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Biz model 3 value proposition, cust selection

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These slides discuss value proposition and customer selection for business model

These slides discuss value proposition and customer selection for business model


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  • People don’t know what they want with respect to many things. We arent very rational in many ways
  • Tell them the old story about shoes. Two marketing analysts went to a poor country to investigated the market for shoes. One reported: no market, nobody wears shoes. The second reported: huge market, nobody wears shoes.
  • Tell story about how people often give reasons why a technology wont succeed even when they don’t know. They feel like they have to say something. Tell story about SUP and indexing
  • And this is easier to read than when u read in full-screen mode. Then u only see one page at a time. Why do we even have pages in electronic documents? Must think critically about products, not just try to use them
  • Anybody hear of kickstarter?
  • Who were the customers for these products?
  • who
  • Why might a consumer want the feeling of texture?
  • These slides focus on the hardware and not the software. Besides developing the software, running it requires computing power. How much?
  • Why would we want a smaller or more flexible light? Who must be involved in order to take advantage of small and flexible lights?
  • Where do we want thinness, response time. How about readability in daylight?
  • How much better are OLED displays for these applications? Will someone pay the extra price?
  • Bio-electronic chip senses electric charges, elasticities, forces and pressures
  • What kinds of products can we make as we combine these different materials?
  • Transcript

    • 1. Value Propositions andCustomer SelectionA/Prof Jeffrey FunkDivision of Engineering and Technology ManagementNational University of Singapore
    • 2. Business Model Value proposition: what to offer and how todifferentiate Customer selection: whom to serve and not serve Value capture: dominant source of revenues Scope of activities: what activities to carry out andwhat relationships to have Strategic control: how to sustain profitability
    • 3. Outline Customer needs Market segments and customer selection Definition of value proposition Examples Quantitative methods Conclusions
    • 4. Simple Definition of Marketing To determine the NEEDS and wants oftarget market and deliver the desiredsatisfaction more effectively and efficientlythan competitors
    • 5. What is a Need?Today’sBusinessCustomer NeedsUnarticulatedArticulatedCustomer TypesServed Unserved
    • 6. What is a Need? (continued) Understand needs from perspective of:◦ Economic value◦ Functional value◦ Psychological value Collecting data on customer needs◦ Surveys◦ Focus groups◦ Analysis of buying patterns What are the broad trends that impact oncustomer needs?◦ Social networking◦ Mobile lifestyles
    • 7. Do People Know what they Need? 40 years ago did most people think theyneeded◦ Mobile phone◦ Internet-compatible phone◦ Computer, digital camera◦ Foreign vacations Surveys in early 1980s suggested thatusers didn’t need/want mobile phones But they ended up buying one andnow, many say they can’t live without one Part of the problem is that surveys didn’ttake into account falling prices of mobilephones
    • 8. What if we Look at theirPurchasing Behavior? Better than asking them, but still notperfect Does a person buying a drill need a drill? No, they need a hole! Or maybe they need a way to connect toitems with◦ A screw◦ A screw and a bolt
    • 9. What if we Look at theirPurchasing Behavior? (2) Do Westerners only like Western food? Westerners used to only eat Western food But now they eat many kinds of foods How should we have interpreted theirpurchasing behavior when they only ateWestern food?
    • 10. What if we Look at theirPurchasing Behavior? (3) There are other reasons to be carefulwhen generalizing about countries Generalizations only reflect “averages” or“medians” And we are interested in specific needs ofspecific people If you can find unserved or unarticulatedneeds, you can be very successful
    • 11. It’s not Just Consumers, it’s Firms Organizations do things inefficiently becausethey◦ have always done them this way or◦ don’t know really understand what they need 30 years ago, many logistics people didn’tknow they needed deliveries to assemblylines or retail floor, and not to loading docks! Does NUS know that they need cloudcomputing? Or that Google mail is easier touse than NUS mail? Part of the problem is that final users havelittle impact on many organizational decisions(e.g., purchasing computers or furniture)
    • 12. As a Seller of Products & Services You need to know who makes decisions Who are the key decision makers?◦ Purchasing managers?◦ Other managers? Who are the key collaborators?◦ Retail outlets and other distributors◦ Suppliers of complementary products Does your value proposition match theirneeds?
