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Break Out of the Commoditization Trap - How to Create, Communicate, Capture and Deliver Value
Transcript of Break Out of the Commoditization Trap - How to Create, Communicate, Capture and Deliver Value
© 2010 Trajectory Group • Confidential & Proprietary 1
ACC 2011 Meeting, March 16-17, 2011
How to break out of the
commoditization trap?
Presented by Ralf Hug, President
Trajectory Group LLC
© 2010 Trajectory Group • Confidential & Proprietary 2
Your competition copied your winning features and is underselling you by a wide margin. Customers once delighted by your innovation/quality are now only interested in your price. Your largest customers are aggressively using bargaining power squeezing your prices and margins impacting your profitability. AND your marketing has become powerless!
Sound familiar?
© 2010 Trajectory Group • Confidential & Proprietary 4
A Company With a Price Advantage
Can Be Undercut!
A Company With a Performance Advantage
Can Be Out Flanked!
But, a Company Owning the Category‟s USP
(Unique Selling Proposition)
Can Potentially Demand a Price Premium . . . Forever!
THINK ABOUT THIS…
© 2010 Trajectory Group • Confidential & Proprietary 5
DIFFERENTIATE
OR
DIE
ESCAPE
BY REINVENTING THE VALUE PROPOSITIONS
© 2010 Trajectory Group • Confidential & Proprietary 6
DEVELOP, COMMUNICATE, DELIVER AND CAPTURE VALUE
Customer Value Proposition
Profit Formula Key
Resources Key
Processes
Value Propositions can be copied. Companies need to (re-) architect the organizational system in ways that allow them to effectively deliver the value
proposition, and create a unique defensible position!
The Four-Box
Business Model
Framework
Source: Seizing the White Space: Business Model Innovation for Growth and Renewal, Mark W. Johnson , 2010
© 2010 Trajectory Group • Confidential & Proprietary 7
BUILDING A BUSINESS MODEL
START
KEY
RESOURCES
Brand
People
Technology
Partnerships
Channel
KEY
PROCESSES
R&D
Manufacturing
HR
Marketing
IT
CUSTOMER
VALUE
PROPOSITION
Solving important
customer problems
Satisfying Customer
Needs
PROFIT
FORMULA
Cost Structure
Revenue Model
Target Unit Margin
Resource Velocity
Audi etron
$160,000
Tata Nano
$2,500
Source: Adapted from HBR Jan-Feb 2011 New
Business Models in Emerging Markets
© 2010 Trajectory Group • Confidential & Proprietary 8
What value do we deliver?
What problems are we solving?
Which customer needs are we
satisfying?
What product bundles are we offering
each customer segment? Cu
sto
mer
Se
gm
en
t
Valu
e P
rop
os
itio
n
Customer Relationship
Channel
How to develop, communicate, and deliver VALUE!
Source: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Alex Osterwalder, 2010
© 2010 Trajectory Group • Confidential & Proprietary 9
DEVELOPING VALUE PROPOSITION
Need
Customer
Satisfaction Low
High
Low High
Identifying an
Unfulfilled Need
Inherent Features 1. Must have
2. Everyone has
Value Adding Features 1. Customer Values
2. Willing to Pay for it
3. Can’t get elsewhere
Gaining Competitive Advantage
and Differentiation
Unimportant
Critical
Inferior Superior
Feature 2
Feature 3
Feature 1
Competitor1
Competitor2
Differentiation on
Important Features
Value is created when product attributes match specific customer needs.
© 2010 Trajectory Group • Confidential & Proprietary 10
Quality/
Performance
Low
High
Low High
Price/
Cost
Value Line
Creating Unique Positions
on Value Space Map
Quality/
Performance
Low
High
Low High
Price/
Cost
Value Line
Price/Value
A value map defines the relative position of different companies in an industry along the cost (price)/performance (quality) axis
The value line/frontier defines the maximum performance currently feasible for any given price/cost (to the customer/consumer)
Quality/
Performance
Low
High
Low High
Price/
Cost
Value Lines
Shift
value
frontier
Extending, reinventing or
shifting the value frontier
DEVELOPING VALUE PROPOSITION
© 2010 Trajectory Group • Confidential & Proprietary 11
Paradigm Shift
The most powerful competitive differentiators in today’s marketplace speak not only to functional benefits,
but also … and perhaps most importantly … to some meta benefit, above and beyond the functioning of
the product itself.
