Value Merchants: Demonstrating and Documenting Superior Value in Business Markets by James C. Anderson;Nirmalya Kumar;James A. Narus

Author:James C. Anderson;Nirmalya Kumar;James A. Narus
Language: eng
Format: mobi
Published: 2009-04-16T17:52:00+00:00

New elements that also are likely candidates for inclusion in the standard offering are those for which (1) most of the costs are incurred in their initial development or deployment; (2) continuing costs vary relatively little over the number of customers actually using the element; or (3) usage of the element in some way reduces the supplier's own costs.

Introduce as a value-added option. Offering new elements separately provides value-added options for customers that seek them and allows suppliers to readily gauge interest in new services, programs, and systems. For example, although R.R. Donnelley's traditional business has focused on printing, binding, film preparation, and prepress work, its management believes that future growth and profits will come from innovative services, such as database management, consulting and training, dimensional and talking ads, direct marketing, layout systems, and mapping services. To test their viability in the marketplace, Donnelley has offered these services as value-added options.

Break Away from the Pack

In our management practice research, a number of managers wistfully expressed a desire for change but were concerned about what competitors would do. These managers believed their competitors were looking to improve profitability too but that they wouldn't match a move to make more flexible market offerings. In addition, these managers had timing and discipline concerns. Before taking up these last two concerns, though, we consider breaking away as a means of countering competitors' dubious parity claims.

One way to break away from the pack (which also works for services included in the standard offering) is to guarantee outcomes based on the service. The larger and more complicated the list of services a firm markets, the more likely it is that competitors will claim, "We can do that." When this occurs, savvy marketers respond by transforming service claims into guarantees. For instance, when Okuma's competitors began to promise rapid delivery, Okuma announced its twenty-four-hour shipment guarantee. If a customer orders a part and it is not shipped in twenty-four hours, the customer gets the part for free. Greif Inc. takes the guarantee one step further, introducing a guaranteed cost-savings program. If a customer requests that it be given a 5 percent price cut, the division guarantees to find at least a 5 percent cost savings. This is formalized into a written contract. If the customer doesn't realize the 5 percent savings, Greif agrees to pay the difference. If more than 5 percent of savings is found, the customer gets to keep it all. To date, Greif has had no problem delivering as guaranteed. Furthermore, managers find that it's a great way to turn discussions away from price.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.