    • 13. Another way to look at needs Empathy Map From Business ModelGeneration, Alexander Osterwalder
    • 14. What does sheTHINK AND FEELWhat really countsMajor preoccupationsWorries and aspirationsWhat does sheSEEEnvironmentFriendsWhat the market offersWhat does sheHEARWhat friends sayWhat boss saysWhat influencers sayWhat does sheSAY AND DO?Attitude in publicAppearanceBehavior towards others?PAINFearsFrustrationsObstaclesGAINWants/needsMeasures of successobstacles
    • 15. Empathy Maps Can you define empathy maps for avariety of different segments? Define a representative user for eachsegment and define hercharacteristics, needs, and what she◦ Says and does◦ Hears◦ Thinks and feels
    • 16. Outline Customer needs Market segments and customer selection Definition of value proposition Examples Quantitative methods Conclusions
    • 17.  Different market segments, i.e., users◦ have different willingness to pay and demand different levels ofperformance◦ demand different types of features or performance◦ make different tradeoffs between performance, features, price◦ fundamentally want different products These segments emerge over time◦ Often difficult to specify them before products begin to diffuse◦ Some markets have more segments (i.e., sub-markets) than othermarkets◦ Understanding the differences and similarities betweensegments is critical for businessesMarket Segments and Diffusion
    • 18. Segmentation Categorize customers in groups that havedistinct needs◦ How many types of customers are there?◦ What differentiates them, how are their needsdistinct?◦ How valuable might they be (size of market andpotential profitability)?◦ Which segments will be the first adopters of thenew technology?◦ How will the definitions of the segments evolve? Understand the differences between productand market segments
    • 19. Targeting Select the segment (s) that have the bestshort and long-term prospects for the firm◦ If a new technology, they must be earlyadopters of new technology◦ have a large potential value (Present/Future)◦ fit with the company’s core competency◦ preferably not fit with the competitor’s corecompetency You must justify your choice of targetsegment(s)
    • 20. Must Connect Customer Needs withCompany’s CapabilitiesRequire the effective andefficient reconciliation ofany differencesMarket PullWhat the market orsegment indicates itneeds/wants and iswilling to pay forCompany PullWhat the firm iscapable of andwilling to provideto the marketVoice of theMarketVoice of theFirmMarket-BasedFirm
    • 21. Ideally, we would select not just asegment, but the first customers inthat segment In addition to whether the technology is appropriate forthe targeted segment,◦ Do you have the connections with the right customers and thedecision makers for those customers?◦ Will these customers tell others about the new technology?◦ Will other customers listen to the first customers?
    • 22. This an Iterative Process1. Segment Market2. Identifyneeds in each marketexisting products in each marketstrengths and weaknesses ofeach productwhere are the opportunities?3. Select segment (customer)and propose value proposition(and propose more than just a simpleand clear statement, more below)
    • 23. Outline Customer needs Market segments and customer selection Definition of value proposition Examples Quantitative methods Conclusions
    • 24. Value PropositionValue tothetargetmarketBenefits tothetargetmarketPrice tothetargetmarket=RelativetoA simple and clear statement of the intended targetmarket, the benefits of the offering, and the priceNew technologies/products diffuse because they offer asuperior value proposition to users
    • 25. Value Proposition But what constitutes a great value proposition?◦ Large benefits and low price This requires innovation! Let’s look at some examples (all of them can bedefined as discontinuities). For each of them◦ What is the value proposition?◦ What enables them to have a great value proposition?◦ To a lesser extent, what enabled them to be introduced at thattime?
    • 26. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products, touch screens◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 27. What isvalueproposition?Who werefirstcustomers?
    • 28. What isvalueproposition?Who werefirstcustomers?
    • 29. What is value proposition?Who were first customers?
    • 30. These Products IntroducedNew Types of Value iPad and iPhone◦ better user interface for accessing Internet◦ touch screen that eliminated need for keyboard◦ large number of apps, supported by well-designed operating system iPod◦ first portable MP3 player that actually worked◦ excellent integration with online music site◦ easy control with click wheel
    • 31. Who were the Customers forthese Products iPod◦ Music lovers◦ Young people iPhone◦ Also young people, why? iPad◦ Many young people, but not those that usecomputers for creating documents, Why? How about Apple’s laptops?
    • 32. But not just final users, thereare also other customers iPod◦ Music companies: cooperation with them wasneeded for iPod to succeed iPhone◦ Phone companies, application software providers iPad◦ Application software providers and also mediacompanies Multiple types of customers exist for manytechnologies
    • 33. Timing (1) What kind of changes determined theirtiming? Was it social, technological, or regulatorychanges? Why weren’t these products introducedmuch earlier than they were? Could they have been introduced yearsbefore they were?
