ABSTRACT

Understanding, using and communicating the value created for their customers is a challenge for many businesses. In practice this can result in an inability to respond assertively and confidently to customer demands for deep discounting. Margin erosion, premature commoditization and loss of market share follow. At the heart of the issue is a lack of a unifying framework for analyzing, quantifying and communicating value. Pricing practitioners (and their sales colleagues) also need to discriminate between those customers who care deeply about the value delivered by their suppliers and those customers who have no interest whatsoever in value and who are, instead, obsessed with procuring products and services at the lowest possible price. In this chapter, we introduce and outline an innovative and highly practical concept in value analysis – the value triad. We demonstrate its application in two contemporary case studies. In these cases, this instrument led to new insights and the creation of deeper, richer and more focused customer value propositions. By deploying this model, these companies came to understand the real drivers of the buying decision, to position their prices to achieve optimal profitability and created a framework within which value-based pricing could be implemented.