The Best Deal An Exercise to Introduce Customer Value Concepts

1. The Best DealAn Exercise to Introduce Customer Value Concepts Facilitator Notes & Presentation Slides

2. Value Exercise NOT FOR PRESENTATION A simple participative exercise that can be used to introduce and explore the topic of customer value Takes around 30 minutes Humorous and stimulating Can lead to a discussion on some fundamental questions and issues surrounding value The slides can be amended and contextualised for specific group circumstances Best Deal Exercise

3. NOT FOR PRESENTATION The Best Deal – Facilitator Instructions • Ask for two pairs of volunteers from the group (each pair will be doing the same exercise) • There are two roles to be played by each person in each group – one person is Steve Scrapper and the other is Vincent Vintage • Give each person the briefing sheet for his/her particular character. They must not see the briefing sheet of the other character • Tell them to read the briefing sheet and follow its instructions (and not to tell the other person this information). • Each pair is sent out to separate rooms for 5 to 10 minutes to complete their tasks. • You brief the rest of the class by showing them the PowerPoint slides which gives all the information. • Each member of the class is invited to estimate the final price that each pair will agree for the sale of the vehicle. Write these on a flip chart, and [optional] take £1 from everyone, with the closest to the combined prices receiving the ‘pot’. Alternatively, have a prize (like a book) available. • The pairs return and you ask then to reveal their agreed price for the car. The pot is given to the winner in the group. • Go through the final slides; optional discussion on value can follow. Best Deal Exercise

4. Vincent Vintage’s Instructions You are Vincent Vintage, a specialist in sourcing old and rare cars for discerning collectors. At a government function in London recently, you met the American ambassador, who once realising what you did, explained that he was looking for a 1975 Cadillac Eldorado Convertible, as a 50th birthday present for his brother Orville, who collects classic 1970’s American cars. He tasked you to try and find one, and said that he was prepared to pay up to £30,000 for one. A few days later you are driving in Cardiff, and on passing Dai Dealer’s Quality Used Cars, you notice an Eldorado in the back. You stop and go in and ask Dai about the availability of the car. Dai says it is available, and you say that you would like to buy it. Your Instructions: Find a quiet room or area & meet with Dai. You have 10 minutes to do your best deal with Dave (ie arrive at a price) and buy the Eldorado. [NB Dai does not know the background of your situation!] TO BE PRINTED NOT FOR PRESENTATION Best Deal Exercise

5. Dai Dealer’s Instructions You are Dai Dealer, owner of a quality used car business in Cardiff. You’ve decided on a bit of a clear out of some old and very slow moving stock that’s blocking up the back of your site, and you call your mate Steve Scrapper to ask him to shift it all. Steve says he’ll give you £100 for anything that’s driveable, and £50 for anything he’s got to lift to take away. You’ve decided that everything round the back has to go – including the old 1975 Cadillac Eldorado convertible, though whilst driveable, no one seems to want it and is just taking up a lot of space. The day before Steve is about to come round to move the cars, you are visited by a Mr Vincent Vintage, who explains that he understands that you have a Cadillac Eldorado, and he’s interested in buying it. Your Instructions: Find a quiet room or area & meet with Vincent. You have 10 minutes to do your best deal with him (ie arrive at a price) and sell the Eldorado. [NB Vincent does not know the background of your situation!] TO BE PRINTED NOT FOR PRESENTATION Best Deal Exercise

6. The Car Dealer Exercise “The Best Deal” Best Deal Exercise

7. Instructions • Two pairs of volunteers please! • each pair will be doing the same exercise • There are two roles to be played by each person in each pair – one person is Dai Dealer and the other is Vernon Vintage • Read your briefing sheet for your particular character. You must not see the briefing sheet of the other character • Follow its instructions • and do not to tell the other person the information • 10 minutes to complete your tasks & return Best Deal Exercise

8. The following slides only to be shown to the group after the two pairs who are role playing have left the room

9. These are the instructions given to each person

10. Dai Dealer’s Instructions You are Dai Dealer, owner of a quality used car business in Cardiff. You’ve decided on a bit of a clear out of some old and very slow moving stock that’s blocking up the back of your site, and you call your mate Steve Scrapper to ask him to shift it all. Steve says he’ll give you £100 for anything that’s driveable, and £50 for anything he’s got to lift to take away.  Best Deal Exercise

11. Dai Dealer’s Instructions You’ve decided that everything round the back has to go – including the old 1975 Cadillac Eldorado convertible, though whilst driveable, no one seems to want it and is just taking up a lot of space. Best Deal Exercise

12. Dai Dealer’s Instructions • The day before Steve is about to come round to move the cars, you are visited by a Mr Vernon Vintage, who explains that he understands that you have a Cadillac Eldorado, and that he’s interested in buying it. You have 10 minutes to do your best deal with Vernon and sell the Eldorado Best Deal Exercise

13. Vernon Vintage’s Instructions You are Vernon Vintage, a specialist in sourcing old and rare cars for discerning collectors. At a government social function in London recently, you met the American ambassador, who once realising what you did, explained that he was looking for a 1975 Cadillac Eldorado Convertible, as a 50th birthday present for his brother, who collects classic 1970’s American cars. He tasked you to try and find one, and said that he was prepared to pay up to £30,000 for it. Best Deal Exercise

14. Vernon Vintage’s Instructions You have 10 minutes to do your best deal with Dai and buy the Eldorado A few days later you are driving through Cardiff, and on passing Dai Dealer’s Quality Used Cars, you notice an Eldorado in the back. You stop and go in and ask Dai about the availability of the car. Dai says it is available, and you say that you would like to buy it. Best Deal Exercise

15. Sale Price Implications Low Sales Price: • Dai has lost out; Vernon is quid's-in. He’s going to charge the ambassador £30,000 anyway High Sales Price: • Dai makes a tidy packet!Vernon’s margin is eroded Best Deal Exercise

16. How much will they settle for? Everyone forecast the final agreed prices Place your bets! Closest wins prize! Best Deal Exercise

17. Invite both pairs back into the room when they have agreed a price

18. Negotiation Results Each pair: Explain each other’s tactics What lay behind your behaviour? Were you happy with the result? What price did you agree? Best Deal Exercise

19. Negotiation Results -> Recap on the situation of the two parties >>> What does each player think about the price agreed? Who has made the best forecast for the sales price? Best Deal Exercise

20. Value Discussion • What is value? • Do people have different views on value? • Are value decisions rational and emotional? • Does what think is value change over time? • What’s the difference between product and service value? • Does your organisation really know what value means to its customers? • Is it clear who your ‘arbiters of value’ are? • How does your organisation go about identifying value? • How do you ensure you continue to deliver value? Best Deal Exercise

21. Apocryphal Value Case Study Students working on website design during early years of internet Responded to tender from a bank requiring a site to be built Pitched their price at £5,000 – which was the cost of a Greek holiday for the team; emailed quote to bank Positive response from bank they had won the contact! For £50,000! Examination of their email with the quote revealed that they had mistyped their price and accidentally added an extra zero! Best Deal Exercise

22. Lean Principle #1 Specify Value form the customers perspective And the Lessons? • What is value? • Nothing has any intrinsicvalue • It’s ‘perceived value’ • Demand, need and perception are critical • Do not look at value just from your perspective • Whether you are the buyer or seller • Tactics must concentrate on finding out how the other person or party perceives value • Personal perspective should not dominate Best Deal Exercise