SIMPLISITY: THE NEW VALUE PROPOSITION
RETAIL: COSTCO VS. SAM’S CLUB
Costco Sam’s Club
Offers limited number of best sellers in a broad Offers limited number of best sellers in traditional
range of categories. household goods categories
Emphasizes newest merchandize, has a high style Concentrates on traditional merchandize with low
turnover. style turnover.
Offers sophisticated, higher-end products at very Emphasizes very low prices, but merchandize is
lucrative prices. lower-end.
Sales per square foot are $795 Sales per square foot are $516
“Costco's motivated employees also sell more: $795 of sales “The other problem was that Sam's didn't cater to the higher class
per square foot, vs. only $516 at Sam's and $411 at BJ's of people that Costco did. Now, Jim has done a pretty damned
Wholesale Club Inc. (BJ ), its other primary club rival.” remarkable job. He puts a great emphasis on quality and has
moved into the food business and other new lines. We [the Prices]
Business Week, APRIL 12, 2004
were very good at creating, but Jim was very good at developing.“
“A sure way to attract and keep customers is by selling goods
on the cheap that they didn't expect to see. That's why racks of
fine wine have been installed, as well as books ranging from “Costco is used to making high-end goods available to its
best-selling novels to fairy tales. Those are in addition to Sam's shoppers, most with annual household incomes topping $75,000.
ace: amassing and selling, at bargain prices, items people need Items such as Mont Blanc's platinum Generations pen go for
most.” $98.99. Then, there's the Omega Constellation women's watch for
warehouseclubs_x.htm http://www.usatoday.com/money/industries/retail/2003 -06-19-
SIMPLICITY: THE NEW VALUE PROPOSITION -1 -
FINANCIAL SERVICES: ING DIRECT VS. BANK ONE
ING Direct Savings Accounts Bank One Savings Accounts
Orange Savings Account Bank One Regular Savings
Minimum to Open: $25
No minimum balance. Interest Rate: 0.25%
Transaction Fees: No transaction f ee f or f irst 4 transactions per
Interest Rate: 2%
month. $3 per additional transaction.
No fees. No service charges. No penalties. No Service Fees: $4 per month.
hidden costs. Waiving Service Fees: Minimum balance of $250 or
more during that month.
Bank One Money Market Savings
ING offers $35 referral bonus to be split between Minimum to Open: $2,000
new account holder ($25) and referee ($10). $0 - $9,999 0.30%
$10,000 - $24,999 0.40%
$25,000 - $49,999 0.50%
$50,000 + 0.55%
Service Fees: $8.00 per month if balance f alls below $2,000 during
the monthly statement cycle.
Premier One® Savings
Minimum to Open:$10,000
$0 - $9,999 0.75%
$10,000 - $24,999 1.50%
$25,000 - $49,999 1.65%
$50,000 - $99,999 1.70%
Transaction Fees: None
Service Fees: $20.00 per month if balance f alls below $10,000
during the monthly statement cycle.
Our highest liquid savings rates when linked to an active Premier
One Checking account. Accounts linked to inactive Premier One
Checking accounts may earn lower rates.
SIMPLICITY: THE NEW VALUE PROPOSITION -2 -
FINANCIAL SERVICES: ING DIRECT VS. BANK ONE
“ING Direct's products are straightforward: mortgages and home-equity loans, a half-dozen mutual funds,
and CDs and savings accounts that pay some of the highest rates available. There are no fees or
minimums. Customers can manage their accounts online, by phone, or by mail.
In just two-and-a-half years, ING Direct has attracted more than a million customers and $10 billion in
assets, shifting from startup mode to being one of the 50 biggest banks in the country. New assets are
streaming in at a rate of close to $500 million a month. ING Direct, based in Wilmington, Delaware (but a
division of the Amsterdam-based ING Group), had expected to lose $37 million in 2002. Instead, it turned a
profit of $40 million.”
FAST COMPANY, March 2003, Page 110 By: Scott Kirsner,
SIMPLICITY: THE NEW VALUE PROPOSITION -3 -
RESTAURANTS: SHABUSEN VS. YOUR LOCAL BUFFET
Shabusen “All you can eat” Sushi Regular Buffet
Real cuisine: Japanese sushi house and Korean grill. No-frill home cooking.
High turnover allows always having the freshest
Food is prepared in advance, not to order; quality of
ingredients. Restaurant serves one of the best sushi
food is usually average.
in North America.
