The Digital War Room for analyzing customer-perceived value, release 2

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1 The Digital War Room for analyzing customer-perceived value, release 2 Bradley T. Gale and Donald J. Swire, Customer Value, Inc. (617) September 2003 CVI's Digital War Room software is a superior solution for assessing your products competitive strengths and weaknesses and honing your value proposition. Release 2 of the software adds important new modules for analysis and ease of use. Assess your Competitive Position using the DWR's Enhanced Value-Mapping System Value Map for Commercial Filtration 220 High ($) Low Worse Better Performance Index Fair-value line passes through average price and average benefit. Slope = $32 per benefit point. 1. Plots your brand's price and overall performance (functional and emotional) versus competing brands 2. Includes reference lines for average price and average performance in the market category 3. Establishes a fair-value reference line that represents average relative value (performance for price) in the category 4. Calibrates the price for performance trade off that customer make -- the incremental monetary worth per point of overall benefit 5. Defines a fair-value zone the fair-value line and automatically-set zone boundaries show quartiles in the distribution of customer-perceived value (new in release 2) 1

2 6. Highlights frontier products that have the best performance at each price point. These products are likely to be the market-share winners in the future (new in release 2) 7. Allows price to be measured on a scale of price attractiveness (1 to 10) or as a monetary amount. The latter enables a monetized analysis of customer-perceived value, by attribute. 8. Allows the vertical axis of a value map to be the selling price of the product or the total cost to the customer of using the product. 9. Enables you to estimate how much each of your product s advantages are worth to the customer Refine your Value Proposition with the Value Scorecard Highlights the key selling points of each brand Quantifies the difference in monetary worth to customers associated with these selling points Reveals the customer-perceived value positioning of each brand in monetary terms Quantifies key weaknesses in each brand's economic value Prioritize Performance Improvements based on the Attribute Analysis Module (new in release 2) Attribute Scores for Selected Suppliers Chloroform Removal Average Technical support Performance Scores 1. Produces a powerful visual display (above) of the performance of your brand versus a selected set of competing products, by attribute. This display also reveals the degree of differentiation in performance among brands, by attribute 2. Produces a plot of attribute importance weights versus your performance scores 2

3 3. Produces a plot of attribute importance versus your performance-difference versus competitors. Contains a reference line showing your average performance-difference, which is used to calibrate halo effects 4. Quantifies the monetary worth to customers of your performance differences versus competitors, by attribute Improvement Opportunities Chloroform Removal Catch up Benchmark Breakthrough Technical support Value of Improvements ($) 5. Reveals the added value to customers of "catching up" to average performance on attributes where you are behind (above) 6. Reveals the added value to customers of "pulling ahead" to achieve best-in-category (benchmark) performance, by attribute (above) 7. Shows the increased economic value to customers of making a one-point improvement in performance versus competitors, by attribute 3

4 Shift from Cost-Based Pricing to Value-Based Pricing with the Pricing Module (release 2) Value Map for Commercial Filtration 220 High ($) Fair price Low Cost Worse Performance Index Better Fair-value line passes through average price and average benefit. Slope = $32 per benefit point. Produces a value map for pricing where the automatically-set zone boundaries show quartiles in the distribution of actual price expressed as a percent of perceived price. Customers often think in terms of percentage differences Enables you to superimpose your total cost per unit on the value map along with a line that connects your total cost, price, and fair price, per unit. This enables you to price based on value while visualizing cost and margins. Generates a pricing scorecard showing pricing metrics and the customer and vendor perspectives on prices 4

5 Implied Strategic Intent ** Balance Share Margin Dominate segment Grow share Balance between growth & margin Build margin Harvest position ** Based on ratio of Selling to Fair Draws a pricing strategy dial (above) that indicates the inferred pricing strategy (margin or share) for each brand Prepare for Value Selling with Head-to-Head Appraisals of Economic Value Value Relative to Chloroform Removal Technical support Capital cost Disposibles cost Relative value impacts - vs. Weaknesses Total= $100.7 ( $37.7 from benefits, $63.0 from price) Strengths The DWR automatically produces a series of head-to-head charts that appraise the monetary worth of your brand versus each competing product, by attribute (Us-vs-them module, new in release 2). Practitioners use these charts as an input to their value-selling kit for sales reps and key account executives Shift your Data to DWR Release 2 using Import Forms Feature (new in release 2). This enables you to import input forms and user worksheets from prior versions of the DWR. ### 5