8/11/2022
152.232
SMALL
BUSINESS
MANAGEMENT
DR BILL KIRKLEY
SESSION 4 – ASSESSING VALUE &
VIABILITY
Are markets
becoming polarized?
Local
High touch
Traditional
Natural/ Unprocessed
Premium Price
Risqué
Seasonal
Craft Scale
Speciality markets
Closed Supply chain
Global
High tech
New & Improved
Convenience
Health conscious
All year availability
Large Scale
Commoditised markets
Open supply chain
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We need to rethink our perceptions of markets, value creation and strategy.
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So, what is
VALUE?
REVITALIZATION:
Growth
New Business development
New Market Development
Strategic Direction
Resource Leverage
Dynamic
RESTRUCTURING:
Quality
Costs
Cycle times
Logistics
Productivity
Administrative systems
Portfolio choices
Static
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Performance Gap Opportunity Gap
Value Creation
Where is the value
here ?
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What need are they satisfying or what problem are they trying to solve?
What value is
being delivered?
What features
are part of the
offer?
For Whom? At what cost? How is the offer
different from
others?
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Do small businesses really know what ‘value’ is?
Value means different
things to …
• Different people;
• To the same people at …
Different times
of the day
Different days of
the week
When they are
with different
people
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Have a look at this …
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Where is the value
here ?
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Which one will she
select?
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Creating customer
value
Creating functional value
experiences, based on
differentiated features, that
satisfy an individual’s needs or
solve problems.
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KB1
KB2
Slide 10
KB1 Kirkley, Bill, 2/08/2021
KB2 Kirkley, Bill, 2/08/2021
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Identified value allows you to create a differentiated value
proposition …
What features
can be
increased?
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What features
can be added?
What features
can be
removed?
What features
can be
decreased?
Creating customer
value
The business offers relevant product
attributes at a reasonable transaction
cost and creates a comfortable and
convenient buying experience for the
customer.
A coordinated supply chain carries
attribute information downstream so
that value is signalled to customers and
compensation is returned upstream.
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KB1
KB2
Slide 12
KB1 Kirkley, Bill, 2/08/2021
KB2 Kirkley, Bill, 2/08/2021
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Another example:
Value Creation
Creating more value
for your customer
Value Capture
Earning the ability to
keep some of that
value
Value Dissipation
Knowing that you will
lose your competitive
advantage eventually.
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Value chain management has
three key phases …
Creating customer
value
This used to be the only way you
could enjoy a genuine Guinness …
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Creating customer
value
Remember, value means
different things to different
people at different times of the
day …
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Capturing value
So, without changing the product itself,
and by adding features, increasing the
value of others, decreasing some and
removing others altogether; Guinness
successfully captured NEW value by
changing the customer experience.
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This is what customers came
for,
This is the experience customers
had,
This is how customers relive the
experience …
BUT …
knowing about value dissipation,
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How do you maintain competitive advantage?
Key summary on
value
• Focus on the value proposition;
• Know your customer!
• Access consumer appropriate
technologies;
• Ensure incentives are aligned and
realistic;
• Understand your resources,
capacities, competencies and
strategic goals;
• Demand continuous
improvement.
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VIABILITY
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Value Disciplines – Core Business Types
Successful
Businesses excel in
one primary
discipline.
Product Leadership
(State of the Art Technology)
Operational Excellence
(Lead in Price & Convenience)
Customer Intimacy
(Tailor and Customise offers
for Individual customers)
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Where do you invest the most effort?
Products
R&D, Brand and Promotion
Costs
Optimal processing & high Efficiency
Customers
Understanding needs,
Finding solutions
Product
Leadership
Customer
Intimacy
Operational
Excellence
Common Brandingapproaches by Value
Discipline
Brand Optimization
New Technology = New Brands
“New Brands that mean performance”
Brand Minimization
Minimise Brands to Maximise Efficiency
“Brands don’t sell products, low prices do”
Brand Proliferation
Customer Experiences and Needs
Drive Brand & line extensions.
“Just the Product for you”.
Product
Leadership
Customer
Intimacy
Operational
Excellence
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Common Pricingapproaches by Value Discipline
Premium Pricing
Manufacturer perceived benefits value to customer
“Premium prices for premium performance”
Aggressive pricing
Cost + Profit expectations
“Low prices drive volume up and
costs down”
Variable pricing
Channel and/or Customer
Perceived value.
“Programs for everyone’s needs”.
Product
Leadership
Customer
Intimacy
Operational
Excellence
Developing a Customer Centric Approach
Give the Customer a Great
Product with superior performance
Help the Customer be
more efficient and Cost effective
Take responsibility for
the Customer’s Success
Product
Leadership
Customer
Intimacy
Operational
Excellence
Good PL and OE
Companies are
Customer focused!
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Performance metrics
% Gross Profit & % New Products
% ROIC% Share of Wallet
Product
Leadership
Customer
Intimacy
Operational
Excellence
Who are the
competitors and
which ones drive
the market?
What is the
market share of
each
competitor?
How many market
and sales dollars
will market
leaders spend to
compete?
What will the cost
of entry be against
incumbent
competitors?
What
performance
attributes have
customers said are
important?
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Viability – some essential questions …
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What share of
this market does
the company
want to capture
in the first three
years?
Are there
existing
standards and
which
competitor is
driving them?
Does the company
seek to embrace
these standards,
extend them or
replace them?
What are the
markets adjacent
to the one being
created?
What markets will
potential
customers come
from?
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Viability – some essential questions …
What ‘never
could have been
done before’ will
make customers
use / buy?
How long will it
take to educate
potential
customers to
grow a market
of sufficient
size?
How will the
company educate
the market? How
will it create
demand?
What are realistic
sales forecasts for
the first three
years?
How much
financing will it
take to push
through while
educating and
growing the
market?
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Viability – some essential questions …
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THANK YOU
QUESTIONS?