© 2010 Trajectory Group • Confidential & Proprietary 12
RE-INVENTING YOUR VALUE PROPOSITION
Value + =
Points of Parity
(“Me-too”)
Points of Difference
Resonating Focus
Touchpoints
Impact of Social
Media
Outbound
vs.
Inbound
Marketing
Old vs. New Media
Impact of Social
Media
Product/Service Attributes
Functionality
Quality
Price
Timeliness
Tangible
Image Relationship Meta Benefit + +
Intangible
Brand
Reputation
Delivery
Response
Perception
Delight
Peace of Mind
Solving
Customer
Problems
Satisfying
Customer
Needs
Experience
Eco-”system”
End-to-End
Solution
© 2010 Trajectory Group • Confidential & Proprietary 13
What value do we
deliver?
What problems are we
solving?
Which customer needs
are we satisfying?
What product bundles
are we offering each
customer segment?
For whom are we
creating value?
Who are our most
important customers?
Cu
sto
mer
Se
gm
en
t
Valu
e P
rop
os
itio
n
What type of relationship does each of
our Customer Segments expect us to
establish and maintain?
How costly are they?
How integrated with the rest of our
business?
Customer Relationship
Through which channels do we reach our
Customers?
How are our Channels integrated?
Which ones work best?
Which are the most cost effective?
Channel
How to develop, communicate, and deliver VALUE
Source: Business Model Generation:
A Handbook for Visionaries, Game
Changers, and Challengers ,
Alex Osterwalder, 2010
© 2010 Trajectory Group • Confidential & Proprietary 14
COMMUNICATING VALUE - THE BUYING PROCESS
Awareness Consideration Purchase
Delivery
Ownership
Experience
Repurchase
Decision
Retention Avoidable
Defections
Natural
Defections
Referral
“Word of Mouth”
1. If customers aren‟t aware of you, they can‟t consider you.
2. If they don‟t consider you, they can‟t prefer you.
3. If they don‟t prefer you, they won‟t purchase/consume from you.
4. If they don‟t purchase/consume from you, they can‟t experience
your competitively superior products and services and be retained.
© 2010 Trajectory Group • Confidential & Proprietary 15
Channel Facing Tactics:
Awareness Inquiry Order/Purchase Delivery Owner Experience Repurchase
Pre-POS POS Owner Repurchase
Consumer Lifecycle
Strategic Focus
MATCHING PROGRAMS WITH PROCESS
Educating and positioning
Press/Media/Trade show, special event participation
Updates and new product
Direct Mail/Cross-sell/up-sell
Keywords, Links, AdWords
Signage, Demos, Kiosk
Educational multimedia
Media Buy – Brand Campaign
Mailings
Satisfaction surveys
Tactical Approach
POS / Merchandising / Display
Web – Brand Building
Advertising
Web – Product Showcase
Product Catalog
Outbound Marketing/CRM
Organic Search/Paid Search
Collateral
PR/Events
Promotion and referral programs
Social Media
Interactive
Facebook, Twitter, YouTube Facebook, Twitter, YouTube
Retention/Cross-sell/up-sell
Retention/WOM/Cross-sell/up-sell
Banner/Acquisition Campaigns Referral Campaigns
Retention/WOM/Cross-sell/up-sell
Coupon
Consumer Facing Tactics:
Recall Campaign
E-MailCampaign
© 2010 Trajectory Group • Confidential & Proprietary 16
WHAT ABOUT SOCIAL MEDIA?
Share
Network Publish
OUTBOUND MARKETING “Interruption Marketing”
“Buy, Beg, or Bug Your Way In”
INBOUND MARKETING “Permission Marketing”
“Earn Your Way In”
Blog - SEO - Social
Fitting Social Media into the Marketing Mix:
Can’t ignore it. Have to go where the customers are!
© 2010 Trajectory Group • Confidential & Proprietary 18
THE WEB AS A HUB
Website
Hub
Paradigm Shift
Social Media impact
across the entire
organization:
- Branding
- Product Management
- Customer Service/Call
Center/Complaint
Management
- Public Relations
- Lead Generation
- Business Development
- Training & Education
- Customer Reviews
- Marketing Communications
- Sales
- HR
© 2010 Trajectory Group • Confidential & Proprietary 19
MARKETING PHILOSOPHY
Targeted
Messages and stories are laser focused on target audience,
i.e. relevant, remarkable, etc.