Waiter service. Cafeteria-type self-service.
Authentic Japanese décor and great ambiance. Unsophisticated dining setting.
“As Vancouver is well known for its sushi, this place is one of my faves.It has an all you can eat sushi variety, as well as all t he teriyaki and they
even have meat that you can bbq in the center of your table, on a little sunken bbq. Usually very busy, as it is very popular.Reasonably priced,
and friendly serving staff. Also of mention, is the second floor viewing of the hustle and bustle of the streets down below, for those of you who
like to people watch.”
Reviews: "The best Japanese All-You-Can-Eat anywhere! “
"I eat at Shabusen on a weekly basis and don't mind the half hour drive to eat their sushi. All -you-can-eat menu is available, with bbq at each
table or hot pot. Prices are reasonable and service is very f ast and f riendly. Newly renovated with pleasant decor. They are very busy on Friday
and Saturday nights, reservations are recommended. I highly recommend this restaurant! A+ “
- Theresa O (firstname.lastname@example.org) (April 15th 2003, http://www.sushi.inf ogate.de/rest/na_canada_vancouver.htm
SIMPLICITY: THE NEW VALUE PROPOSITION -4 -
COMPUTERS: COMPAQ X1000 VS. OTHER LAPTOPS
Compaq X1000 Other Laptops
“All-on-one” proposition: when introduced, computer
included every possible optional feature: wide Current laptops had some features but not others, so
screen, wireless enabled, fast video card, large hard the customer would have to install additional
drive; FireWire, S-video, USB2, Ethernet, phone line equipment.
The laptop offering was very segmented, as
The simple positioning of X1000 series was a perfect
manufacturers tried to tailor machines to specific
replacement to the desktop, as it had everything the
tasks. As a result, laptops could not compete with
user might need.
better enabled and easier upgradable desktops.
Conventional offering is often one-sided, with some
It resulted in a winner product at a reasonable price. critical components missing as manufacturers were
fighting to get consumer to trade up.
Just bought the X for my wife. Set up our first wireless network and everything went well. The widescreen is fabulous to look at and the notebook
very easy to use. […] We got the 1.3 and seems to be as fast as my p4 2.5 desktop. For most people the WXGA screen will be good enough,
max res of 1280. […] Anyway first notebook and really loving it.
This computer truly represents a new age in mobile computing. It is incredibly fast, on battery power it lasts twice as long as any other computer I
have owned, the screen in bright and accurate, as a multimedia / entertainment computer few will top it, and for all it offers, it is remarkably thin
and light. Go to a store that has an X1000 and other notebooks on display. Notice how the crowd gathers around the Compaq. Th ere is good
reason for that.
SIMPLICITY: THE NEW VALUE PROPOSITION -5 -
WINNER PRODUCTS HAVE A LOT IN COMMON
• Straightforward, simple product offering.
• High-end, sophisticated, quality product.
• Limited choice.
• Winner product features: the product includes many traditionally optional features.
• Attractive pricing allows achieving high sales.
• Low overhead: the product itself produces buzz.
SIMPLICITY: THE NEW VALUE PROPOSITION -6 -
OTHER THINGS TO THINK ABOUT
• What industries this simple value proposition could work in and why.
• Role of economies of scale.
• Existence of “winner configuration”.
• Simplicity should provide value for consumer and cut cost for marketer.
• How to invent simple products.
• What else?
SIMPLICITY: THE NEW VALUE PROPOSITION -7 -
SIMPLICITY: THE NEW VALUE PROPOSITION -8 -
ING DIRECT PRODUCTS
SIMPLICITY: THE NEW VALUE PROPOSITION -9 -
A BETTER SAVING ACCOUNT
ING DIRECT offers an alternative to traditional banking that provides a better value to customers. ING
DIRECT (the operating name of ING Bank, fsb) does business online, over the phone or by mail, and that
keeps costs low. Without the overhead and high operational cost of other banks, rates on the Orange
Savings Account and Orange CD accounts are higher and rates on home loans lower. The savings and CD
accounts allow you to earn the highest rates in the nation with no fees and no minimums. The Orange
Mortgage is an adjustable rate mortgage with no application fee, no points, and great rates that can save you
thousands. ING DIRECT is banking made simple to help you Save your money!
SIMPLICITY: THE NEW VALUE PROPOSITION - 10 -