Lafley & Martin: Consumer Value Analysis

This is the 11th in our series on Lafley & Martin’s great business strategy book “Playing to Win”. We  have gone through the overall model and are now in the second part of “how to play”. The first part was to analyze the industry the firm will compete in. We now take a look at the consumers.

The first question is whether you sell directly to consumers or through a channel. If you sell through a channel (like selling to a department store or other retailer) you need to consider your relationship with them. If you don’t, you may never get your product in front of the customer. What type of relationships work? In the old days, one might stop by now and then to see how things are going. L&M argue that now managing channel relationships is more nuanced. It has to be “win/win” and it should be based on sharing the “how to do it” challenges.

The above can be a challenge. So too, analyzing what customers value. Henry Ford hit the nail on the head when he said that if he asked his customers what they wanted they would say “a faster horse”. Customers know what they do, but not necessarily how to do these things better. For that reason, analyzing what customers will value requires looking into their behavior patterns and projecting forward where the value arises. And of course, this is likely to change over time.

next up – assessing your own relative position in terms of capabilities and costs.

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