Value Drivers
oMaking a product or service unique to create higher value for customers and justify higher prices than competitors.
Differentiation
What is the overall goal of Cost Drivers?
Reduce firms costs below that of their competitors while maintaining the adequate value.
Sell the ecosystem lock-in by making money from keeping users inside its ecosystem
Apple
oUnique attributes (quality, design, innovation, customization) that justify higher prices.
Product Features
As you do something over and over, you get better at it, therefore driving down overall costs.
Learning Curve
Makes most profit from memberships, not product markups.
Costco
oPersonalized experiences that build loyalty.
Customer Service
Similar to learning curve, however it assumes an increase in technology that the learning curve does not.
Experience Curve
Often loses money on the hardware, profits from subscription and add ons
Playstation and XBOX
oAdditional products or services that enhance value and customer retention.
Complements
the cost advantages a business obtains due to an increase in the scale of production, resulting in a lower cost-per-unit
Economies of scale
Owns the land and buildings, then charges franchisees rent; real estate is the core profit driver, not burgers.
McDonalds