Integrated
Messages and Marketing tools are leveraged and
integrated speaking with one clear voice
Measurable
Well-defined, measurable success criteria following the
SMART criteria (Specific , Measurable, Actionable,
Realistic, Timed)
T I M
© 2010 Trajectory Group • Confidential & Proprietary 20
RAISING THE BAR
TOWARDS
BEST-IN-CLASS
MARKETING PROCESSES
© 2010 Trajectory Group • Confidential & Proprietary 21
DEVELOP, COMMUNICATE, AND DELIVER VALUE
Customer Value Proposition
Profit Formula Key
Resources Key
Processes
Value Propositions can be copied. Companies need to (re-) architect the organizational system in ways that allow them to effectively deliver the value
proposition, and create a unique defensible position!
The Four-Box
Business Model
Framework
Source: Seizing the White Space: Business Model Innovation for Growth and Renewal, Mark W. Johnson , 2010
© 2010 Trajectory Group • Confidential & Proprietary 22
DELIVERING VALUE: BEST-IN-CLASS MARKETING
“Inferior”
“Superior”
Status Quo Benchmark
Gap
Initiatives
What is Best-in-Class within the Marketing function?
How does it feel to work for a Best-in-Class Organization?
How do you raise the bar to become Best-in-Class?
How do you stack up on key Marketing Elements?
© 2010 Trajectory Group • Confidential & Proprietary 23
DELIVERING VALUE: BEST-IN-CLASS MARKETING
How do you stack up on key Marketing Elements?
0 1 2 3 4 5 6 7 8 9 10
Sales Force Deployment
Account Management
Sales Execution Excellence
Market Introduction
Distribution Strategy
Pricing
Communications & Social Media
Product Planning
Brand Positioning
People Capability & Marketing Leadership
Market Intelligence
Marketing Planning Process
Marketing Strategy
2010 2011
Key
Functional
Elements
© 2010 Trajectory Group • Confidential & Proprietary 24
BEST-IN-CLASS EXAMPLE:
MARKET INTELLIGENCE
The group has no market intelligence available
The group has basic product/market data on market size and
competitive shares on a aggregated level
Quality of market intelligence information on end-users/applications,
distribution and competitors is benchmarked on world-class level.
Market intelligence is a key element in all business planning
processes. There is a shared belief that good market intelligence is a
key success factor for shareholder value creation.
The focus of the Market Intelligence Plan is the end-user as key driver
for the business. Measurements per end-user segment provides
insights on: installed base, usage, attitudes/behaviors, awareness,
brand image, product acceptance, etc.
© 2010 Trajectory Group • Confidential & Proprietary 25
BEST-IN-CLASS EXAMPLE:
PEOPLE CAPABILITIES &MARKET LEADERSHIP
Market is outside, customers are a “nuisance”, end users are unknown
and most of our people “wanting to leave on time”
The marketing function shifts its focus from trade channels and
product specs towards a market defined by end-users
needs/applications
The team has become the most knowledgeable, skillful and motivated
marketing organization that attracts “too many” potential marketing
candidates form the best companies, and the most superior business
school.
The marketing team is able to formulate a comprehensive marketing
plan, regularly demonstrates new knowledge, and is able to convince
management to resource, support and adopt new ways of working
… training, mentoring, developing, and enhancing new marketers
© 2010 Trajectory Group • Confidential & Proprietary 26
DELIVERING VALUE: MARKETING ROLES AND RESPONSIBILITIES
Quantitative
Analysis Product Strategy
Product Planning
Program Strategy
Sales Readiness
Channel Support
Product Roadmap
Market Requirements
Positioning
Sales Process
Release Milestones
User Personas
Use Scenarios
Lead Generation
Thought Leaders
Buyer Personas
Success Stories
Competitive
Write-up
White Papers
Channel Training
Collateral & Sales Tools
Answer Desk
Event Support
Presentations
& Demos
Special Calls
Launch Plan
Customer Retention
Marketing Plan
Customer Acquisition
Product Portfolio
Buy, Built or Partner
Business Case
Pricing
Operational Metrics
Product Performance
Market Sizing
Market Problems
Market Research
Distinctive Competence
Innovation Win/Loss Analysis
Technology Assessment
Competitive
Analysis
Market Analysis
Tactical
Str
ate
gic
Source: Pragmatic Marketing
© 2010 Trajectory Group • Confidential & Proprietary 27
DELIVERING VALUE: MARKETING ORG STRUCTURE
Marketing
Strategic Planning Product
Management
Product
Marketing
Marketing Communications
Channel
Marketing
Job Descriptions
Roles & Responsibilities
Department Interfaces
Training/Coaching/Mentoring
Career Growth & Development Plan
Performance Goals
Strategic Tactical
© 2010 Trajectory Group • Confidential & Proprietary 28
CONCLUSION
IF THE CUSTOMER/CONSUMER CAN‟T DIFFERENTIATE YOU,
THEN THE ONLY DIFFERENTIATOR IS PRICE.
proprietary & confidential
Product Strategy 30
In a category where the
competition is stripping out
everything or simply adding
checkbox features, NAVIGON
delivers beyond the basics
with an experience that
truly adds value to the
end customer
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
Product Strategy 31
DESIGN
In a field of me-too
devices, NAVIGON
embraces design as a
key differentiator.
