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The Value Proposition

19 Feb, 2010 By: Ron Harris imageSource

The Value Proposition

As a marketing executive in the imaging industry, one topic seems to be
appearing with increasing frequency over the last year. That topic is value.
It's been brought up in many different ways from as many different perspectives,
whether competing with the OEM, other remanufacturers, importers, resellers,
dealers, or hybrids, the value your customers feel they are or aren't getting
from you is the reason why your customer base is growing or getting smaller. 
This leads to the question of what will drive some of the larger purchase
decisions those customers will make over the next year and during the course of
conducting their business in this economic climate.

Actually in any industry where a successful aftermarket emerges and thrives,
the value proposition is always the final era of this business cycle.  First the
OEM designs the product and creates the market or an industry.  As the market
becomes too large for the OEM to control, a few bold pioneering manufacturers
enter the market to compete against the OEM.  Based on price they develop a
small market share while the OEM’s fight back to stop or limit the size of this
aftermarket.  If the industry grows, so does the aftermarket, as many others see
the opportunity that now presents itself and they enter the market to compete
with products of varying scopes and qualities. Consumers become confused, prices
are driven down, there is shaking out of weak competitors, and acquisitions &
mergers. From this intense competition new technologies and innovations emerge. 
Consumers become savvy about their choices; value quantifies the situation and
suppliers who meet or surpass hybrid consumer demand win the war.

To compete in today's marketplace, both domestic and international imaging
suppliers must better understand value and marketing. Meeting the needs of the
customer is something that every successful business must continually strive to
do. Producing a product for a market rather than producing a product and trying
to find a market for it are two separate activities. The latter activity has
been the area that most manufacturers have participated in. For success in this
decade, cartridge producers must create value propositions, target the market
more effectively, and alter manufacturing and quality practices to assure
complete compliance with the specifications called for from their valued

The Value Factor

Choose a value proposition that is in line with your market's challenges and
desires, communicating the unique contribution your company, product and
services provide to your market that is different from your competitors and that
somehow makes the life of the customer better, easier, more convenient,
efficient or less expensive.

In the imaging industry most aftermarket manufacturers and resellers base their
value propositions on price, some on recycling or the environment; a few have
used quality, and lately more and more are trying MPS. The OEM has focused its
attention on the brand, its image of superior quality, consistency,
organizational size, and a national or global network of support, logistics,
financial “security” from buying direct from the manufacturer or an authorized
representative, and now, MPS as well.

For most customers today, price by itself is not the key factor when a
purchase is being considered. This is because most customers compare the entire
marketing offering and do not simply make their purchase decision based solely
on a product’s price. In essence, when a purchase situation arises price is one
of several variables customers evaluate when they mentally assess a product’s
overall value.  They compare one product to another in relationship to price and
features (or better yet, benefits) and how it fits into their methods of doing
business and style of working.

Value refers to the perception of benefits received for what someone must
give up. Since price often reflects an important part of what someone gives up,
a customer’s perceived value of a product will be affected by a seller’s pricing
decision. Value equals the perceived benefits received for perceived price paid.

For the buyer, the value of a product will change as perceived price paid
and/or perceived benefits received change. But the price paid in a transaction
is not only financial it can also involve other things that a buyer may be
giving up. For example, in addition to paying money, a buyer may have to spend
time learning a new system, evaluating the product, spend on marketing to tell
customers about the change, pay to have an old product removed, close down
current operations while a new product is installed; they may incur other
miscellaneous expenses or time consuming events.

The factors used in determining value before purchasing tend to consist of
pricing, quality, competition, availability, logistics, support, potential
prosperity vs. failure of the manufacturer or company’s reputation that’s not
perceived as corporate well-being.

Quality can be defined as many things to many people, but current trends on
"quality" deal with its use in the manufacturing sector where it means freedom
from defects, consistency, compliance to manufacturing specifications, meeting
or exceeding the expectations of customers, etc.  Quality must be a part of
every value proposition.

