Step #1: Defining the Solution and Competitive Space

Thursday, February 5th, 2009 at 7:01 am

The first step in creating a Value Web is to identify the firm’s offering, or unique solution, in relation to the total solution. If you remember, a total solution, as defined earlier, provides a customer with a complete set of required or desired functionality, including pre- and after-purchase needs. We will talk more about the total solution in step #3, using the customer experience life cycle. For now, the firm should focus on identifying and assessing all the value propositions that it can realistically offer to its customers via the products or services it provides. The firm’s offering, its unique solution, then, is defined by the utility provided to customers; why, how, when, and where this offering is being used. Additional questions that can be useful when defining the unique solution include those that investigate the acquisition process: Where, when, and how are customers buying the firm’s products? The result of this exercise is a good description of what the firm goes to market with.

In addition to clearly defining its offering, a firm needs to thoroughly assess its competitive space. At the highest levels, the firm needs to identify providers of substitutes—products or services that fulfill the same or similar needs as the firm’s offering. Questions that help in this exercise include: What other companies offer the same or similar products? How are these products different? How are they competing with us in terms of internal business processes? How are these competitors going to market? What are their short-term and long-term strategies? What other companies could infringe upon Acme’s turf by adjusting their product mix? What are the chances of new entrants setting up shop? Answers to these types of questions need to be collected and thoroughly analyzed in a fashion similar to a thorough, traditional competitor analysis.

Let’s look at these steps using our example. As we said earlier, Acme is a diversified financial services firm, offering no-frills brokerage, banking and insurance products, predominantly using an Internet-based self-service distribution model. To keep this example manageable, we will focus on only one of Acme’s product lines, the firm’s online brokerage business. For our purposes, then, the unique solution (online brokerage) Acme provides to its customers consists of the firm’s marketing activities that create consumer awareness, its network of financial advisors, the Internet Web site through which most of the firm’s business is conducted, and its few branch offices and call centers that also interact with the customer. In addition to these externally focused services, Acme’s offering also entails the actual trading functionality that allows a customer to buy or sell securities. Acme’s competitive space is characterized by other financial institutions offering competing products and services. Such competitors include small, no-frills startups all the way to the traditional full-service brokers. In addition, there are nonfinancial substitute products that could serve as investment vehicles, including high-end art, real estate, and other tangibles that are expected to appreciate over time.

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies