| Issue 21 |

More for More

Added Value Strategy means focusing on offering a specific advantage to all the customers that might want it. For example - the softest butter, the most natural jam, or… the best weight-loss bread. This is the most common way to set yourself apart from the competition and positively ingrain yourself in the customer's memory, as described in this section in the past. Even though many try to set themselves apart this way, only a few actually succeed in doing it. Therefore, here are a few points and recommendations on how to obtain true added value, even for… a marketer:

• What is the true meaning of "added value"? It's very simple - something that has added value is something that people are prepared to pay more for. If, for example, customers are willing to pay more for softer socks, then "softness" has an added value in the sock market. And in the same context, added value means more for more . Therefore, if you don't have the courage to cost your product at a relatively high price - added value strategy might simply not be for you.
• How do you measure added value? It can be measured in a fairly simple manner - by asking customers how much more they would be willing to pay for a specific advantage. For example, you can conduct a survey and ask by what percentage the customer is willing to pay more for especially soft socks (0%, 10%, 20%, 30%), and to compare this to similar surveys where they are asked about socks that absorb sweat, designer socks, and odor-proof socks. The advantage that turns out to be the highest added value (the average) will also be the most profitable, assuming that all entail similar costs.
• Should a prime advantage be chosen that is important to the majority of customers? Not necessarily. If it's possible to create such an advantage and maintain it over time - great, but in many cases, prime advantages in a competitive market are already taken by a sole competitor (Dannon yogurt = health) or a group of competitors (Japanese car = quality). Moreover, allegedly important advantages may burn out, emphasized by all the competitors (a fast printer), and therefore no longer perceived as unique.
• Is setting yourself apart using a marginal advantage sufficient? In certain cases - definitely. For example, if an Israeli company is satisfied with 5% of the global market, a relatively marginal yet available advantage, that particular advantage may secure that segment of the market. And if it is an advantage that may take off over the years - even better. For example, when Swedish Volvo penetrated the American market in the 1950's, safety wasn't a very important issue. There weren't a lot of cars on the road, they weren't very fast, and accidents happened only occasionally. Volvo was content with an added value that enchanted only 5% of Americans during that period. Fortunately for Volvo - the importance of safety only intensified over the years. Volvo obviously reaped the benefits later on.
• What if it's a really marginal advantage? In very advanced and competitive markets, where all the prime values are desired, this can also help. What's the difference between the various banks? Not much. In cases like these, the bank with the best-designed branches can perhaps attract a certain amount of customers that are design lovers. These types of marginal advantages can nevertheless influence a customer's choice (in the absence of something else that sets it apart), and the competitors probably won't rush to copy them.
• So is a marginal advantage preferable then? Definitely not. The idea is to identify the greatest possible added value that can be offered. In other words, one that hasn't been taken yet, hasn't burned out, and suits the marketer's capabilities. If it can be protected and earn reasonably well - excellent. If not, perhaps it would be better to find a different market, or adopt a different strategy (for example - a niche strategy, or a low price strategy). It's also worthwhile to mention that marginal advantages will work better in markets that don't have elements that set competitors apart, where there is no customer loyalty, and the cost of a customer's migration is low. For example - moving to a new bank involves a great deal of effort, and therefore very few customers, if any, would change banks just because the competitor's branch is better designed.
• And suppose that we succeeded in identifying a suitable advantage, how do we maintain it? That already depends on market positioning. If you were the first to claim this advantage (for example - soft socks), and you worked systematically to establish your claim, you may succeed in acquiring a "brain segment" for a prolonged period of time. For example - Volvo hasn't been a safer car than its competitors for long, but it is still perceived as such. As mentioned above, a detailed explanation on market positioning was described in this section in the past .
• Until when should we continue maintaining the added value that we will offer? As long as it's relevant to customers, sets you apart from competitors, and you can charge more money for it. The most common mistake in Added Value Strategy is not to persist with it because you want "to offer your customers new things". Consistent repetition over the years of the same marketing message (the softest butter, the best weight-loss bread) conflicts with the new marketer or CEO's natural intuition ("We pay the advertising agency a lot of money - let them think of something new…"). But for the customers, consistently repeating the same message only reinforces what sets you apart, and strengthens your advantage. Market re-positioning (meaning - migration to a different value) is only necessary when the added value that represents you stops being relevant to your customers. If you have chosen a relatively important value, it shouldn't happen for years to come….

