Download e-book for iPad: American Strategy in WWII - A Reconsideration by K. Greenfield

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It’s critical, as a wise adage goes, to accept being approximately right lest you be precisely wrong in disregarding an important driver of value that seems too difficult to quantify. Therefore, the in-depth interview provides a foundation for developing value algorithms and collecting some initial data points to turn those algorithms into quantified estimates of customers’ monetary value drivers. EXHIBIT 4 Examples of Value Driver Algorithms for Equipment Manufacturer Cost Drivers Algorithm Reduction in mounting costs (Current mounting costs) ϫ (Percent reduction in mounting costs) Reduction in procurement costs (Reduction in procurement costs)/(Number of units ordered) Reduction in defective board handling costs ((Reduced number of defective boards) ϫ (Cost per board))/(Number of units ordered) Revenue Drivers Algorithm New contracts (Number of contractors as a percent of upgrade business) ϫ (Percent of business a customer wins due to lower cost bids) ϫ (Average contribution per contract) Increased throughput (Percent increase in throughput per measurement) ϫ (Dollar contribution per measurement) ϫ (Average number of measurements) 25 Value Creation Once the differential value algorithms have been determined, the final step is to sum the reference value and the differentiation value to determine the total monetary value.

Enterprise firmographics such as revenue, industry, and number of employees clearly separate firms into nominally homogenous groups. Inputs for this basic analysis can include existing segmentation studies, industry databases, government statistics, and other secondary sources. Outputs include buying patterns, customer descriptions, a preliminary set of current customer needs, and a provisional list of unmet customer needs. You should be able to design first-pass segmentation maps based on those outputs.

In-depth interviews probing how and why buyers choose among competitive suppliers provide the additional input required. Industry experts, distributors, and salespeople can provide supplemental information for double checking the value perception patterns revealed by the interviews. The outputs of this step include a number of useful building blocks for valuebased market segmentation, including a list of value drivers ranked by their ability to discriminate among customers (statistical cluster analysis of quantitative data is a useful tool here), an explanation of why each driver adds value, and whether customers in each segment recognize that value.

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American Strategy in WWII - A Reconsideration by K. Greenfield

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