Understanding the Facets of Economic Value Estimation

 Prasad Sista is an Illinois-based finance and marketing expert. He obtained his MBA in finance, marketing, and entrepreneurship at the University of Chicago Booth School of Business. Prasad Sista currently works as a senior value advisor at SAP Downers Grove, where he provides strategic advice and support in creating value propositions.

Providing value is crucial in any business. It is how customers measure what is worth purchasing and decide between market competitors. Customers often assess the monetary value, that is, how the product affects their total income or savings, as well as the psychological value, that is, the level of satisfaction it provides, in attaching value to a product. They also significantly consider the availability of alternatives and the value attached to them, known as the reference value.

Economic value estimation is therefore a calculation of how buyers decide between a product and the best alternatives. This information is a great tool for any organization as it allows the business to understand how their customers think. In doing this, they can develop effective marketing strategies, know how to set prices, and guide the development of new products and services. Companies that apply these economic virtues often adopt ease of use, aesthetic appeal, quality, and emotional appeal to the development or improvement of their products or services.

Tips for Creating a Value Proposition

Drawing on over two decades of executive-level experience in strategy, product management and marketing, and finance, Prasad Sista has served as senior value advisor with SAP America Inc. since May 2017. In this role, Prasad Sista strategically advises customers and supports sellers while creating business cases and value propositions.

Part of the overall marketing strategy of a company, a value proposition denotes the value it promises to deliver to its customers if they choose to purchase its product. In a nutshell, it is a short statement that communicates to prospective buyers the product’s attractive points and differentiating qualities from other similar offerings and the reasons it is worth buying. Formulating a compelling value proposition can be a challenge. Following are three tips that can facilitate it.

Identify the Target Customers and Their Needs

Trying to appeal to everyone results in a diluted value proposition. Instead, companies should find their target customer and get a deeper understanding of their motivations, needs, and challenges. Conducting market analysis and research, creating buyer personas, and speaking to customer service representatives and salespeople can help companies identify their ideal customers and what problems they expect the companies’ products or services to solve. They can then include this information in the value proposition and make it a customer-centered one.

Know the Competition

Studying the competitors and their value proposition is equally essential. It can help companies tweak their value proposition to increase its impact. Furthermore, by identifying the strengths and weaknesses of their main competitors, companies can establish their key differentiators.

Keep It Clear and Concise

A powerful value proposition is concise, well-articulated, and relatable. It should not be more than three sentences. Customers should be able to grasp the message the company wants to deliver and the product’s benefits right away. Finally, the value proposition should convince them that their problems will be solved.

Basic Business Valuation Methods

A business leader with a strong background in industrial and mechanical engineering,

Prasad Sista has served as a senior value advisor with SAP since 2017. One of Prasad Sista’s areas of expertise is value estimation using advanced methods.

Industry professionals use a wide variety of analytical techniques and technology to determine the value of businesses and other investment assets. Each type of asset requires unique approaches to valuation analysis.

When estimating the value of a business, it is first important to take stock of all of its assets. In addition to cash and stocks, these assets might include equipment, inventory, real estate, intellectual property, and even customer relationships.

In addition to present assets, both past and future earnings should be key considerations in any business valuation. Therefore, evaluators must complete comprehensive historical earnings and future maintainable earnings valuations. Businesses that cannot expect stable profits in the future may require a discount cash flow valuation, which discounts projected net cash flows at present-day values. Evaluators should also conduct relative valuations on similar businesses for comparative purposes.

Technology Is Making Business

Prasad Sista works as a senior value advisor for SAP America Inc, a company offering business and technology solutions to its customers. As part of his job, Prasad Sista examines how clients can increase the efficiency of their operations, and technology plays a major role in this.

Cloud technology has seen steadily increasing adoption over the last decade as the technology has evolved. This technology has made the world truly accessible from anywhere, as it allows data and information to be stored and accessed remotely. Businesses can utilize this for numerous applications, and in general, it makes workers more efficient.

Project management software is also being used much more frequently today. With many businesses needing various working groups to collaborate on projects, software to organize it all is essential. This software allows management and employees to access work and communicate on a shared platform, ensuring everyone is kept up to date.

One of the biggest factors of worker boredom and fatigue is monotony. Traditionally many workers had to do small repetitive tasks all day, which can be mentally and physically draining. Technology has helped eliminate a lot of these roles, so employees can focus on tasks that require more skill.