    • 34. Timing (2) All of these products needed◦ Large memory storage◦ Fast processors◦ But could these products have been introducedwithout so much memory or processors? What determined when ICs had sufficient memorycapacity and processor speed? iPad and iPhone needed touch displays◦ What determined the timing of the displays?
    • 35. Looking to Future What are limitations of Apple’s products? What do these limitations tell us aboutpotentially better valuepropositions, i.e., solutions, in the future? Can improvements in memory andprocessor ICs or in touch displays lead to◦ better products,◦ those with better value propositions?◦ Or might other improvements in othertechnologies enable better value propositions?
    • 36. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products, touch screens◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 37. Touch Screens (1) Many kinds But most arevariations ofeither◦ Resistive◦ Capacitive (iPhone) Depend on newmaterials that aredeposited on topof an LCD display Processorsinterpret the data
    • 38. No “look” touch Interface◦ Existing screens require one to look carefullyat screen while touching specific place◦ Tactus offers overlay thatfacilitates proper locationof finger “Bubbles” rise out of displaywhen fingers touch displaythus helping fingers find“right spot” These bubbles are formed using MEMS (micro-electronic mechanical systems) Studies have found that faster and more accuratetyping are achieved with the Tactus overlay
    • 39. How the Tactus System WorksMicro-channels are filled with fluid whose refractive indexmatches that of top polymer layerThus, transparency is even across surface
    • 40. What about CustomerSelection? Who are the customers? Why might they want Tactus’ touchscreen What might they consider as they makedecisions about touch screen? How can we collect information aboutwhat they consider?
    • 41. Texture Touch Displays Sensation of texture can provide moreinformation for users This can be done using changes invibration with◦ small motors or◦ transparent electrodes (Senseg), whichprovide information about texture, etc.http://www.youtube.com/watch?v=1oARSmw21rg (from 1 minute mark) Early applications: 3D modeling orremote surgery can benefit from dataon texture of materials or organs
    • 42. What about CustomerSelection? Who are the customers? Why do they want Senseg’s touchscreen What will they consider as they makedecisions about touch screen? How can we collect information aboutwhat they consider?
    • 43. Applications for Touch Displays Not just smart phones But also◦ Advertising displays atbus stops or MRT stations◦ Mall information displays◦ Self checkout in stores◦ Information counter instores◦ Sony’s AtracTable is beingdeveloped for theseapplications
    • 44. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 45. Microelectronic Mechanical Systems(MEMS) Small feature devices or machines Fabricated with techniques similar to thoseused with integrated circuits But use many different materials◦ Silicon◦ Polymers◦ Metals◦ Ceramics
    • 46. Ratchet Mechanism Actuator Torsional AcutatorEarly Optical Switch Clutch Mechanism Anti-reverse mechanismhttp://www.memx.com/
    • 47. Source: MEMS Technology Roadmapping, Michael Gaitan, NISTChair, iNEMI and ITRS MEMS Technology Working Groups Nano-TecWorkshop 3, 31 May 2012
    • 48. Source: Clark Ngyuen, August and September 2011 Berkeley lectures; ppb: parts per billionppt: parts per trillion
    • 49. For Each Application Who are the customers? What is the specific value proposition foreach of them? How are MEMS better than the currenttechnology?◦ In terms of performance◦ In terms of price
    • 50. MEMS for Inkjet Printers MEMS are used to eject ink Benefits◦ Smaller and thus higher resolution nozzles◦ Faster printing because print head covers widthof page◦ Less ink usage◦ Lower cost through IC-based technology
    • 51. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 52. Gesture InterfacesKey Components2D/3D Camera(image sensor)Tracking, Recognition &GestureUnderstandingSoftwareKey dimensions that need improvement areAccuracy, Throughput and Affordability
    • 53. Leap has Generated Excitementhttp://www.youtube.com/watch?v=_d6KuiuteIALeap uses multiple camera sensors to recognize gesturesWorkspace is about 3 cubic metersBetter sensors will enable larger work spaces$70 control system that plugs into any computerMIT’s Technology Review calls Leap, “The most importantnew technology since the smart phone…”How about Microsoft’s Kinect?http://www.youtube.com/watch?v=o4U1pzVf9hY
    • 54. Types of Augmented RealityGlassesPhones