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Ideas for innovation in coffee

The following ideas were developed using various thinking tools, and do not exist at present (to the best of our knowledge):

1. A cappuccino cup with a drinking spout at the bottom, so the froth at the top stays until the end.
2. Cappuccino fortified with coffee dust (finely ground coffee grinds) that can also be used to decorate the top of the coffee.
3. Coffee served in a waffle cup - leak proof but edible and tasty when the coffee has been drunk.
4. Self-serve coffee houses - including instruction - for customers interested in learning how to make their own cappuccino.
5. A coffee house  where you always get your frothed milk and espresso separately.
6. A coffee pub where only coffee is served in combination with various alcoholic beverages (cocktails).
7. A coffee house that offers Coffee Reading services as part of their regular service.
8. A coffee house with a robotic coffee machine, which prepares coffee by the order and walks around the coffee house.
9. A coffee house where the "house blend" changes every hour and is offered at a discount (for variety lovers).
10. An ice cream parlor that only offers coffee ice creams in a variety of flavors and shapes accompanied, of course, by coffee

• Articles on Systematic Innovation  
• To learn about Systematic Innovation Workshops : click here
• We will be glad to read your comments and suggestions

A listening recommendation

O.K., this time the recommendation isn't exactly about effective management, but if you love music like I do, you'll understand why I couldn't resist. And anyway, if you really must, you will find a few "managerial" applications to the technology described here mentioned later on.

Let's get to the point: I'm talking about the web site www.pandora.com, which enables you to open personal radio stations with quality sound and songs that are exactly to your liking, within seconds, effortlessly, and without having to install hardware or software, even at the office (if you have speakers or earphones). In fact, if you click on the link to the site and continue reading afterwards, you can try out Pandora while you read.

After you enter the site, a rectangle the size of a car radio disc will appear after a few seconds, and you will be asked to enter an artist's name or song that you like. Afterwards, your favorite band will play for you directly from the Internet - with a wonderful, high-quality sound, and the cover of the disc that is playing will appear on the right hand side of the "radio". If you place the cursor over it, a "thumbs up" will appear on the disc (click on it if you like the song), and "thumbs down" (click if you dislike), and a triangle between them (that opens a links menu to other information and options).

And then a really amazing thing happens - when the song ends, the disc moves to the left, and a new song starts playing, and a picture of the new disc appears. The song that is now playing is similar in musical style to the previous song, and you'll probably like it as well if you aren't familiar with it yet. In fact, it has been automatically selected especially for you from over 400,000 songs (!), according to approximately 200 or more parameters (!) that characterize the previous song: musical style, rhythm, types of musical instruments, singer's gender, song style, etc.

If you like the new song, click on the "thumbs up", and if you don't - "thumbs down" (and the station will move to the next song). This way you "train" your radio station. After you mark a few songs, it will mainly play exactly what you like to hear, including songs that you don't know. You will very quickly broaden your musical horizons - and you'll no longer need the assistance of the salesperson at the music store. If you want to delve deeper, you can read about the performing artist, see and sample his/her discs, and buy them in a number of different formats, or simply bookmark the artist for any use you see fit.

After you try out Pandora, you can register (for free) - so that the radio station that you opened will be saved and be readily available for you from anywhere you can connect to the Internet. The general idea is to create specialized radio stations after entering 2-3 fairly similar songs (for example Classic Rock or Jazz with saxophone solos). This will make it possible for Pandora to offer you truly similar musical songs, and maintain a unique character for the station. If you want to diversify, simply create another station.

And as promised, here are a number of managerial applications using Pandora:

• Improve the atmosphere . Play original, interesting, and unrepetitive music in every appropriate space (for example - to increase productivity on a production floor, to reinforce an image at a reception desk, for a relaxed ambience in a dining hall, and for a fun shopping experience at a store). The database includes almost every musical style that exists, except for World Music and Classical Music (they are still working on how to catalogue these styles, which are more complex).
• Give personalized gifts. You can surprise a customer or employee that likes a specific singer with an original gift. Simply ask them what they like, and buy them something similar that you found on Pandora, that they aren't familiar with but will love. Music opens doors and hearts.
• Disconnect. Are you working on a special project and need some time off from the people around you? Hook up to Pandora, plug in your earphones, and forget about the rest of the world. Create a suitable station (60's music? Chilllout?), dive into the project, and the music will take you through to the project's completion.
• Share. You've created a choice radio station? Send it to an acquaintance that likes a similar musical style. It's easy to do this with Pandora - you send your radio station via email, and the receiver simply opens it and receives the station that you have "created" and takes it from there.
• Get your daily update. You read about Bob Dylan's new disc and wanted to know what it was all about? Open a new radio station on Pandora (you can open up to 10 stations!), type in Bob Dylan, and listen to any one of his songs. Click on the artist's name (appears above the picture of the disc), and a detailed information page will open up about Bob Dylan, including pictures of discs in chronological order. Click on the latest disc (called "Modern Times"), and an information page about the disc will open up, including the option of sampling all the songs on it. You liked it - buy the MP3 immediately (there's a link), order it on Amazon, or go to your nearest music store. You didn't like it - you can always interject with "I heard it. It's actually nothing special" in a conversation, and be up to date…
• Celebrate. It's also important to celebrate at work sometimes. When there's a reason to have party, create a reggae station, rock station, hip-hop station, Brazilian music station, etc. Selecting 2 songs for each station and "training" the songs later on will suffice, and the party's well underway. " Of course there are many more possibilities. We'd be happy to hear about what you've discovered

• For the Pandora site : www.pandora.com
• Two of Ari's Pandora stations : Hip-hop-Reggae | Jazz
• For information on an innovative thinking in technology workshop : click here (PDF file, in Hebrew)
• For new services that ZOOZ offers : click here