Puretone Ways to Play
Since 2008, we have conducted an ongoing research effort to identify the value propositions of companies around the world. This often involves deconstructing the “ways to play” of particular companies: breaking down the value they provide to customers into common strategic archetypes. We have identified fifteen of these “puretone” archetypes, as we call them. They are prevalent in companies around the world. Most companies combine two or more of them into a more distinctive strategy. You can use the puretones to identify another company’s value proposition, or to design your own.
To illustrate and clarify each puretone “way to play,” we have long used the examples listed here. They are meant to demonstrate each concept with real-life, generally understood examples. Some companies are listed under more than one puretone; their value proposition is bespoke to them, unlike any other, all distinctive variations on the archetypal puretone themes. Nonetheless, in looking at the list of examples, the essence of each value proposition may be easier to grasp.
Puretone ways to play
| Puretone way to play (value proposition) | Definition | Examples of companies that incorporate these puretones | Comments |
|
Aggregator |
Provides the convenience and simplicity of a one-stop solution |
Amazon Apple (through its App Store and iTunes) W.W. Grainger Inc Any peer-to-peer e-commerce business, where people exchange rooms, rides, goods, or services |
These companies pull together multiple suppliers or sources under one common experience. |
|
Category leader |
Maintains top market share in a category and uses that position to shape and influence downstream channels and upstream supply markets, gaining leverage and customer loyalty |
Most of the “supercompetitors” described in chapter 6 Coca-Cola Danaher’s member companies Frito-Lay Intel L’Oréal GE Pfizer’s consumer healthcare business in 2001– 2006 (as described in this book) Starbucks Walmart |
These companies often develop mass marketing capabilities that provide broad market appeal, combined with a high level of influence on both the value chain and the retail channels of the entire category. |
|
Consolidator |
Dominates an industry through acquisitions (“rolling up an industry”) to provide either a value benefit to consumers or access to a platform with products and services that otherwise would not be possible |
Danaher GE Many tech companies that use acquisition to build and maintain a platform, including Apple, Cisco Systems, Google, Microsoft, and Oracle. |
Consolidators acquire rivals and offer customers access, technology, or prices that no smaller or less comprehensive company can provide. |
|
Leverages insight and market intelligence to offer tailored products or services |
Burger King (with its “have it your way” campaign) Companies that build electronics and computer systems to order Frito-Lay (assortments tailored to the retail stores) Most B2B software development companies Haier Inditex |
The internet, with its interoperability, automation of customer insight, global reach, and lowered transaction costs, has made it easier to succeed as a customizer. |
|
|
Disintermediator |
Helps customers bypass unreachable or more expensive distribution channels and parts of the value chain, thereby providing access to otherwise inaccessible services and products |
NAPA Auto Parts (Genuine Parts Company)
Priceline 3PLs (third-party logistics firms) |
To deliver its way to play, a disintermediator must provide enhanced value for its customers, usually by cutting costs or aggregating volume. For example, the 3PLs provide “on-demand transportation”—in consumer packaged goods, these firms can take over an entire distribution chain, with capabilities they deploy on behalf of all their clients. |
|
Experience provider |
Builds enjoyment, engagement, and emotional attachment through strong brands or experiences |
Apple Hotel chains with a design-based or specialty value proposition IKEA Lego McDonald’s Sports car makers Natura Starbucks Virgin Airlines and other Virgin companies (Virgin Group) |
Unlike premium players, these businesses can be viable at all price segments. In many US communities, for the price of a Happy Meal, McDonald’s provides the most accessible and engaging indoor playground available. Experience providers can also include those manufacturers who make the use or purchase of their product feel like a noteworthy event. |
|
Leverages foundations laid by innovators to quickly introduce competing offerings, often at greater value or to a broader base of consumers |
Generic pharmaceutical manufacturers Google (with Android) Hyundai Chinese shan zhai (innovative “knock-off” manufacturers) |
Many successful innovations (e.g., the steamboat, electric power, television, personal computer) were spread through fast followers that successfully marketed someone else’s innovation. |
|
|
Innovator |
Introduces new and creative products or services to the market |
Apple Haier Inditex Leading-edge biotech companies Procter & Gamble Philips (Koninklijke Philips N.V.) Under Armour |
These are not just introducers of new products or services, but companies whose ongoing innovative capability enables them to consistently win and hold customers. There are many types of innovators, and the most successful ways to play clearly define the type of innovation and why it distinguishes a particular company. |
|
Platform provider |
Operates and oversees a shared resource or infrastructure |
Electric power utilities Lego Microsoft (with Windows) New York Stock Exchange FedEx Conrail (CSX and Norfolk Southern Railway) Back-office transaction processors Natural resource providers (oil, natural gas, forest products, and mining companies) |
These companies create a platform or resource that others can share by doing business with them. Whether they are heavily regulated or not, they have an implicit role as stewards of the resource they manage. |
|
Offers high-end products or services |
Herman Miller Luxury automakers such as BMW Nordstrom Premium hotel chains such as Ritz-Carlton |
Customers pay for both status and perceived value: customer service (Nordstrom), artistry (Herman Miller), performance (BMW). |
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|
Regulation navigator |
Offers access to otherwise unreachable products and services by managing within government rules and oversight, and by influencing them |
Pfizer’s consumer healthcare business in 2001– 2006 (as described in this book) Health insurance companies China National Off-Shore Oil Corporation (government owned) Industrial and Commercial Bank of China (government owned) Some trading companies (Mitsui) |
These companies are viable in nations and sectors where governments control or regulate a large percentage of business activity. The CEO of a Turkish company once remarked that in a pre-deregulation environment, it was important to operate in many product lines, to have allies in multiple ministries, because pleasing the government was more important than pleasing customers. These companies can be vulnerable if regulation frameworks change. |
|
Reputation player |
As a trustworthy provider, charges a premium or gains privileged access to customers |
CostCo Financial services companies with reputations for probity (which many have struggled to retain or rebuild since the mid-2000s) Natura Pfizer’s consumer healthcare business in 2001– 2006 (as described in this book) Tata Seventh Generation Volvo (Geely Automotive) |
The reputational attribute is not necessarily altruistic, but it is tied to a value other than saving money. Volvo’s reputation for safety was arguably a compelling factor in its 2010 purchase by the Chinese company Geely Motors. This way to play can backfire if a company lacks the capabilities or attention to follow through and its reputation erodes (BP, Enron, Honda and Toyota all experienced this), and it often depends on close connection with a dedicated, affiliated group of customers. |
|
Mitigates or pools market risk for its customers |
Commodity hedge funds New hybrid health care providers-payers, following the Kaiser Permanente model Many insurance companies |
Risk absorbers enable others to extend entrepreneurially or help them navigate uncertainty. |
|
|
Solutions provider |
Provides bundled products and services that fully address customer needs |
Ahlstrom (Oyj)
CEMEX Haier Lockheed Martin |
This group is also known as integrators, because the way to play depends on the capability to fit together disparate technologies and practices, including those from customers. |
|
Value player |
Offers lowest prices or tremendous value for comparable products and services |
IKEA
JetBlue McDonald’s Ryanair Southwest Airlines Tata Motors (with the Nano) Walmart |
Also known as low-cost producers, successful value players have the capabilities to sustain their position without falling into a commoditization spiral of price-based competition. |