So The Onion went after Sony (SNE) the other day. Funny, of course. We can all relate. Even the brand idolized for so long by Steve Jobs isn’t immune to forgetting that simplicity is the ultimate sophistication. Makes us wonder if there are incipient value gaps at SNE that might be leaking profitability. Here’s how it usually goes: Company isn’t always certain which product benefit the customer values the most because the company has its head too far up its products’ features (see the Onion video) and loses track of actual benefits. Outfits like Booz Allen say that lacking this knowledge stands in the way of optimum sales. Next, those excessive features – which are expensive to develop -- creep into the new products. Next, the price has to reflect the expensive new features – the same ones that do little except antagonize users and inspire satirical videos that fly all over the Internet. Price should be based not on your cost to develop and produce, but on the value your customers assign to the benefit they want most. See Apple’s success.
Moral: Optimize your revenue and protect your margins by knowing what your customers value the most and what they'll pay to get it. Keep your value proposition tuned.
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