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Value in Use Analysis for Product Pricing and Marketing
www.spyrotek.com
What is Value?
A measure of desirability
A measure of the magnitude of an unmet need is met
Value and Innovatrion
Innovation exists at the intersection of invention and value
If your new product/invention/service does not offer value, it is just novel - not innovative
Your new offering must deliver value
Meet an unmet need
Innovation is not a measure of the change you make. It is a measure of the need you address.
Christensen's Disruptive Innovation Models
Sustaining technology (bringing a better product into an established market) - Suicide.
Low-End distribution (addressing overserved customers with a low cost business model) - Not just a lower price, but addressing a different set of customers.
New market disruption (compete against non-consumption) - Opens up a whole new space.
Value in Use Analysis
Three Models for Applying Customer Feedback to Innovation
H. Carpenter
Features: low impact on company results; low challenge of getting most useful feedback
product's "job": mid-mid
?
Pricing of a New Product
Cost pluss
Competition-driving
Customer-driven
Minimum ROI
Cost in use analysis
Value in use analysis
We must move away from cost based pricing to value based pricing
Risk is related to potential reward
Incorpoarate in pricing
Organic, Translational, Scope Change (Levels of risk and reward)
Value Pricing
Don't under price because price is a symbol of value
Price is not value
iPhone apps
$30 app is out selling the low price stuff
The company knows the real value of the product
iPhone apps are moving up in quality and price, professional service, and other high end apps.
Economic value
Hard vs soft value in use
How do you split value?
You can't capture 100% of the value
The split may influence market as a whole
Value to customer has to overcome any switching costs, barriers, and competitor reactions
Can you defend with a patent or tradesecret?
Using game theory to predict behavior and results.
iPad MPQP vs. Competition
iPad
Dell Mini 10
Kindle DX
Archos Droid Tablet
Weighting based spread sheet (starting tool)
Kano analysis
Conjoint Analysis - Best tool, but dangerous. Garbage in garbage out - Must go through traditional tools first
The Value Box (c) Concept
Full Value in Use Price
Split Value in Use Pricing
Minimum Price (Price at Full ROI including R&D etc)
Cost of production
Summary
Deliver clear value for unmet needs
Value in use can be measured and quantified
Pricing is a took used to share value with customer
The value box is a new tool...