Value Merchants. Nirmalya Kumar

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СКАЧАТЬ and government agencies in Belgium, the Netherlands, and Luxembourg. One feature of a particular chromatograph, a patented injection system, enabled R&D lab customers to maintain sample integrity by avoiding high-temperature vaporization, eliminating the risk of thermal degradation, enhancing test discrimination, and permitting the use of volatile solvents. Seeking growth, the firm began to market the most basic model of this chromatograph to a new market (application) segment for the firm: contract laboratories.

      In initial meetings with prospective contract lab customers, the firm’s salespeople touted the injection system feature and its benefit of maintaining sample integrity. The prospects scoffed at this, stating that they were doing routine testing of soil and water samples for environmental regulation compliance, for which maintaining sample integrity was not a concern, and that room-temperature sample injection served their requirements adequately. The supplier was taken aback and forced to rethink its value proposition.

      Another pitfall of the all-benefits proposition is that many, if not most, of the benefits may be points of parity with the next-best alternative, diminishing the effect of the few actual points of difference. An international engineering consulting firm was bidding for a light-rail project, and on the last chart of its presentation to the prospective municipal client, it listed the ten reasons why the municipality should award it the project. The other two finalist firms, though, could make most of the same claims because they were points of parity. Put yourself, for a moment, in the place of the prospective client. Suppose each firm, at the end of its presentation, gives ten reasons why you ought to award it the project. The lists are almost the same. How do you resolve the impasse? By asking each of the firms to “sharpen their pencils” and give a final best price. You then award the project to the firm that gives the largest price concession. Any distinctiveness that does exist between firms has been overshadowed by the greater overlapping sameness.

      Favorable Points of Difference

      The second customer value proposition, favorable points of difference, explicitly recognizes there is an alternative open to the customer. The recent experience of a leading industrial gas supplier underscores this distinction. It received a request for proposal from a customer for a major piece of business stating that the two or three suppliers that could demonstrate the most persuasive value propositions in their proposals would be invited to visit the supplier and to discuss and refine their proposals. After the meeting, the customer would select a supplier for this business.

      As this example illustrates, “Why should our firm purchase your offering instead of your competitor’s?” is a more pertinent question than “Why should our firm purchase your offering?” Why? Because the former question focuses supplier managers on differentiating their offering from the next-best alternative, which requires more detailed knowledge of it. A characteristic that the favorable-points-of-difference proposition shares with the all-benefits proposition, though, is that more is regarded as better, so supplier managers strive to list as many favorable points of difference as they can.

      Knowing that an offering element is a point of difference relative to the next-best alternative does not, however, convey what the value of this difference is to target customers. Further, a supplier’s market offering may have several points of difference relative to the next-best alternative, which complicates understanding which of them delivers the greatest value to target customers. Without a detailed understanding of the customer’s requirements and preferences, and what it is worth to fulfill them, suppliers may stress points of difference that deliver relatively little value to the target customer. Each of these can lead to the potential pitfall of value presumption : assuming that favorable points of difference must be valuable for the customer. Our opening anecdote in chapter 1 about the IC supplier that unnecessarily discounted its price nicely illustrates the likely outcome when supplier salespeople stress favorable points of difference that actually have little value for the customer.

      Resonating Focus

      Although we contend that a favorable-points-of-difference proposition is preferable to an all-benefits proposition, we further contend that the third customer value proposition alternative, resonating focus, is the most preferred. We will go even further: the resonating-focus value proposition should be the gold standard for judging customer value propositions.

      In a business world where customer managers are taking on greater responsibility and are increasingly pressed for time, to be successful, suppliers must deliver customer value propositions that are simple, yet powerfully captivating. They do this by making their offerings superior on the few elements whose functionality or performance matter most to target customers, by demonstrating and documenting the value of this superior performance, and by communicating it to customer managers in a way that conveys that the supplier understands the customers’ business concerns and priorities. The resonating-focus customer value proposition consists of the one or two points of difference, and perhaps a point of parity, that deliver the greatest value to target customers.

      This proposition differs from the favorable-points-of-difference proposition in two significant respects. First, more is not better. Although a supplier’s offering may possess other favorable points of difference relative to the next-best alternative, the resonating-focus proposition steadfastly concentrates on the one or two points of difference that deliver, and whose improvement will continue to deliver, the greatest value to target customers. To better leverage limited resources, a supplier might even cede to the next-best alternative previous favorable points of difference that customers value the least, so that the supplier can concentrate its resources on improving the one or two points of difference customers value most.

      Second, the resonating-focus proposition may contain a point of parity. This occurs either when the point of parity is required for target customers even to consider the supplier’s offering or when a point of contention, where the next-best alternative was thought to be superior but research reveals it is not, is resolved in the supplier’s favor.

      To give practical meaning to the resonating-focus value proposition, let’s consider a few examples. Sonoco approached a large European customer, a maker of consumer packaged goods, about redesigning the packaging for one of its product lines. Sonoco believed that the customer would profit from updated packaging, and by proposing the initiative itself, the company reinforced its reputation as an innovator. Although the redesigned packaging provided six favorable points of difference relative to the next-best alternative, Sonoco chose to emphasize one point of parity and two points of difference in its resonating-focus value proposition.

      Sonoco’s value proposition to the customer was that the redesigned packaging would have the same price as the present packaging but deliver significantly greater manufacturing efficiency in the customer’s fill lines through higher-speed closing and provide a distinctive look that consumers would find more appealing than the present packaging.

      Sonoco chose to include a point of parity in its value proposition because, in this case, the customer would not even consider a packaging redesign if the price were to increase. The first point of difference in the value proposition delivered cost savings to the customer, allowing it to move from a seven-day, three-shift production schedule during peak times to a two-shift, five-day operation. The second point of difference in the value proposition delivered an advantage at the consumer level, helping the customer incrementally grow its revenues and profits. In persuading the customer to change to the redesigned packaging, Sonoco did not neglect to mention the other favorable points of difference. Rather, it chose to place much greater emphasis on the one point of parity and the two points of difference that mattered most to the customer, thereby delivering a value proposition with resonating focus.

      Stressing as a point of parity what customers mistakenly presume to be a point of difference favoring a competitor’s offering can be an essential part of constructing a customer value proposition that has a resonating focus. Take the СКАЧАТЬ