    • 55. For each of these technologies Who are the customers? What is the specific value proposition foreach of them? How are MEMS better than the currenttechnology?◦ In terms of performance◦ In terms of price
    • 56. What about Putting Eye TrackingTechnology in Google Glasses
    • 57. Other Applications of Eye Tracking Use cameras totrack eyemovements◦ Monitor drivers orother operators ofmachines◦ Help paralyzed peopleuse computers As cost of camerasfall◦ Eye tracking mightbecome user interfacefor non-paralyzedSource: http://www.economist.com/news/technology-quarterly/21567195-computer-interfaces-ability-determine-location-persons-gaze
    • 58. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 59. Type ofSpecsIncandescentLampFluorescentlampLED OLEDThickness Very Thick Very Thick 6.9 mm (for LEDTV)1.8 mmFlexibility Very inflexible,and breakableVery inflexible,and breakableSome flexibility Most flexibleDanger to eyes Can’t stare atthemCan’t stare atthemCan’t stare atthemOkay to stareLifespan 500-700 hrs >10, 000 hrs 100, 000 hrs 15, 000 hrsPrice of 60 WattbulbA few USD <5 USD 70 USD Most expensiveEfficiency/Brightness300 USD/Year for800 lumens75 USD peryear30 USD per year Not yet efficientEnvironmentalfriendlinessLow efficiency ContainsmercuryMost efficient, notoxic chemicalNot yet efficient,no toxic chemicalComparison of Lighting in 2012Source: Group presentation in MT5016 module and http://electronics.howstuffworks.com/led4.htm
    • 60. Applications for OLED Lighting
    • 61. Value Proposition: New Displays
    • 62. OLED Display ApplicationsCustomer TypesCustomerNeedsUnarticulatedArticulatedServed Un-ServedConsumers products display, e.g.TV, mobiles, tablets etc.Automotive Lighting & DisplaysDigital WallTransparent MonitorHousehold Lighting?3D glassRollable Display
    • 63. Build astretchymesh withelectronicson thinislandsconnectedby springybridgesprintmeshonto thinplasticwhichholds theentiremeshtogetherBuildbody-wornstickersthatmeasurebodyactivityWater-proofBreath-able
    • 64. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 65. Early Applications: cardiac pacemaker andcochlear implant.
    • 66. http://www.siliconsemiconductor.net/article/69596-Efficient-mixing-in-milliseconds-with-lab-on-a-Chip.phpAnother Type ofBio-Electronics:Simple formof MEMS withMicro-FluidicChannels
    • 67. Example of Inputs, Outputs and Processingon Bio-Electronic IC
    • 68. Applications in Laboratories and in Homes are Emerging asImprovements are Made to Bio-ElectronicsLabs:
    • 69. Customers and Value Propositions Hospitals? Doctor Offices? Homes? Would less training be needed to usethese devices than current devices? Can patients use them on their own? How about rural areas where there arefew doctors? Can chips and cartridges be placed insidemobile phones?
    • 70. Composition of a Bionic EyeSource: Building the bionic eye: an emerging reality and opportunity, Lotfi B. Merabet (2011)
    • 71. Source: Biomaterials 29(24–25): 3393–3399MEMS-BasedElectrodeElectrodeImplantedInto RetinaMEMS-based Electrode is Implanted into Retina
    • 72. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 73. Fullerenes, Graphene, Carbon NanotubesFullerenes: specific number ofcarbon atoms arranged assphereGraphene: flat sheet ofcarbon atomsCarbon Nanotubes: flat sheetis rolled so that sides areconnected, thus creating tubemultiple walled tube containsmultiple tubes
    • 74. Graphene A single layer of carbon atoms gives high specificsurface area (1000 -1800 m2/g) with theoreticalmaximum of 2,600 m2 per gram Very low electrical resistance, high thermal conductivity(4,000 W/m-K), and high mobility (about 200,000cm2/Vs at room temperature, compared to 1,400 insilicon and 77,000 in indium antimonide) One of strongest materials, but yet flexible Unusual optical behavior: equally transparent toultraviolet, visible and infrared light Two current markets (composites for strength andelectrodes for conductivity) but also displays, computerchips, and solar cells Very expensive! But cheaper than carbon nanotubesbecause less energy and lower purity gaseous feedstockare needed. Also more surface area per gram thancarbon nanotubeSource: Segal, Michael (2009). "Selling graphene by the ton". Nature Nanotechnology 4 (10): 612–4Nature 483, S29 (15 March 2012). Also http://www.azom.com/news.aspx?newsID=11679
    • 75. Improvements in Graphene (andother Materials) Single layer of graphene with 30 inch diameter Fabricate graphene in a roll to roll process infuture Now there are more than 10 materials that areall two-dimensional with complimentaryproperties that could be integrated withgraphene to provide extra functionality. Boron nitride is also one-atom thick and insteadof being a conductor it is an insulator (ofheat), the best insulator we knowSource: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3
