Value Propositions - Case Studies Part Two
Following on from last week’s post, here are a few more real cases to get you thinking about Value Propositions…
When you think of Nespresso, what’s the first word that comes into your head?
Who’s the first person that you picture?
Some people say “Tacky” or “Sophisticated” or “Overpriced” or “Delicious”.
Everyone pictures George Clooney, Nespresso’s universally beloved spokesman.
What’s interesting is that the tech behind Nespresso is not expensive, their Dolce Gusto version came out years earlier and nobody cared. What they did with the new name and branding was make coffee pods feel elegant.
Nestle, makers of Blend 43, took a mundane product and make it desirable, a machine that proudly sits in kitchens, offices and hotel rooms around the world and feels a little bit luxurious. They made little packets of coffee feel special, and through good design, made the pods and machines handsome enough that people would want to display them on their benchtops.
That’s the genius of their work; they sell sophistication and a decent coffee, all at an 80-cent price point. It’s not designed to compete with proper La Marzocco machines, and it’s not supposed to compete with bags of beans; they created a market that didn’t exist before.
Many readers of this will be quick to point out the terrible environmental impact of the pods, which aren’t recyclable.
Right here we see the realities of Value Proposition design; Tradeoffs.
If Nespresso thought their target market would care enough about their environmental impact, they’d make them recyclable. Instead they did their homework and decided that taste, price, style and convenience were the actual dealbreakers, and built their product accordingly.
The proof of Nespresso’s success is their competitors; know anyone with a Lavazza Mio machine?
They sell pretty much exactly the same thing, but with no George, no cool, no authenticity. Economically, they should be sharing the market, but they don’t have a compelling enough Value Proposition to be able to compete.
Now in 2016, we see a new battle forming, the challengers making their own Nespresso-Compatible pods. What Value Proposition is put forward by the Aldi pods? Vittoria? Oxfam?
Shoes of Prey
I only heard about Shoes of Prey recently, from my colleague Caroline who raves about them.
Shoes of Prey let women design their own shoes, every detail chosen by you. The shape, base, colours, materials, accents, sizes, all up for grabs.
You’re probably going to pay $200-$250, depending on what you want to upgrade, and that includes “Free” delivery.
Your shoes then arrive in a fancy package, with a picture of your shoe on the outside of the box for easier storage (apparently that’s a thing people like?)
So what’s the Value Proposition here?
It seems that there are two main appeals. The first one is the thrill of the process, designing your dream shoe, playing around with the different combinations, learning about what you like. It’s a fun, well crafted experience that gives the buyer a great story to tell when they’re wearing them.
That’s the Gain Creator. What about the Pain Reliever?
Having spent a fair while shoe shopping with various women, I notice a common theme: Frustration. Everyone’s got something weird about their shoes; their foot is wide or narrow, the heel needs to be a certain height, the toes are long or short, or they need an uncommon size of shoe.
Shoes of Prey remove this pain, by giving you complete control over the specifications. No long days of trying on different pairs, instead you get a shoe that is engineered just for you.
It seems compelling, and the market has spoken; this is something women want.
Until recently, I have been an outsider to the beer world, and never had much of an opinion about Heineken. My sense was that people like it (it’s no Bud Light or Fosters), but if you love beer then you know there are better options out there.
I like the Heineken case because of a move they made in 2012, one which upset a few people.
Heineken paid US$45m to appear in the movie Skyfall, and have James Bond drink their beer.
A few quick facts; for their money, they also had Daniel Craig shoot an ad campaign to be released simultaneously. He was in favour of the brand, as their contribution paid for a quarter of Skyfall’s budget. James Bond has never drunk a beer on screen before, so this was a first. The ensuing controversy was completely overblown, the product placement was subtle.
The bottles appears in two scenes; one when Bond is recovering from being shot, lying in bed next to a beach, with the label obscured. The second is being held by M’s assistant Tanner, who drinks one while they’re remotely tracking the villain later on in the movie. Blink and you’d miss it.
So why pay all that money?
For the association - Heineken is James Bond’s choice of beer.
The fact is, Bond has always been about product placement; every classic Bond brand was paid for. The gain for the brand is the perception of luxury: if Bond wears/shoots/uses it, then it must be good.
It comes back to Seth Godin’s idea – what is the story the customer tells themselves? If people buy Heineken because they know it’s Bond’s beer, and genuinely enjoyed that experience, they become loyal customers, despite no chemical change to the product. Sometimes, perception is reality.
For more of the Value Propositions Case Studies series;
Part One featuring Louis Vuitton, AFL, Uber and TOMS
Part Three featuring a variety of Men’s Watches and Chocolate brands
Part Four featuring the classic iPod ads, Whiskey, Hardware, Butter and Barossa Tourism