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20Sep '11

An Integrated Model of Value Creation Based on the Refined Kano’s Model and the Blue…

Total Quality Management & Business Excellence

Theme: Theoretical integration of blue ocean strategy with Kano’s model for creating customer value, as illustrated by the case of Daiken air conditioners in China.

Summary: This paper argues that a firm can create four types of value for customers: psychological value, creative value, functional value and economic value. The authors attempt to theoretically integrate blue ocean strategy with Kano’s model for assessing quality attributes of an offering to create unique blue ocean value for customers. Kano’s model states that the assessment of value or quality of an offering involves both an objective assessment (as to whether a given quality attribute is fulfilled), as well as a subjective assessment (the customer’s perceived level of satisfaction). Yang (2005) expanded on Kano’s work by taking into account the degree of importance of an attribute as perceived by customers, categorizing value/quality attributes into eight groups: highly attractive, less attractive, high value-added, low value-added, critical, necessary, potential and care-free. Using the practical example of Daiken air conditioners, a leading manufacturer in China, this paper maps the refined Kano categories onto blue ocean strategy’s four actions: eliminating, reducing, raising and creating. The authors suggest that to create unprecedented value for customers, companies should consider eliminating care-free attributes; maintain necessary and less attractive attributes; raise critical, highly attractive, and high value-added quality attributes; and finally create novel integrated quality attributes/ factors.

Reference: Yang, Ching-Chow, and D. Sung. “An Integrated Model of Value Creation Based on the Refined Kano's Model and the Blue Ocean Strategy.” Total Quality Management & Business Excellence, Special Issue: From Value Creation to Customer Satisfaction 22 (2011): 925-940.
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