Our unique design
DNA has produced
numerous awards.
FEATURES
Across tiers, NAVIGON
strives to deliver
beyond the basics
with additional premium
WOW features that
supercharge end
customer value.
PERFORMANCE
The soul of each PND
is built on NAVIGON‟s
premium navigation
software, delivering a
navigation experience
that is second-to-none.
EASE OF USE
NAVIGON innovation
translates to a simpler,
more enjoyable
navigation experience
that the mass market
requires.
The experience that matters
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
Product Strategy 32
NAVIGON values the voice of the consumer
46% 39% 38%
28% 27% 19%
25% 21%
16% 14% 15% 12% 12% 14% 12% 10%
29%
33% 34%
34% 35%
35% 24% 28%
30% 28% 26%
23% 20% 17% 17%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Extremely
Appealing
Very
Appealing
TOP TWO-BOX RANKINGS
Invested in consumer research
– Made Traffic and Reality View a portfolio wide USP
– Added Text-to-Speech (TTS) to the entry-tier
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
Product Feature Spotlight 33
NAVIGON™ 7100
4.3” touchscreen
Standard POIs (1.5M)
2D or 3D viewing
Day/night setting
Highway signs displayed
POI on route, in vicinity
PIN protection
Block routes
Route planning features
Predictive text entry
Maps
Favorite, last destinations
Go home feature
Text-to-Speech
Branded POIs
Speed limit warning
City-first or street-first entry
NAVIGON Fresh compatible
Zagat® Survey Ratings and Reviews
Reality View™
Lifetime Traffic
Lane Assistant
WOW Features
PLUS Features
FOUNDATIONAL Features
Source: Building the NAVIGON Brand,
CMO Summit 2008
proprietary & confidential
34
2007 Product Highlights
NAVIGON® 7100
NAVIGON® 5100
NAVIGON® 2100/2120
BOLD INNOVATION
PRECISION TECHNOLOGY
AWARD-WINNING DESIGN
RELEVANT FEATURES
FOUND NOWHERE ELSE
A product portfolio that made the market take notice…
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
35 2007 Product Highlights
NAVIGON® 7100
NAVIGON® 5100
NAVIGON® 2100/2120
A product portfolio that made the market take notice…
NAVIGON® 7100 NAVIGON
® 5100 NAVIGON
® 2100/2120
Superior Experience
and Design
4.3” with all the bells and whistles Reality View™
Lifetime TrafficSM
Zagat® Survey Text–to-Speech Bluetooth®
Delivering More
for Less
3.5” with features never found at an entry-tier
Reality View™
Text-to-Speech Retail service
activations
Design Meets
Innovation
3.5” with unmatched feature set Reality View™
Lifetime TrafficSM
Zagat® Survey Text-to-Speech
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
2007 Marketing Campaign 36
Launched brand with an
integrated campaign aimed
at differentiating NAVIGON
from its competitors
TV
200M
213M
ONLINE
100M
RADIO
25M
POS
OVERALL Q4 „07
IMPRESSIONS
538M
Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
TV Campaign 37
http://www.youtube.com/watch?v=MlSq-B4JAh8 Check out YouTube:
proprietary & confidential
Interactive Campaign 39
Between Oct ‟07 and Dec „07
brand campaign has sent over
400,000 users to NAVIGON‟s
microsite (experiencenavigon.com)
76% of the users (~304,000)
sent directly to channel partner
websites
Microsite: www.experiencenavigon.com Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
Brand Positioning 40
OUR BRAND POSITION Innovative features that are
useful and relevant backed by
stunning designs
NAVIGON is satisfying a position in the PND space that is
currently unmet by the competition and currently being
requested by consumers.
Source: Ipsos Insight, Brand Tracking Study –
Jan. 2008; 3000 total respondents online Source: Building the NAVIGON Brand, CMO Summit 2008
proprietary & confidential
Significant Milestones 41
3.60% 4.00% 4.00%
11.50%
6.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00% Ju
l-0
7
Au
g-0
7
Se
p-0
7
Oct-
07
Nov-0
7
Dec-0
7
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
NAVIGON is now the #4 GPS
brand in the U.S.!
