Article at a glance:

Delivering value to customers

This collection of four classic McKinsey papers is a quick executive-education course in valuing and pricing products. "Market strategy and the price-value model" defines products in terms of the value customers ascribe to them as opposed to the price customers are willing to pay. This model helps managers to identify under- and overpriced products and to spot new market opportunities. "Economic value to the customer" provides a framework for quantifying the full value of business products—and thus what it would take to induce prospective customers to switch. "A business is a value delivery system" was one of the first and clearest illustrations of the "value proposition"—the succinct statement of the benefits that companies offer—and shows managers how to define and implement their own value proposition. Finally, in "Getting back to strategy," the noted strategist Kenichi Ohmae questions the wisdom of challenging industry rivals and argues that winning strategies focus less on attacking competitors than on creating value for customers.

The take-away

It is hard to develop a pricing strategy or a broader competitive strategy without knowing the value of your goods or services to customers. Powerful models and mind-sets help managers to work out how much they can charge for their products, to spot opportunities in the market, and—the ultimate competitive strategy—to serve customers in ways that competitors can't even imagine.