New in the Value Strategy Toolkit for 2012

Enhanced Product-Appraisal Table on the Scorecard Worksheet

The product-appraisal table provides an estimate of how much your product is worth based on a comparison to a reference product.  The two products are compared side-by-side in terms of their performance on a set of benefit attributes. If there were no performance differences, your product would be worth the same as what the reference product sells for. However, where there are performance differences, the software provides estimates of the worth of those differences for each of the attributes. New to this release of the software, the appraisal also takes into account any differences between the products in terms of the customer’s costs of using or owning the product.  So, for example, if two appliances have similar performance in terms of the benefit attributes, but one costs the customer less to use in terms of the expected ongoing electricity costs, that difference will raise the appraised value of the more efficient unit. 

The appraisal table will include these cost-savings impacts whenever more than one price element is entered on the scorecard worksheet.  One of the elements (generally, the actual selling price) is designated as primary.  The others (e.g. operating costs) are treated as potential adjusters to the worth of the product.  All costs can be “weighted”.  This reflects the fact that customers may not place as much weight on uncertain, projected future costs as they do on the initial selling price. Weights on factors such as operating electricity costs are often in the 30%-60% range. 

These changes, in effect, integrate the techniques of economic value analysis with customer value analysis.

Price versus Fair Price Plot on the Scorecard Worksheet

It is possible to use the worth-estimation logic in the Product-Appraisal Table to estimate a fair price for any product included in the competitive set, not just your own.  The scorecard worksheet, in fact, does this estimation.  Whenever there is more than one price element included on the scorecard worksheet, a new chart is added to the analysis section of the worksheet -- the Price-versus-Fair-Price chart.  This chart plots the competing products on a scatter chart, with their estimated fair price on the horizontal axis and their actual selling price on the vertical axis.  A sloping line marks out the points where the actual price would equal the fair price.  Products plotted above this line are “over priced”.  Products plotted below this line are “under priced”.

This chart differs from the value map (Total cost versus performance) in part because what is plotted on the vertical axis is just the selling-price component of cost, not the total cost.  Therefore, this chart is useful when setting prices.  In cases where there is only one cost component (i.e. the selling price itself), the Price-versus-Fair-Price chart would be redundant with the value map and is not displayed.

Color coding bubbles on the Value Map

You can now easily color-code the points (or bubbles) on a value map (e.g. red for your own products). You identify the colors you want to use on the Scorecard Workshee by assigning your desired colors to the fonts used for product/supplier names . (For an example, see the Scorecard Minivans sample case.) The value map on the scorecard worksheet will reflect this color scheme. When the analysis on the scorecard worksheet is set (or reset), both the points and the labels of the products on the scorecard-worksheet value map are colored using the colors set for the fonts.

When the scorecard is loaded into the profile, the font colors are transferred to the Profile page. The value map on the Value-Map tab will pick up the colors from there. Exactly how the colors work depends on how the points on the value map are plotted. There are three options:

1) Points plotted as dots: In this case, both the dots and the labels are color coded . On a crowded value map, this can make it easier to identify which label goes with which dot.
2) Points plotted as bubbles (typically reflecting relative market shares of the products): In this case the bubbles are color coded using the font colors. (The labels are left in black so that they're legible, even if overlaid on a colored bubble). Wherever the font is left at the default black color, the bubbles are a light gray color.
3) Points potted as nested bubbles (typically reflecting current market share (solid border) and past market share (dotted border)): Only the labels will use the font's color coding. The borders of the bubbles will be red if the bubble is shrinking, green if expanding and black if holding constant.

Custom scorecards

Different occasions call for formatting the Scorecard Worksheet's comparative data in different ways for insertion into, say, a PowerPoint presentation. For example, sometimes you may want to include attribute weights in the table; sometimes not. It is hard to adjust the way this table is formatted on the scorecard worksheet because the locations on the scorecard worksheet have some significance in the way the worksheet functions. The easiest way to select the desired comparative data and format them to your specification is to copy the relevant data onto a separate worksheet where the formatting can be adjusted as you like it.

This is made easy in the new VST. Using the Scorecard-worksheet Options button, select Custom Display. This gives you a chance to select which of the comparative data you wish to transfer onto your custom display. After making your selection, click OK. A new custom-scorecard tab will be added to the VST immediately following the scorecard with the data. It will have the data you've specified. (A number of our sample-case Scorecard worksheets in the attached version have custom scorecards adjacent to them.) Your selections for options will be stored as new defaults, so you can create a similarly formatted table for any scorecard you like at any time.

Unlike the scorecard worksheet, the custom scorecard plays no structural role in the workbook. so, you can add formatting (column width, labels, new rows, bold or italic, colors, etc.) or add new data without affecting anything. You can get the table looking exactly as you want it before making a copy for a presentation.

You can copy the newly formatted table on the custom scorecard using the options button on that tab, or by using the traditional Edit > Copy. If creating a Word or PowerPoint file, you should paste the copied table as a picture.

User-friendly additions to the Scorecard Worksheet

In the new scorecard worksheet, all of the major analytical displays (value map, appraisal table, etc.) are lined up horizontally across the top of the page.  This means that only horizontal scrolling is necessary to find any exhibit.   This feature gives you the ability to simulate changes to the data and see the results instantly.  To do this, use the Options button and click “Split Screen”.  Then locate the input data on the left half of the screen and, say, the value map on the right side.  Any change you then make to the input data on the left side of the screen is instantly seen in the analysis on the right side without any scrolling necessary. Note that the linear, horizontal arrangement of displays is used whenever a new analysis is triggered.  Existing worksheets in the older format will not be reformatted.  However, the software is completely compatible with either format.

The controls for the different displays have been moved to be adjacent to the displays they control.  So, for example, the controls to adjust the slope of the fair-value line are adjacent to the value map.  The controls for identifying the target and reference products are adjacent to the product-appraisal table.

Users now have the ability to delete rows of data corresponding to any attributes or price elements. (This supplements the existing capability to add rows.) To use this feature select any data item in the row(s) to be deleted and select the “Delete row(s)” option from the Options button.  Note that when deleting rows, the weights on all of the price elements or benefit attributes will have to be reset.  Also new is the ability to delete a column of data, i.e. to remove one of more of the competing products from the analysis.

Finally, a new table has been added showing the range (minimum and maximum) of each price element across the various competitors.  This is displayed below the standards-and-weights table.

Streamlined and simplified displays

The table on the Head-to-Head tab has been simplified and formatted consistently with the appraisal table.  This table does a side-by-side comparison of two products from the perspective of value to the customer.

The Pricing tab no longer has its own value map in cases where “other costs” are an issue.  The problem was that defining “Overall Performance”, the horizontal axis of the value map, gets complicated (and controversial) if some cost elements (such as energy costs) are considered to be elements of performance.  Now, the value map is only drawn in cases in which there is a single price element, or in which the user has specified that all cost elements should be added together to be treated as a single composite price for value-map purposes.  For those cases where other costs are considered separately, the price-vs-fair-price chart gives a cleaner, more understandable representation of the competitive situation