Moved from “Others” designation
(11 or higher) to #5 in
November and #4 in
February
#4 in both units and $ volume in Q1
‟08
Navigon 2100 was the #2 best
selling PND in the US in
February „08
First time since February „07 that a
brand other than Garmin, TomTom
or Magellan accounted for more than
10% of the PND market
Growing market
and brand share
NAVIGON Growth
Source: NPD 4/22/08
Garmin44.4%
TomTom20.8%
Magellan14.1%
Navigon7.7%
Mio7.2%
Nextar2.1%
Harman Kardon
0.4%
Hewlett Packard
0.2%
All Other2.6%
NAVIGON Q1 Unit Market Share
Source: Building the NAVIGON Brand, CMO Summit 2008
© 2010 Trajectory Group • Confidential & Proprietary 42
DEVELOP, COMMUNICATE, CAPTURE AND DELIVER VALUE
Customer Value Proposition
Profit Formula Key
Resources Key
Processes
Source: Seizing the White Space: Business Model Innovation for Growth and Renewal, Mark W. Johnson , 2010
© 2010 Trajectory Group • Confidential & Proprietary 43
WHAT HAPPENED TO NAVIGON?
#1 Top Grossing app in several
Countries during last 12 months
Two million smartphone apps sold
since launch in 7/2009
Expansion into Automotive
Acquired by Garmin in 2011
© 2010 Trajectory Group • Confidential & Proprietary 44 © 2010 Trajectory Group • Confidential & Proprietary 44
Ralf Hug, Founder & President
TRAJECTORY GROUP LLC
Email: [email protected]
Cell Phone: +1 773 733 6913
Skype: ralf_hug
LinkedIn: www.linkedin.com/in/ralfhug
Slideshare: www.slideshare.net/ralfhug
Twitter: @ralfhug
Questions? Please contact me at:
© 2010 Trajectory Group • Confidential & Proprietary 45
TRAJECTORY GROUP OVERVIEW
Ralf Hug Founder & President
15 Years of Global Management
Experience
Expertise in Strategy Development,
Business Development, Marketing and
Product Management
In-depth Industry Experience in
Automotive, Telematics, M2M, GPS/LBS,
Wireless, CE and Connected TV
MBA University of Bayreuth, Germany
Past Management Positions at:
Business development and strategic
advisory services firm with the very
specific conviction to help companies
to stay on the trajectory of success
Services include:
o Management Advisory
o Marketing Strategy and Planning
o Inbound and Outbound Marketing
o Business Development
o Product Strategy and Launch
o Interim Management
Deep Industry Expertise in:
o Automotive /Telematics/M2M
o GPS/LBS/Wireless/Apps
o Content/Media/Services
o CE/Connected TV
TRACTECORY GROUP LLC
Trajectory [trə′jektrē]: Plotting a realistic path
towards achieving a target over a period of time
© 2010 Trajectory Group • Confidential & Proprietary 46
TRAJECTORY GROUP CAPABILITIES
Marketing & Product Strategy
Telematics
Strategy
Partner & Business
Development
M2M
Auto App Store
Value Chain
Business Models
Connected Car
Connected Services
Navigation
MRD/PRD
Consumer Research
Product & Services Roadmap
Best-in-Class Marketing
Processes
Content Aggregation Global
B2B and B2C Marketing Benchmarking
Content & Service
Providers
Retail, Dealer & Channel
Marketing
Content Monetization
Device/Smartphone Integration
Marketing Strategy &
Planning
Go-To-Market Planning
Prospecting
Sales Planning
Customer Introductions
Partnership Development
Relationship Management
Competitor Analysis
Value Proposition
Innovation Management
Fleet Insurance
Aftermarket
Auto OEMs
Wireless Carriers
Category Mgmt
Europe
© 2010 Trajectory Group • Confidential & Proprietary 47
BONUS DOCUMENTS ON SLIDESHARE
Presentation:
“The Connected Car
Comes in Many Flavors”
Article:
“To Find the Business Case for Telematics, Look Higher Up.”
http://slidesha.re/hkpRkW
http://slidesha.re/bFCv3V
Presentation: “Envision Automotive App Stores – Key Questions”
http://slidesha.re/eWnh0n
http://slidesha.re/hvKezS
Check out Ralf Hug SlideShare Channel