Value Method Marketing Framework

Introduction to The Value Method Framework

Copyright 2013 Alivant, All rights reserved.

Jed RecordPrincipal Consultant

04/13/2023 Copyright 2013 Alivant, all rights reserved. 2

Problems Facing Business Leaders

• Symptom: Increased focus on delivering leads from quarter to quarter, rather than growing long-term value for the enterprise

Loss of strategic direction

• Symptom: Maintaining margins by cost-cutting, rather than value differentiation

Increased pricing pressures

• Symptom: Difficult to clearly connect marketing activities to revenue expansion, resulting in cost per lead metrics replacing value creation measures

Marketing budget stagnation/reduction


Solution

By identifying, quantifying and communicating the differentiated value provided to customers through its offerings, the firm can maximize the value of the transaction for the customer, and strengthen its ability to maintain pricing premiums.

Maximize the value exchange between firm and customer


Maximizing Value Exchange

Source: Alivant proprietary value model




ValueGaps


Measuring Value Fit



What is Value?

Value can be a slippery term and it is used in many different ways. In the practice of value management the term is understood as follows:

Value is relative to an alternative – value cannot be judged in isolation

Value is composite and decomposable – value can be analyzed into a set of value drivers

There is more than one aspect of value – in B2B the most important aspect is the economic, but other aspects such as the emotional, environmental and social value can also be considered

Value can be quantified – economic value can be quantified in a currency, other aspects have their own forms of quantification such as Quality Adjusted Life Years in healthcare or Carbon Footprint for green solutions


Modeling Economic Value

Source: Alivant Value Model adapted from “The Strategy and Tactics of Pricing” – Nagle, Hogan, Zale

Alivant Value Model


Value Model Example

For Segment:

Attribute Description Est Value Cust Pref Attributes Cust Value Attribute Description Est Value Attribute Description Est ValueAttribute 1 Attribute 1 Attribute 1 Attribute 1Attribute 2 Attribute 2 Attribute 2 Attribute 2Attribute 3 Attribute 3 Attribute 3 Attribute 3Attribute 4 Attribute 4 Attribute 4 Attribute 4Attribute 5 Attribute 5 Attribute 5 Attribute 5Attribute 6 Attribute 6 Attribute 6 Attribute 6Attribute 7 Attribute 7 Attribute 7 Attribute 7Attribute 8 Attribute 8 Attribute 8 Attribute 8Attribute 9 Attribute 9 Attribute 9 Attribute 9Attribute 10 Attribute 10 Attribute 10 Attribute 10Differentiation Value -$ Differentiation Value -$ Differentiation Value -$ Diff Gap Value -$

Attribute 12 Attribute 12 Attribute 12 Attribute 12Attribute 13 Attribute 13 Attribute 13 Attribute 13Attribute 14 Attribute 14 Attribute 14 Attribute 14Attribute 15 Attribute 15 Attribute 15 Attribute 15Attribute 16 Attribute 16 Attribute 16 Attribute 16Attribute 17 Attribute 17 Attribute 17 Attribute 17Attribute 18 Attribute 18 Attribute 18 Attribute 18Attribute 19 Attribute 19 Attribute 19 Attribute 19Attribute 20 Attribute 20 Attribute 20 Attribute 20Attribute 21 Attribute 21 Attribute 21 Attribute 21Reference Value -$ Reference Value -$ Reference Value -$ Ref Gap Value -$

Your Offering Customer Preference Competitor Offering

Alivant Value Model Worksheet

Value Gaps

Product / Solution Attributes

Minimum Requiredfeatures

for a Credible Offering

Differentiating

Attributes

Differen

tiated

Costs

Value management relies on multiple streams of information from inside and outside the company. Both internal and external perspectives are necessary. Information about customers, competitors, demand, offers, costs and production constraints are all used in value management.


The Value Method Framework:

IdentifyValue

• Customer Value• Market Value• Firm Value

QuantifyValue

• Costs• Demand• Direct/Indirect Value Levers

CommunicateValue

• Messaging Platform Development• Customer Cycle Management• Demand Generation

I

Q

C


Value Identification

Identify your Capabilities

• Strengths/Weaknesses• Sustainable Competitive

Advantage

Identify Market

Opportunities

• Trends, Market Gaps• Dangers, Risks• Portfolio Review• Scenario Planning• Define the competitive spaces

(Segments)

Identify What the Customer

Values

• Conjoint analysis• CI Research• Personas• Common themes


Quantify Value

MeasureCosts & Savings

• Input costs• Cost to serve• Customer incurred

costs• Replacement Costs

Measure Demand

• Price Elasticity• Sales forecasting• Strategic

Alternatives (bundling / promotions)

Develop Business Case


Communicate Value

Developing a

Messaging Framework

• Value Proposition• Messaging Platform• Theme Development

Lifecycle Messaging

• Personas• Customer Cycle• Timing• Triggers

Demand Generation

• Digital media planning• Content Marketing• Direct Response• Sales Enablement


Summary

• To enable consistent, effective messages• To provide customer focused solutions• To enable value based selling, and avoid competing on price/cost

Why the Value Method (IQC) Framework?

• The framework is used to develop research-based marketing strategies and messaging which relate to customer needs and maximize the differentiation value of each offering

• Value gaps are identified in customer and competitor research activities• Key metrics and objectives are developed from research insights• Product design and marketing communications are developed to meet these objectives

How is it used?

• Delivering unique value for the customer becomes part of the culture• Focusing on differentiation supports stronger margins and pricing• Consistency of communications builds customer trust and loyalty

(just like McDonalds, they know what to expect)

What are the results?


How will Value Management benefit my company?Value management delivers profitable growth. It does so in the following ways: Innovation is focused on products and services that provide value

to the customer (innovation that does not provide additional value relative to the best alternatives is money that is thrown away)

Markets are segmented and pricing architecture structured around how the customer gets value (this helps to maximize prices across the full range of potential customers)

Value is communicated in marketing messages (so that messages can rise above the noise of generalized claims)

Prices are based on how and how much value customers get from your solution (helping to manage discounting and commoditization pressure)

Sales negotiations are shifted from demands about price to tradeoffs on value (controlling discounting and managing costs)

Your thoughts?


Thank you!

Jed RecordPrincipal Consultant

Alivant

Phone: (919) 480-1050Email: [email protected]: www.alivant.com

http://www.alivant.com/

Value Method Marketing Framework

Marketing

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