    • 76. Improvements in Graphene (andother Materials) - continued If you go to three atoms thick we have anothermaterial called molybdenum disulfide which is asemiconductor, like silicon, but lighter andstronger. These materials can then be combined in orderto fabricate completely new material structuresthat dont exist in nature.Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3
    • 77. Carbon Nanotubes (1) Diameters and axes impact on◦ levels of conduction and thus◦ whether the carbon nanotube is aconductor, semiconductor, or an insulator Conducting nanotubes◦ 1000 times higher conductivities than copper◦ 100 times higher current densities thansuperconductors Strongest materials known in tension High thermal conductivity But hard to fabricate (Easier to makelong superconductors)
    • 78. Potential Applications Composites for structural materials(e.g., racing bikes) Anti-fouling paint for ships Printed CNT transistors on polymer film Transparent electrodes fordisplays, solar cells But which ones have the largest needfor highest performance and the lowestprice sensitivity?
    • 79. Outline Customer needs Market segments and customer selection Definition of value proposition Examples◦ Apple’s recent products,◦ Microelectronic mechanical systems (MEMS)◦ Other human-computer interfaces◦ Lighting and displays◦ Bio-electronics◦ Nano-technology, Superconductivity Quantitative methods Conclusions
    • 80. Superconductivity Characteristics of superconductingmaterials◦ zero electrical resistance◦ expulsion of magnetic fields Most superconducting materials do so atvery low temperatures and thusphenomenon was not useful until recently
    • 81. Recent Increases in Critical Temperature…http://www.ccas-web.org/superconductivity/
    • 82. Problems Expensive Often brittle Only operate at very low temperatures,which require liquid nitrogen or evenhelium Superconductivity disappears at highcurrents and/or magnetic fields Which applications have the largest needfor highest performance and the lowestprice sensitivity?
    • 83. Potential Applications Magnetic Resonance Imaging (MRI) Energy usage and transmission◦ Transformers◦ Motors and generators◦ Cables◦ Fault current limiters Electronic devices (very fast and very lowenergy consumption)◦ Used in quantum computers Magnetic levitating trains Fusion
    • 84. More Information on theseTechnologies Can be found in many places, but oneplace is my slideshare account http://www.slideshare.net/Funk98/presentations Slides on technology change from myMT5009 module◦ Time series data on improvements◦ Drivers of improvements◦ Group presentations
    • 85. Outline Customer needs Market segments and customerselection Definition of value proposition Examples Quantitative methods◦ Strategy canvas, i.e., Blue Ocean Strategy◦ Product development specifications Conclusions
    • 86. Previous Slides Provided qualitative descriptions of valuepropositions for technologies that are nowconsidered far superior to previous ones We would like to have quantitative data◦ To show how technologies are superior or maybecome superior to the old technologies◦ To show this before or during the transition◦ To also help us understand the niches thatmany technologies occupy for short and longperiods of time
    • 87. The Strategy Canvas of Southwest AirlineLowPriceMealsLounges SeatingClasschoicesHubconnectivityFriendlyserviSpeedFrequent point-to-pointdeparturHighAverageAirlineSouthwestCarTransport
    • 88. Mainframe ComputersMini-computersStrategy Canvas for Computers in late 1970sLowPriceProcessingSpeedMemoryCapacitySmallPhysicalSizeUserInterfaceCustomizabilityPersonal ComputersHighLowShortResponseTimePersonal ComputersMini-computersMainframe Computers
    • 89. High________________________________________________________________________________________Premium Wines________________________________________________________________________________________________________________________________________________________________________________Budget WinesStrategy Canvas of U.S. Wine Industry in Late 1990sLow________________________________________________________________________________________PriceEnologicalterminologyAbove-the-line marketing AgingqualityVineyardprestige &legacyWinecomplexityWinerangeSource: W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy,Harvard Business School Press
    • 90. Many of these factors arerelated to an elite image Enological terminology: Tannins and Oak Above-the line marketing Wine Complexity Aging Quality Wine Range, i.e., Variety
    • 91. The Four Actions Framework (Blue Ocean Strategy)A NewValueCurveNote: factors are price, features,and dimension of performance.You can also think about themas needs.
