Creating Customer Value Propositions: Key Concepts for Design Engineers

1. Marketing for Design Engineers:Key Concepts Prof Mary Caravella, School of Business (c) 2015 Prof. Mary Caravella

2. What is marketing? (c) 2015 Prof. Mary Caravella

3. What is marketing? Creating, communicating and delivering VALUE to customers, and managing relationships with those customers to benefit the organization and its stakeholders (c) 2015 Prof. Mary Caravella

4. Brand Associations Customer Value Service Experiences Price Product Attributes Transaction Costs Cost Claims Benefit Claims We develop customer value propositions to facilitate transactions Customer Value Proposition: The specific bundles we propose to help customers solve a problem or achieve a goal, including the benefits we claim they will receive and the costs we ask them to pay Search Learning Negotiation Disposal (c) 2015 Prof. Mary Caravella

5. Two key questions we will focus on • Will what we design create value for customers? • How will customers find us? Eric Ries (2011) The Lean Startup, Crown Business (c) 2015 Prof. Mary Caravella

6. “People don’t want ¼” drill bits, they want ¼” holes” (c) 2015 Prof. Mary Caravella

7. Two drills on Amazon… $118.05 $179.99 Black & Decker SSL20SB 20-Volt MAX Smart Select Lithium Ion Drill/Driver with extra battery DEWALT DCD760KL 18-Volt 1/2-Inch Cordless Compact Lithium-Ion Drill/Driver Kit (includes second battery) (c) 2015 Prof. Mary Caravella

8. Two drills on Amazon… $118.05 $179.99 • SmartSelect Clutch; Choose your project icon and drill automatically adjusts power and speed for optimal results • Gear indicator; 2-speeds indicates high or low setting • 20-volt MAX Lithium batteries deliver extended run-time • High torque motor delivers 175-Inch-pounds • Ergonomic design for improved comfort and control • Lightweight design (4.0 lbs) minimizes user fatigue • Dual speed range 0-500/0-1700 rpm delivers optimal performance • LED worklight provides increased visibility in confined spaces • Compact track saw batteries (DC9181) are compatible with the existing system of DEWALT 18v power tools produced since 1996 • Compact size (8.2-inch) allows users to fit into tight spaces; (c) 2015 Prof. Mary Caravella

9. Two different brands for two different targeted marketswith different problems to be solved or goals to be achieved (c) 2015 Prof. Mary Caravella

10. Three DIMENSIONS of customer needs • Functional • Social • Psychological (c) 2015 Prof. Mary Caravella

11. Why does he choose specific products/services? Because they help me • Do something (Functional) • Express myself with others (Social) • Experience something enjoyable (Psychological) (c) 2015 Prof. Mary Caravella

12. Why does he choose specific products/services? I need… • A drill I can use for everything • Assurance I am buying a reliable product (c) 2015 Prof. Mary Caravella

13. Why does he choose specific products/services? Because they help me • Improve my business (Functional) • Market my business (Social) • Avoid risks (Psychological) • (and I’m a person too!) (c) 2015 Prof. Mary Caravella

14. Why does he choose specific products/services? I need… • Tools I can use all day • Rugged • Compatible power supplies • Tools that show I’m a professional (and make me feel like one) • Distinctive styling consistent with me (c) 2015 Prof. Mary Caravella

15. Your product is a tool to help customers create value for themselves. The more you understand customers and what they value the more likely you will create value (c) 2015 Prof. Mary Caravella

16. Functional value: helps solve a problem or achieve a goal • Social value: connects with or distinguishes from others; expresses something about self to others • Psychological value: interesting, enjoyable, anxiety-reducing, satisfying (c) 2015 Prof. Mary Caravella

17. The sensors found in smart phones and Nintendo Wii controllers have migrated into Black & Decker’s cordless 4v MAX Gyro, billed as the world’s first motion-activated screwdriver. Tilt it right by a mere quarter of an inch and it screws clockwise to tighten; left, and it turns counterclockwise—all thanks to an internal gyroscope that senses wrist motions, which are measured by a small microprocessor that turns those movements into changes in the drill’s speed and direction (c) 2015 Prof. Mary Caravella

18. Now that we better understand WHY people choose what they do, we turn to HOW they do it (c) 2015 Prof. Mary Caravella

19. HOW does he choose? LIFE SEARCH SOLVE DMP (decision making process) How a customers moves through a decision (c) 2015 Prof. Mary Caravella

20. 1.Creating Customer Value Life gives rise to problems and goals LIFE SEARCH SOLVE • What’s going on in my life? • What triggers this need? (c) 2015 Prof. Mary Caravella

21. We search for and evaluate solutions LIFE SEARCH SOLVE • What’s going on in my life? • What triggers this need? • What do I already know about how to address this need? • Who should I ask? • Where else should I look? • What is important to consider? (c) 2015 Prof. Mary Caravella

22. We choose, and evaluate our choice LIFE SEARCH SOLVE • What’s going on in my life? • What triggers this need? • What do I already know about how to address this need? • Who should I ask? • Where else should I look? • What is important to consider? • How satisfied am I with the product/service? • How satisfied was I with the purchase process? • Do I get the support I need? (c) 2015 Prof. Mary Caravella

23. 1: Target Segment Description Implications Need characteristics affect the DMP… LIFE SEARCH SOLVE Need Importance Drives effort to get started AND increases effort spent searching Need Frequency Decreases effort spent searching (c) 2015 Prof. Mary Caravella

24. So they affect your marketing challenge (c) 2015 Prof. Mary Caravella

25. We’re opening a deli, we’d like Sam to find us “I need lunch” (c) 2015 Prof. Mary Caravella

26. Sam likes to get outside of work during his 30 minute lunch break. He usually walks with a few of his coworkers to one of the nearby fast food places, but lately has been packing lunches– he’d like to eat healthier, but doesn’t want to make his friends change their lunch routine. What is Sam’s “decision journey” (DMP)? (c) 2015 Prof. Mary Caravella

27. Identify key decision criteria • When Sam chooses a place to eat for lunch… • What is non-negotiable? (“must haves”) • Can get in and out in 30 minutes • What other things does he consider? (potential “differentiators”) • Healthy food • Friends can get food they like too (c) 2015 Prof. Mary Caravella

28. Develop competitive decision matrix Very useful for determining and communicating competitive situation and product development priorities (c) 2015 Prof. Mary Caravella

29. Decision criteria affect your POSITIONING • How you distinguish yourself from competitors in your customer’s mind • Positioning Statement • For (our target segment), our ( product/brand ) • is (ONE important and most differentiating decision criterion) • among all (competing ways of solving targeted problem) • because ( single most important “supporting evidence” ) (c) 2015 Prof. Mary Caravella

30. Some direction.. • Will what we design create value for customers? • Work to understand all the dimensions of customer value: functional, social and psychological, that customers evaluate against costs • Understand which product attributes are must haves and which are differentiators • Use brands to signal (and deliver) intangible benefits • How will customers find us? • Work to understand the customer decision journey (DMP) • Understand what is most likely to trigger a search, where they are most likely to search and what causes them to stop searching • Use brands to create mental shortcuts related to your positioning (c) 2015 Prof. Mary Caravella

31. Reach out if I can help • mcaravella@business.uconn.edu (c) 2015 Prof. Mary Caravella