The Competitive Factor

Competition is being driven by many factors, including the emergence of a
global marketplace, the increased number of firms, new technology that makes it
easier for firms to enter new markets, and ever-increasing pressure from
consumers to increase value.  Companies making similar products compete in the
areas of wholesale price, innovations, marketing and distribution, among other
areas. Market success depends on who creates the highest value (a lower cost
when all is totaled) or an improved market position for their customers.

Availability is the point where all necessary commercialization activities
have been completed and the product has been made available to the general
market either via the Web or physical media and there is enough inventory
readily available to meet the demand.  This is the value of delivering on time
or when you say you will.

Logistics or the management of the details of an operation that deals with
the procurement, distribution, maintenance, and replacement of material and
personnel is a very important value in a global economy.  The value is the
customer doesn’t have to deal with these details.

The Prosperity Factor

Potential Prosperity - or having possibility, capability, or power in
financial respects; an economic state of growth with rising profits and full
employment, a successful, flourishing or thriving condition and good fortune -
is the reason everyone is in business, and if you can offer this value, you have
it made. Having a reputation of corporate well-being and longevity is of huge
value.  We hate to buy something now if we are convinced that the manufacturer
won't be around to support the product down the road.

As cartridge producers find it more difficult to make ends meet with
diminishing profit margins from increasing input costs and shrinking cartridge
prices, more emphasis is being placed on adding value to those products.
Value-added services will not allow for substantially increased cartridge
prices, but you can add more profit, increase sales and customer loyalty by
performing activities usually performed by others. The benefit comes from the
value-added activity performed, not just by increasing cartridge prices.

How do you define the value of your market offering?

Can you measure it? Few suppliers in this industry are able to answer those
questions, and yet the ability to pinpoint the value of a product or service for
one's customers has never been more important.

The Customer Factor

By creating and using what the marketers call customer value models,
suppliers are able to figure out exactly what their offerings are worth to
customers. Field value assessments are the most commonly used method for
building customer value models; a call or written survey for suppliers to gather
data about their customers firsthand whenever possible. Through these
assessments, a supplier can build a value model for an individual customer or
for a market segment, drawing on data gathered from several customers in that

Suppliers can use customer value models to create competitive advantages in
several ways. First, they can capitalize on the inevitable variation in
customers' requirements by providing flexible market offerings. Second, they can
use value models to demonstrate how a new product or service they are offering
will provide greater value. Third, they can use their knowledge of how their
market offerings specifically deliver value to craft persuasive value
propositions. And fourth, they can use value models to provide evidence to
customers of their accomplishments.

Doing business based on value delivered gives companies the means to get an
equitable return for their efforts. Once suppliers truly understand value, they
will be able to realize the benefits of measuring and monitoring it for their

The Support Factor

Tech Support: Overall Tech Support is a valuable service; without technical
help many customers would be at a loss with many problems. Some problems may
seem minor but for the serious issues they resolve they are a resource that can
often be seen as a godsend. Without them some resellers and many end users would
be stuck in a quagmire of problems that we as sales people have no idea how to

Customer Support: Customer Service is the cornerstone of a solid, thriving
business. It costs six to thirty times more to get a new customer than it does
to service and maintain the satisfaction and loyalty of an existing customer.
Companies struggle to cut costs without realizing that customer attrition might
be the single largest cost they have. Keeping customers happy has the same
bottom line effect as cutting costs.

Marketing Support: Trade Marketing is a discipline of marketing that relates
manufacturer, wholesaler or distributor in helping a reseller or retailer market
their products into the retailer’s sales channels.  A consumer is the one who
identifies and purchases a product from a retailer. To ensure that a retailer
promotes your product against competitors, you must market your product to the
retailer, also. Trade marketing might also include offering various
tangible/intangible benefits to retailers. It’s the alignment of sales and
marketing activities for joint profitability and success.

Managed Print Services (MPS):  Helping customers monitor and quantify the
current spend within their print environments and implementing solutions to help
them bring down those costs. The value for a reseller is capturing a client’s
entire print environment and getting them under contract, and for the end user
its savings and efficiency.

Ron Harris is Director of Marketing and Business Development at Virtual
Imaging Products, headquartered in Southern California. Visit
or phone (866) 876-2464 for further information.

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