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)
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