in either can make a value proposition obsolete very quickly. This allows the firm to link its unique competitive advantage with the value is will deliver to its chosen customers. 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. Many companies have limited products targeted at a single set of customers – these typically have one value proposition. Eventually core competencies will emerge because the markets will reward certain elements while ignoring others. LLC | Page 13 . a company would understand both their core competencies and their customers very well. Stability can mean that your value proposition can last many years or decades. it is more important to start with understanding your customers and work backwards to your firm’s unique capabilities. The danger comes when you miss those changes that signal that it’s time for a major overhaul of your value proposition.  What is the relationship between a value proposition and a core competency? We tend to view these as two sides of the same coin.  How long does a value proposition last? The longevity of a value proposition depends on both the customers (or markets) and your firm. In the real world.  Do you need to understand your core competencies to create a good value proposition? In an ideal world. Buggy whips anyone? Copyright ParCon Consulting.

SECTION THREE Examples and Samples Copyright ParCon Consulting. LLC | Page 14 .

It’s is this convenience or speed and the fact you always know what you’re going to get which is McDonald’s value proposition. merely imitations of it. Essentially. It’s is probably this trustworthiness which leads to the adage. LLC | Page 15 . customized computer direct to your door. cleanliness. and your success is our success. Thus. Coca-cola is a completely unique product. Copyright ParCon Consulting. and convenience”. We Own the Problem IBM positions ourselves as trusted experts in technology who will work collaboratively with you. Founder Our product is unique We Make it Easier Our price is the lowest Dell’s value proposition is simple. “McDonalds stands for friendliness. your problem becomes our problem. Dell can keep its prices down because of it’s just-in-time ordering system which minimizes stock and the need to calculate demand in advance. “no one ever got fired for buying IBM”. This secret formula combined with exclusive use of the coca-cola brand name means that nobody else can ever produce a coca-cola product. Ken Croc.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 it’s formula famously being a closely guarded secret. consistency. Dell will deliver a low-cost.

Appendix: Optional Slides For Client Presentations The slides that follow may have been referenced during your presentation 2011 Copyright Accept Corporation | Slide 16 Proprietary and Confidential .

See ParCon’s core competency module for more insight Organizational capabilities tend to be easier to articulate and are often elements of a firm’s success. Market intelligence is the mechanism that a firm uses to systematically gather. While there are many capabilities required for a firm to function. wants. Each has “segment” has a combination of needs. profitability. Not easily imitated or often understood. interpret and make decisions about. LLC | Page 17 . However they tend to exist and function in isolation and are often not extended throughout the organization. how. why. market growth. after striving over years. desires & values you need to understand and address in your value proposition. The Environment is the context within which the customer sees and understands your value proposition. they are only core if they differentiate a company strategically. etc. the level of noise the customer hears. It often includes things like competitive options. and its experiences. 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. size. its people. and what unmet needs it intends to address. Copyright ParCon Consulting. Value proposition is a concise summation of a company’s 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. social/political and economic influences which all impact their attitudes and biases.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. Target customers are the unique customers you decide to pursue based on well considered criteria like. who to target. they can give a firm unique competitive advantages in creating and delivering long-term value to customers.

IV. III. Developing a Compelling Value Proposition for Your Business. LLC | Page 18 . ParCon Consulting has additional presentations and capabilities that may also be of value. IV. I. Understanding Core Competencies and Organizational Capabilities Defining Your Organizations’ Core Competencies Defining and Prioritizing Markets and Customers Developing Customer Archetypes Copyright ParCon Consulting.Appendix Would You Like to Learn More? If you found this presentation helpful. The following may be of interest to you. II.