Creating Value

The Process of Managing Market Offerings

Managing Market Offerings

Managing market offerings is the process of putting products, services, programs, and systems together in ways that create the greatest value for targeted segments and customer firms.

Managing Market Offerings

Apply ValueBased Pricing

Articulate the Present Market Offering

Assess Customer Value and Supplier Cost

Formulate Flexible Market Offerings by Segment

Prepare to Implement Market Offerings

Managing Market Offerings

Kotlers Onion Model

Potential Product Augmented Product Expected Product Basic Product Core Benefit

(Kotler 1997) Fig 15.02

Articulate the Present Market Offering

The Flexible Market Offering

Products Standard Services

Options

Mitsubishi Electric Industrial Controls

Machining Center Segment
Products Standard computerized numerical controls CRT Terminal program panel axle & drive motors sprindle drives & motors basic software Services

Options

Mitsubishi Electric Industrial Controls

Machining Center Segment
Products Standard product availability delivery installation set-up training field engineering Services

Options

Mitsubishi Electric Industrial Controls

Machining Center Segment
Products Services

Standard

high-performance hardware interactive screens advanced drives & motors

Options

Mitsubishi Electric Industrial Controls

Machining Center Segment
Products Services

Standard

customized software 2-year guarantee on parts, labor, & repairs retrofitting customized PLC design

Options

Baxter Healthcares Offerings for Two Market Segments

Market Offering Elements
Services product returns technical assistance single point-of-contact future disease incidence forecast

Segments

Transactional Strategic Accounts Accounts standard standard standard standard not offered standard not offered option

Baxter Healthcares Offerings for Two Market Segments

Market Offering Elements
Systems ASAP Order-Entry IBAX strategic system audit ValueLink stockless inventory IBAX medical software

Segments
Transactional Accounts standard not offered option option Strategic Accounts standard standard option option

Baxter Healthcares Offerings for Two Market Segments

Market Offering Elements
Programs price deals Corporate Customer bonus (financial) Executive Perspectives consolidated purchasing report sumary ACCESS Program Baxter Corporate Consulting

Segments
Transactional Strategic Accounts Accounts standard standard not offered not offered standard standard

not offered standard not offered option not offered option

Assess Customer Value and Supplier Costs

V. Formulate Flexible Market Offering

Market Offering
Strategy Grid
Element Deployment Element Status
existing standard element existing optional element new element do not market market as standard market as option

Managing Market Offerings

Deploying Standard Elements
Prune from standard offering:
low value, high cost services services rarely used by most segment members

Recast as value-added options:

infrequently-performed services that deliver value at specific points in time have customers buy with bonus dollars

Retain in standard offering:

highly-valued by all segment members services whose success depends on widespread usage

Managing Market Offerings

Deploying Existing Optional Elements
Prune options:
services where cost has outstripped value services that are better outsourced

Retain as value-added options:

adds to the services menu

profitable services valued by a significant number of customers

Recast to enhance standard offering:

low cost and declining value services consider alternative of naked solution, with bonus dollars

Managing Market Offerings

Deploying New Elements
Keep on the shelf:
services are ahead of their time services where present service is considered adequate by customers

Introduce as value-added options:

to gauge interest in new services to provide an extraordinary level of service for customers that want more

Augment the standard offering:

services that invigorate partnerships use of the service lowers the suppliers own cost

Prepare to Implement Market Offerings

Managing Market Offerings

Changing Value Spendthrifts into Value Merchants Create value merchants by:
putting into practice a philosophy that products and services generate value

Train value merchants by:

imparting value provided by products and services having them practice selling value supporting them with value-based selling tools

Compensate value merchants on the basis of:

customer contribution to profitability long-term provision of value to customer

Target value-seeking customers, recognizing:

relatively important customers bad customers

Managing Market Offerings

Practical Considerations

option menu vs. tailored-value package(s) breaking away from the pack
whos first? response to We can do that! look to business gains, not fear of losses

strategically position offerings

Promote: You dont have to pay for what you dont need! Avoid: We have to pay for what we used to get for free!

Managing Market Offerings

Finally, to achieve success, managers need to develop a most difficult to acquire skill:
adroitly saying NO to some prospective customers.

Practiced deftly, this skill builds a reputation for the supplier within the industry as firm, consistent and fair.