Value Proposition and Cost Analysis

Value Proposition and Cost Analysis

Renit, Linnea, Amaan

Renit, Linnea, Amaan

Value Proposition

• A promise of value that will be delivered

• The value a customer feels they will receive

Examples of Value Propositions

1. Newness

2. Performance

3. Design and Usability

4. Brand and Status

5. Creativity

Real Life Example: DDB- Doyle Dane Bernbach 

Company Background

• Founded in 1949

• DDB delivers big, game changing creative ideas and business results year after year.

Company Beliefs

• DDB believes in the power of creativity to touch hearts, change minds and build brands.  

• Media has become the most influential channel, and it is DDB's mission to instigate "share value".  

DDB- Doyle Dane Bernbach

Accounts

• Charity Accounts: not paid

o Street to Home

o Crime Stoppers

• Agency of Record (3-5 year agent campaigns)

o Canadian Tourism Commission (largest account)

o BC Hydro (Vancouver office)

o BC Lotteries (Vancouver office)

o BC Dairy Foundation (Vancouver office)

Remember this?...http://youtu.be/JJmqCKtJnxM

Value Proposition: DDB

• Creativity that delivers business rewards

o ie: Salty Campaign actually generated an increase in sales for Knorr

• Share value: consumer wants to play with/interact with communication

o ie: Best Buy pass the present to interact with Mom audience

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source: http://www.ddb.com

Cost Analysis

• Determines if the investment is a sound one

• Provides a basis for comparing projects.

Cost Analysis

1. Calculations of costs and benefits:

  -Tangible costs and benefits + Intangible costs and benefits

2. Discount the future value of benefits

3. Compare the cost and benefit 

4. Compare net rate of return

Cost Analysis

Criticisms:

1. You cannot always attach a value to some costs or benefits

    ie; environmental, social, etc.

2. You cannot always evaluate costs/ benefits for everybody affected

    ie; future generations, animals, etc.

Cost Analysis: DDB

• Track time to the exact minute

• Estimate based on anticipated amount of work and research

• Based on clients budget

Customer Profitability

• The amount of profit associated with each customer/client

• Allows a firm to identify which customers are or will be profitable and which are or will not be

Customer Profitability

(CP)=

Revenues earnedfrom

relationship

-

Costs associated

with relationshi

p

Customer Profitability: DDB

• Profitability on clients: cost + 15-20%o Ex: $100,000 in time (labour) and $15,000 towards in-house

expenses

Questions...

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*http://www.ariad.ca/images/knorr_small.jpg