The Value is brought by the Offer
Once the Value has been defined, we have to design a Value Proposition: we will call it the Offer for short.
For the same Value, different Products can be used. They can be assembled within the same Offer or compete with each other. As an example, to obtain the Value "be in good health", we can turn to a dietitian, a sports coach or a Tai Chi instructor.
An Offer is made up of Products
There are three kinds of Products:
- The Good which is storable, tangible and defined by a noun (e.g., a car, electricity)
- Information which is storable, intangible and defined by a noun (e.g., stock market prices, software)
- The Service (e.g., cut someone's hair, repair Goods) which is not storable and is defined by a verb.
The Information life cycle is close to the Goods life cycle: we Produce, Distribute, stock, deliver and use Information as we do with Goods.
On the other hand, we Distribute and Produce a Service, but we cannot stock it, deliver it or use it.
Two kinds of Information Products: Fact or Model
Facts are mainly pieces of Operational Information.
Examples: news, weather information, stock market prices, music, account status...
Models formalize the real world, in document or software form, to simplify it, communicate it and transform it.
Examples: know-how, instruction manual, procedure, music score...
The knowledge industry consists of transferring Information: facts and Models.
We can, for example, analyze, in educational programs, the things that concern Facts (date of a battle, quotation) or the things that concern Models (a mathematical equation or spelling rules).
Product Model for Goods and Information
- The structure of the Product: nomenclature and options
- The Use Model (or Usage Mode of the
Product): in the form of an instruction manual or
- The Product Value
- The basic Value attached to the
functionalities the Product provides
- The Usability Value of the product (e.g., the success of the iPhone is down to its ease of use)
- The image Value
- The basic Value attached to the functionalities the Product provides
- The cost of producing the Product
Product Model for Services
- The Process Model, as it is an Action
- The Service Value, which is its basic Value
- The cost of producing the Service
The same Product can be part of several Offers: either because we create different combinations of Products for different Customers, or because we Distribute them through different channels.
We therefore need not only to formalize the Product Model, but also the Offer Model (which is proposed by the Distribution).
The Offer Model formalizes:
- The assembly of Products (this can be reduced to just one)
- The Distribution Processes (eg., direct order through Internet): how we identify the right Offer, how we are welcomed, how we buy, how we deliver and install the products
- The conditions of the Offer: price Model, conditions of eligibility
- The Value of the Offer which is not only the Value of the Product, but also the Value of the Distribution Processes : we are more inclined to buying if we are welcomed well, in a nice location, if we can buy through Internet, if we receive advice, delivery...
The story of George the Baker is made available under the terms of the
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