    • 92. High_______________________________________________________________________________________________Premium Wines______________________________________________________________________________________________________________________________________________________________________________________________Budget WinesThe Strategy Canvas of Yellow TailLow______________________________________________________________________________________________PriceEnologicalterminologyAbove-the-line marketingAgingqualityVineyardprestige &legacy WinecomplexityWinerangeEasyDrinkingEase ofSelectionFun andAdventureCasella Wines:Yellow Tail
    • 93. 1. Wine maker or winery:2. Appellation: The country or regionwhere the grapes for this wine weregrown3. Vintage; 4. Variety5. Ripeness; 6. Estate bottlingand winery information
    • 94. The Strategy Canvas of Cirquedu SoleilLowPrice StarperformersAnimalshowsAisleconcessionsMultipleShowarenasUniquevenueThemeRefinedWatchingenvironmentHighMultipleProductionsArtisticMusicanddanceFun AndhumorThrillsanddangerSmallerRegionalCircusesRingling Bros. and Barnum&Bailey Value CurveCirque duSoleil ValueCurveNew Dimensions
    • 95. Ringling Brothers
    • 96. Cirque de Soleil
    • 97. 1990
    • 98. Key Aspects of Strategy Canvas Identify dimensions of performance(i.e., customer needs) for single marketsegment Identify existing products and their levels ofperformance and price Quantify performance (and price) Find dimensions of performance that arecurrently being ignored Conceptualize new types of products thatcan provide new types of performance This is an iterative process
    • 99. For Your Presentation If you describe a strategy canvas in yourpresentation, you must justify yourstrategy canvas with data and/or logic
    • 100. Outline Customer needs Market segments and customer selection Definition of value proposition Examples Quantitative methods◦ Strategy canvas, i.e., Blue Ocean Strategy◦ Product development specifications Conclusions
    • 101. Establishing Target Specs forProducts Choose a specific segment Start with customer needs for thesegment Prepare a list of metrics for the segment Collect data on metrics for products in thesegment Set ideal and marginally acceptable targetvalues for the specifications Reflect on the results and process
    • 102. Product Specifications Example:Mountain Bike Suspension Fork
    • 103. Start with the CustomerNeeds# NEED ImpSTTritrackManiray21 The suspension reduces vibration to the hands. 3 • ••••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• ••••3 The suspension enables high speed descents on bumpy trails. 5 • •••••4 The suspension allows sensitivity adjustment. 3 • ••••5 The suspension preserves the steering characteristics of the bike. 4 •••• ••6 The suspension remains rigid during hard cornering. 4 • •••7 The suspension is lightweight. 4 • •••8 The suspension provides stiff mounting points for the brakes. 2 • ••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• •••••10 The suspension is easy to install. 1 •••• •••••11 The suspension works with fenders. 1 ••• •12 The suspension instills pride. 5 • ••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• •14 The suspension is not contaminated by water. 5 • •••15 The suspension is not contaminated by grunge. 5 • •••16 The suspension can be easily accessed for maintenance. 3 •••• •••••17 The suspension allows easy replacement of worn parts. 1 •••• •••••18 The suspension can be maintained with readily available tools. 3 ••••• •••••19 The suspension lasts a long time. 5 ••••• •••••20 The suspension is safe in a crash. 5 ••••• •••••
