Market Value Solutions

Just came across a question from a “Marketing Profs” reader regarding the communication of her organization’s value proposition.  Once again, the questionner revealed a fundamental misunderstanding of the difference between the organization’s existing value proposition and its promotional, or “sales” proposition.

 Every organization already has a value proposition – one that exists in the minds and perceptions of its current and potential customers. In fact, most organizations have multiple value propositions – one for each of their products or services within each of the markets they serve.  The first challenge these organizations face is to quantitatively identify those value propositions (i.e., measure them), and then to manage them in order to maximize the value delivered.

Stephanie’s question makes it clear that her CEO is really looking for a sales proposition – a statement that will effectively communicate what the organization provides.  That’s all well and good if the organization understands the nature of its existing value proposition, which means that it can quantify the relative importance of Quality, Image, and Price, and that it can further quantify the relative importance of the key components of Quality – those critical-to-quality factors, or CTQs, in Six Sigma parlance.  This requires the type of measurement that will produce a model of Market Value.

The second thing Stephanie’s CEO will require is a quantitative assessment of how the market perceives the value that his company delivers versus the value provided by competitors – because one of the fundamental aspects of value is its relativity.  This assessment will enable the CEO to identify value performance gaps – areas where his organization is outperforming competitive, and areas where his organization is underperforming.

Here’s where the real answer to Stephanie’s question comes in: she can now develop a sales proposition to summarize those positive gaps (organizational strengths) identified by the value measurement system.  Moreover, her organization can now also develop strategies and actions to “fix” those negative gaps (value-based weaknesses).  So, she gets a double whammy for her measurement efforts: an effective sales proposition, and the basis for the development of future organizational strengths.

Oh, and Stephanie made one other significant point: she thinks that the sales proposition should be unique for each customer, but is puzzled about how that translates into effective mass market advertising.  That goes back to the first point I made, namely: the organization will have a unique value proposition for each product/service it provides to each market it serves.  So, develop a product/market matrix for the organization, evaluate the importance of each business opportunity, and go after the ones that will provide the greatest return on investment!  It’s really pretty simple – but extremely powerful!

Karl Rove wrote an op ed piece for the Wall Street Journal today in which he talked about families grappling with health care concerns.  No matter what you may think about his politics, he makes one important point for the future of the health care industry: in a capitalistic economy, people make their health care choices based on value.

Rove asserts that “patients rarely know what a procedure will cost of how good a clinic or hospital is, except by reputation and word of mouth.”  But, where patients have a choice, they will always make their decisions based upon their best information regarding quality and cost – even when that information is merely word of mouth.  The problem facing health care professionals today is that they don’t know how current and prospective patients view the quality and cost of their services.  Moreover, I suspect that most health care professionals don’t even know how their targeted markets define quality and value.  Do young professionals define quality in the same terms as retirees?  How do you know?  How can you maximize quality and value for your targeted clientele if you don’t even know (objectively, quantifiably) what’s most important to them?

A key challenge facing health care professionals for the future will be to (a) understand how their targeted markets define quality and value, (b) how those targeted markets perceive the value delivered by each of the alternatives available to them, and (c) to develop strategies and process improvement programs to differentiate themselves on the basis of value.

 If you are aware of any health care organizations that have begun to meet this challenge, please drop me a note at Reg@MarketValueSolutions.com.  We are eager to identify best practices in this area.