Exploiting Findings from Game Theory to Succeed in a Competitive Environment

Diderich, Claude

doi:10.1007/978-3-030-25875-7_12

Cited by 1 publication

(2 citation statements)

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“…Both sets scriptSj and scriptEj may include functional (focusing either on value or on costs), emotional or symbolic as well as circumstantial or experiential attributes (Park et al ., 1986; Diderich, 2019). They are defined from the customer’s rather than the firm’s perspective.…”

Section: An Analytical Jobs-to-be-done Frameworkmentioning

confidence: 99%

“…The definition of a JTBD does not prescribe how the two sets scriptSj and scriptEj are identified. Successfully describing a JTBD requires observing customers in their natural environment using exploratory and qualitative techniques (Verganti, 2009; Liedtka and Ogilvie, 2014; Diderich, 2019), especially ethnography (Spradley, 1980; Hammersley, 2019). Smart data, rather than big data, leads to successful JTBD definitions.…”

Section: An Analytical Jobs-to-be-done Frameworkmentioning

confidence: 99%

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An axiomatic model towards understanding value creation and appropriation in demand-driven markets

Diderich

2024

JSMA

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PurposeIn demand-driven markets, customer value, sometimes called perceived use value or consumer surplus, is defined by the customer rather than the firm. The value a firm can appropriate, its profits, is driven by the customer’s willingness to pay for the value they receive, adjusted by costs. This paper introduces a conceptual framework that helps understand value creation and appropriation in demand-driven markets and shows how to influence them through strategic decision-making.Design/methodology/approachThis paper uses an axiomatic approach combined with an extended analytical formulation of the jobs-to-be-done framework to contextualise demand-driven markets. It mathematically derives implications for managerial decision-making concerning selecting customer segments, optimising customer value creation and maximising firm value appropriation in a competitive environment.FindingsRooting strategic decision-making in the jobs-to-be-done framework allows distinguishing between what customers want to achieve (goal), what product attributes need to be satisfied (opportunity space/constraints) and what value creation criteria related to features are important (utility function). This paper shows that starting from a job-to-be-done, the problem of identifying which customer segments to serve, what product to offer and what price to charge, can be formulated as an optimisation problem that simultaneously (rather than sequentially) solves for the three decision variables, customer segments, product features and price, by maximising the value that a firm can appropriate, subject to maximising customer value creation and constrained by the competitive environment.Practical implicationsApplying the derived results to simultaneously deciding which customer segments to target, what product features to offer and what price to charge, given a set of competing products, allows managers to increase their chances of winning the competitive game.Originality/valueThis paper shows that starting from a job-to-be-done and simultaneously focusing on customers, product features, price and competitors enhances firm profitability. Strategic decision-making is formulated as an optimisation problem based on an axiomatic approach contextualising demand-driven markets.

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