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B – C = V

B – C = V. How people make IT choices. 1. Definitions b – c = v. Value = The difference between the benefits enjoyed and its costs Benefits – Happiness, enjoyment or advantages produced by a product or service Cost – Price paid to acquire, produce, accomplish, and maintain.

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B – C = V

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  1. B – C = V How people make IT choices "Changing neural pathways every class period."

  2. 1. Definitions b – c = v • Value = The difference between the benefitsenjoyed and its costs • Benefits – Happiness, enjoyment or advantages produced by a product or service • Cost – Price paid to acquire, produce, accomplish, and maintain "Changing neural pathways every class period."

  3. 2. Types of Benefits/Costs Benefits Organize Entertain Enhance prestige/status/sexiness Increase efficiency Communicate Connect with people Improve security Improve health Monitor Increase power Send symbolic message Experience something unique Make a task easier Make a task more convenient Improve reliability/certainty Costs $$$ & Time Acquiring Learning Using Maintaining (Updating) Disposing Ego Safety Privacy Lock-in (loss of flexibility) "Changing neural pathways every class period."

  4. 3. Increasing IT value Drive Up Benefits Add features Improve “sex appeal” Aesthetics Celebrity Endorsements Enhance performance Improve durability Offer choices Highlight network effects Provide “loyalty rewards” Create valued experiences Drive Down Costs Simplify (“de-complexify”) Offer warranties Provide training Ease ordering process Offer service agreements Reduce price Institute a “return policy” "Changing neural pathways every class period."

  5. 4. IT provider’s perspective on the “value game” • Avoid oversupplying benefits • Use “switching costs” to your benefit • Maintain loyalty • Encourage “upgrades” • Decrease benefits • Increase maintenance costs • Maximize the impact of “network effects” • Provide unique benefits or lower costs to consumers (e.g. marketing strategy) "Changing neural pathways every class period."

  6. 5. So what? • What is a benefit/cost to you may not be to another person. • Initial perceptions of benefits/costs may not correspond to experienced benefits/costs • Today’s benefit/cost may not be the same as tomorrow’s benefit/cost (e.g. value is a fluid concept) • Social networks moderate perceptions of value • Value-added innovations either increase benefits or decrease costs • Some benefits/costs are difficult to quantify • The interests of IT consumers and companies are not always the same "Changing neural pathways every class period."

  7. 6. Applications Zune 30 gig (Brown) = $220 vrs. iPod 30 gig (Black) = $237 vrs. vrs. "Changing neural pathways every class period."

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