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1SolutionsIdentificationA-PDFMERGERDEMO2Collect&SynthesizeDataAssessFindingsIdentifySolutionsScopeProblem&ApproachDevelopTeamandManageProjectAdmin.CommunicateRecommendationsSolvetheProblemCompellingSolutionswithClientBuy-InRandom,UnrelatedIssuesComprehensive,DefendableRecommendationsSolutionsidentificationisthefinalstepin“SolvingtheProblem”ThisModuleA-PDFMERGERDEMO3Thismodulehastwoobjectives...OBJECTIVES•Tounderstandhowtopulltogetherthe“so-what”ofStrategicAnalysisandFinancialAnalysis•TounderstandhowtoevaluatestrategicoptionsA-PDFMERGERDEMO4…andkeylearningKEYLEARNINGS•ThetakeawaysfromtheStrategicandFinancialAnalysesareusedtodevelopasetofdecisioncriteria•DecisioncriteriaareusedtoevaluatedifferentstrategicalternativesandselecttheoptimalsolutionfortheclientA-PDFMERGERDEMO5THEFINALSTEPSolutionidentificationandselection...StrategyFormulationSituationAssessmentPerformCompanyAnalysisPerformCompetitiveAnalysisInternalExternalCreateStrategicOptionsEvaluateOptionsSelectOptionsPerformCustomerAnalysisStrategyEvaluationA-PDFMERGERDEMO6ThemostcriticalstepinevaluatingstrategicoptionsisthedevelopmentoftherightsetofdecisioncriteriaDECISIONCRITERIA•Decisioncriteriaaretheminimumrequirementsastrategymustmeettofulfilltheneedsandobjectivesoftheclient.Examplescouldinclude:–IncreasemarketshareinmarketXby2%–Expandproductline–Buildnewinternalcapability–Providea15%returnoninvestmentAstrategymaydomorethanmeettheserequirements;theadditionalobjectivesthestrategymayachievearebenefitsA-PDFMERGERDEMO7ThereareanumberofobjectivestothinkaboutwhendevelopingdecisioncriteriaforyourclientDECISIONCRITERIA(CONT’D)•Considerscenariossuggestedbystrategicuncertaintiesandenvironmentalopportunities/threats•Pursueasustainablecompetitiveadvantage–Exploitorganizationalstrengthsorcompetitorweaknesses–Neutralizeorganizationalweaknessesorcompetitorstrengths•Beconsistentwithorganizationalvision/objectives–Achievealong-termreturnoninvestment–Becompatiblewithvision/objectives•Befeasible–Needonlyavailableresources–Becompatiblewiththeinternalorganization,i.e.,practicalandimplementable•Considertherelationshiptootherstrategieswithinthefirm–Fosterproductportfoliobalance–Considerflexibility–ExploitsynergySource:DevelopingBusinessStrategies,DavidA.AakerA-PDFMERGERDEMO8Thestrategicoptionwhichmeetsall(ormost)ofthecriteriawillbetheoptimalsolutionfortheclientDECISIONCRITERIA(CONT’D)DecisionCriteriaStrategicOptionsABCDCriterion1Criterion2Criterion3Criterion4Criterion5Criterion6Criterion7√√√√√√√√√√√√√√√√√√√√√√A-PDFMERGERDEMOCLIENTEXAMPLESClientExample1:SelectingtheoptimalpricingstrategyA-PDFMERGERDEMO10Market-DrivenSales-DrivenFragmentedRational•Changesthe“rulesofthegame,”potentiallyenablingcompetitiveadvantageand/orgrowingthesizeofthemarketatafasterrate•Linkspricepaidwithvaluedelivered•Reflectsstrategicobjectives,customerneedsanddemandelasticitiesandcompetitiveenvironment•Capturesagreatershareoftheconsumersurplus(betterfitcustomers’willingnesstopay)•Providesaframeworkforpricechangesandnegotiations•SupportsClient’sfinancialandstrategicobjectivesInitialClientObjectivesEnd-StateCurrentStateCLIENTEXAMPLE1:DEVELOPINGAPRICINGSTRATEGYThefollowingexampleinvolvedthedevelopmentofanewpricingstrategyforaninformationservicesclientwithmultipleproducts(i.e.,content)inmultiplemediaplatformsA-PDFMERGERDEMO11ThekeytakeawaysfromouranalysesledustoSevenPricingPrinciples,whichactedasdecisioncriteriaintheinitialdevelopmentofthenewpricingstrategyPrinciple1:UsageShouldNotBethePrimaryDriverofOnlinePricingPrinciple3:PriceOptimalMediumataPremiumPrinciple5:ExploitDifferencesinCustomers’WillingnesstoPayPrinciple4:PriceandPackagePrimarilybyTopicalPracticeAreasPrinciple6:ExploitCompetitiveAdvantagePrinciple2:PriceBasedonIntellectualPropertyValuePrinciple7:SimplifyPricingInternally;EnsureFlexibilityExternallyEnsureStrategyisImplementableDECISIONCRITERIAA-PDFMERGERDEMO12However,asthestrategydevelopedfurther,newdecisioncriteriawereaddedtotheoriginalSevenPricingPrinciplestomeetanumberofcustomerrequirementsandcompanyobjectives•Promotesaleofownedcontent•Enhancethevalueof“commodity”information•Minimizecross-cannibalization•ProvideframeworkforevaluatingproductdevelopmentneedsPortfolioManagementPriceSettingGotoMarket•Meettheneedsofdifferentcustomersegments/allowforgreaterpricediscrimination(e.g.size,PA)•Encouragecross-portfoliobuying•Provideframeworkfor“up-selling”and“down-selling”•Positionofflineasalegalresearchexpense•Supportcross-selling,segmentdevelopment,andmarketsharegain•Providesufficientflexibility–Internal–External/customer•Linkpricepaidwithvalue-delivered•Establishlistpriceintegrity•Reduce/limitdeepdiscountingADDITIONALDECISIONCRITERIAA-PDFMERGERDEMO13DifferentpricingmodelsweredevelopedandthenassessedusingthedecisioncriteriaCasesNewsTreatisesShepard’sTierITierIITierIII$APricedCasesPublicRec.“lower-valued”content“higher-valued”contentTierVIFormsCodesTierVTierVI….$BPricedCodes$CPricedNews$DPricedTreatises$EPricedShepard’s$FPricedPublicRecords$GPricedFormsPricesincreasebylevelLowestPriceHighestPricePracticeAr