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1 Idea Insights from GNPS

Value Creation and Value Capture in

NPDEpisode 15-16

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2 Idea Insights from GNPS

New Product Development

• Companies conduct NPD projects to:• Increase market share• Grow revenues• Improve capabilities

• New products provide value to:• Consumer (value capture)• Manufacturer (value creation)

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3 Idea Insights from GNPS

Value Capture

• Value capture • Also called consumer surplus• Difference between perceived value and price paid

• Customers want to maximize value captured• Consumer wants to pay as little as possible• Producer wants customer to pay as close to reservation price as

possible

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4 Idea Insights from GNPS

Value Creation

• Pricing model• Price too high, customers leave• Price too low, potential profit decay

• Hard, accounting numbers• Value creation = price – cost

• Value creation may be greater than, equal to, or less than customer value capture

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5 Idea Insights from GNPS

Business Models

• Three elements to a business model:1. Customer value proposition (value capture)2. Profit formula (value creation)3. Key capabilities (value creation)

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6 Idea Insights from GNPS

For More Information

• See the full post at the Idea Incubator Blog• www.globalnpsolutions.com/idea-incubator/• Free registration

• Contact me!• 1-281-280-8717• info@globalnpsolutions.com• 2323 Clear Lake City Blvd., #180-177 Houston, TX 77062

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