The Group debated on what is value capture. While some opined that the Value capture is process of identifying new things to add value to the company, a majority argued that the Value capture is the process of increasing the perceived value of a product or the service and not correlating it to the input costs of developing the product.
Notes from Discussion
- Value capture traverses lines between various functional areas: R and D, marketing, strategy
- Value capture is about challenging the status-quo.
- Value capture patterns do exist; making managers conscious of those pattern.
- Since most organizations focus more on value creation, the article and the
discussion suggested that value capturing should be given equal attention.
Notes from Article
1. Innovation (value creation, in traditional sense) isn’t worth much (value capture) if you don’t get paid for it.
Framework needs to be built for developing a common language around value capturing.
Identification/recognition of patterns have led to the following fifteen value-capture strategies under five focal points.
- Price Setting Mechanism
Value-Based Pricing – price is set to capture a fair share of savings a consumer experiences
Auctioning- customer decides among themselves by quoting; may end up paying much more
Demand-driven pricing – dynamic pricing Name-your-own price – auctioning minus disclosure Pay-what-you-want- generally for non-profits
- Changing the Payer
Two-sided market model- consumption is subsidized by the third player
Changing the payer in value constellation- consumption is subsidized by many players Internal budgeting
- Changing the Price Carrier
Changing the price carrier- part of the experience you hang a price tag on
Bundling and unbundling- a bundle of services / products are priced together
All-inclusive offering- the customer is obliged to buy because of the time-frame/setting
- Changing the timing
Installed-based pricing – securing the revenues for future
Futures contracting- securing the revenues for future
- Changing the segment.
Target Costing- identifying the new customers Self-segmented financing- coupons