Offering design

Providing offerings that exceed what customers expect is the goal of offering design.

Successful offering design depends on an organization’s ability to tailor its offerings to each individual customer’s specific needs. Offering design takes into account several factors, such as: the potential added benefit which an offering may provide for a customer and the offerings and cost of competitors.

Custom offerings

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Customer orientation does not mean providing every customer with a comprehensive offering, including a broad range of services. For example IKEA has become the global leader in furniture and interior design by providing less services to customers (for example, you have to pick up the furniture and assemble it yourself) but is still very customer-oriented. For IKEA, the customer value-creation process means that the ideal offering is one that provides maximum value within a certain price bracket. But for customers looking for something exceptional, and willing to pay a higher price, the ideal offering looks different.

Increasingly offerings also provide value through the associations and relationship impact they provide to the customer and user. The fashion industry is the natural example here, but increasingly more and more goods and services are evaluated as fashion items. Mobile phones are one example, and one could question to what extent Apple is a fashion company and to what extent it is a technology company.

Defining an ideal offering

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Offering design must therefore  carefully evaluate, which are the different value-creating potentials that could be satisfied, and then look for those potentials that best match the addressable capabilities of the company. At the same time it has to be understood what the competitors may be able to offer and at what price. Globalization and the transparency of price and quality information of both goods and services have also increased the speed by which industries are facing transformations to increased global sourcing and offshoring in order to meet the price points required by the customers. Therefore most companies are forced to expand their orchestration activities for purely defensive reasons, as this is the only way to rapidly address the request for lowering prices in order to stay competitive. However, only focusing on price will in most cases become a losing strategy, as most markets in maturing will enable networked strategies accessing modular offering elements from the global supply, and combining them together locally near the customers with very little overhead. This has happened with mobile phones in China, and with many other products. Finding the right balance between cost efficiency and creative value enhancement therefore is the key objective for offering design.

Case studies