Chapter 3: Selecting Customsers and Creating Customer Value

Case Study: WWSA:

In search of a value proposition Wolfgang Wiesel SA (WWSA) is a Swiss manufacturer of printing equipment for the graphic industry, specializing in printing large billboards, banners and XL posters. The company started out in Interlaken in the 1950s as a local manufacturer of all-purpose printing equipment, but real growth did not come until the firm's management decided, in 1987, to specialize in the graphic industry. The company moved its headquarters to Basel and grew into a major international player with sales offices, distributors and agents in 34 countries. Annual sales are approximately 230 million. WWSA has traditionally focused on innovation as the engine of growth. Over years the firm has developed and launched an impressive number of technological innovations that have contributed to the state of the art of printing in the graphic industry. Too many products and no focus Recently, WWSA's management has noticed that actual sales growth is no longer according to plan. In most of its major markets, sales are flat, while the total market still grows by 2-3 per cent each year. In 2010, WWSA decides to hire a consultant to take a closer look at the firm's business and find a way out of the slump. After several interviews with senior management and a few selected customers and industry experts, the consultant realizes that, as a result of all these innovation efforts, WWSA simply has too many products. All these products serve specific niche customers with specific needs, but the whole portfolio lacks focus. Even worse, there appears to be no underlying theme to all the products offered to customers in the graphic industry. While every individual product still makes sense, the whole product range has grown unwieldy proportions and it has become impossible to communicate a clear strategy to customers that communicates the firm's corporate identity. This is reflected in management's inability to state succinctly what makes WWSA's products unique. Similarly, WWSA's salespeople are unable to clearly explain to potential customers why they should buy from WWSA rather than from one of its competitors. Fachbereich Elektrische Energietechnik Prof. Dr. Valerie Wulfhorst Betriebswirtschaftslehre, insb. Controlling Telefon 02921 378-451 Telefax 02921 378-409 E-Mail v..t@fh-swf.de Standort Soest Lbecker Ring 2 59494 Soest Fachhochschule Sdwestfalen Sitz: Iserlohn Hagen Iserlohn Meschede Soest www.fh-swf.de Page 2 Developing a value proposition To deal with this problem, WWSA needs to develop a clear value proposition to all of its major products. To jump-start this process, WWSA's management and the external consultant selected one of WWSA's key products that was launched five years ago but failed to command the level of sales that was projected: the XL Big Poster Printer. This is a specialized printer that can print very large posters, which are used to display advertising messages, hide scaffolding when a building is being renovated or increase the aesthetic value of blank concrete walls. These photo-realistic digital prints (with up to 300 dpi) allow advertisers to catch the eye of the target audience in highly frequented locations. The consultant guides WWSA through a systematic process in search of a suitable value proposition that can be used to persuade customers.

Step 1: Identifying potential value elements The process starts with a small group of XL Big Poster Printer salespeople and other managers brainstorming all the elements of the printer that customers may value. This brainstorming session results in a list of eight potential value elements: fast turnaround time, low costs, consistent colour accuracy, large printing formats, near photographic quality on many different media types (high gloss, matte, canvas, silk, vinyl, cloth), high uptime, good product support and close dealer network.

Step 2: Identifying the next-best alternative Having identified the potential value elements, the group of employees is asked to identify the next-best alternative: that is, the vendor that is perceived by customers as the most relevant competitor for this particular product. This turns out to be easy, since a new competitor arrived on the market four years ago and quickly established itself as a major player in the big poster segment.

Step 3: Identifying the key value elements The next challenge is to identify those value elements that are really important to customers and where WWSA offers superior value compared to the next-best alternative. The management team starts with assessing both WWSA's and Competitor X's performance on all eight potential value elements. Initially, the management team assesses performance on all eight value elements only qualitatively.