    • 104. Metric#Need#sMetric Imp Units1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB2 2,6 Spring pre-load 3 N3 1,3 Maximum value from the Monster 5 g4 1,3 Minimum descent time on test track 5 s5 4 Damping coefficient adjustment range 3 N-s/m6 5 Maximum travel (26in wheel) 3 mm7 5 Rake offset 3 mm8 6 Lateral stiffness at the tip 3 kN/m9 7 Total mass 4 kg10 8 Lateral stiffness at brake pivots 2 kN/m11 9 Headset sizes 5 in12 9 Steertube length 5 mm13 9 Wheel sizes 5 list14 9 Maximum tire width 5 in15 10 Time to assemble to frame 1 s16 11 Fender compatibility 1 list17 12 Instills pride 5 subj18 13 Unit manufacturing cost 5 US$19 14 Time in spray chamber w/o water entry 5 s20 15 Cycles in mud chamber w/o contamination 5 k-cycles21 16,17 Time to disassemble/assemble for maintenance 3 s22 17,18 Special tools required for maintenance 3 list23 19 UV test duration to degrade rubber parts 5 hours24 19 Monster cycles to failure 5 cycles25 20 Japan Industrial Standards test 5 binary26 20 Bending strength (frontal loading) 5 MNEstablish Metrics and Units
    • 105. Link Metrics to Needs1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26NeedMetricAttenuationfromdropouttohandlebarat10hzSpringpre-loadMaximumvaluefromtheMonsterMinimumdescenttimeontesttrackDampingcoefficientadjustmentrangeMaximumtravel(26inwheel)RakeoffsetLateralstiffnessatthetipTotalmassLateralstiffnessatbrakepivotsHeadsetsizesSteertubelengthWheelsizesMaximumtirewidthTimetoassembletoframeFendercompatibilityInstillsprideUnitmanufacturingcostTimeinspraychamberw/owaterentryCyclesinmudchamberw/ocontaminationTimetodisassemble/assembleformaintenanceSpecialtoolsrequiredformaintenanceUVtestdurationtodegraderubberpartsMonstercyclestofailureJapanIndustrialStandardstestBendingstrength(frontalloading)1 reduces vibrationto thehands. • • •2 allows easy traversal of slow, difficult terrain. •3 enables high speed descents on bumpy trails. • • •4 allows sensitivity adjustment. •5 preserves the steering characteristics of the bike. • •6 remains rigid during hard cornering. • •7 is lightweight. •8 provides stiff mounting points for the brakes. •9 fits a wide variety of bikes, wheels, and tires. • • • •10 is easy to install. •11 works withfenders. •12 instills pride. •13 is affordable for anamateur enthusiast. •14 is not contaminated by water. •15 is not contaminated by grunge. •16 can be easily accessed for maintenance. •17 allows easy replacement of worn parts. • •18 can be maintained with readily available tools. •19 lasts along time. • •20 is safein a crash. • •
    • 106. Benchmark on CustomerNeeds# NEED ImpSTTritrackManiray2RoxTahxQuadraRoxTahxTi21TonkaProGunhillHeadShox1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••5 The suspension preserves the steering characteristics of the bike. 4 •••• •• • •• ••• •••••6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••7 The suspension is lightweight. 4 • ••• • ••• •••• •••••8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •11 The suspension works with fenders. 1 ••• • • • • •••••12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••
    • 107. Benchmark on MetricsMetric#Need#sMetric Imp UnitsSTTritrackManiray2RoxTahxQuadraRoxTahxTi21TonkaProGunhillHeadShox1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB 8 15 10 15 9 132 2,6 Spring pre-load 3 N 550 760 500 710 480 6803 1,3 Maximum value from the Monster 5 g 3.6 3.2 3.7 3.3 3.7 3.44 1,3 Minimum descent time on test track 5 s 13 11.3 12.6 11.2 13.2 115 4 Damping coefficient adjustment range 3 N-s/m 0 0 0 200 0 06 5 Maximum travel (26in wheel) 3 mm 28 48 43 46 33 387 5 Rake offset 3 mm 41.5 39 38 38 43.2 398 6 Lateral stiffness at the tip 3 kN/m 59 110 85 85 65 1309 7 Total mass 4 kg 1.409 1.385 1.409 1.364 1.222 1.110 8 Lateral stiffness at brake pivots 2 kN/m 295 550 425 425 325 65011 9 Headset sizes 5 in1.0001.1251.0001.1251.2501.0001.1251.0001.1251.2501.0001.125 NA12 9 Steertube length 5 mm150180210230255140165190215150170190210150170190210230150190210220 NA13 9 Wheel sizes 5 list 26in 26in 26in26in700C 26in 26in14 9 Maximum tire width 5 in 1.5 1.75 1.5 1.75 1.5 1.515 10 Time to assemble to frame 1 s 35 35 45 45 35 8516 11 Fender compatibility 1 list Zefal none none none none all17 12 Instills pride 5 subj 1 4 3 5 3 518 13 Unit manufacturing cost 5 US$ 65 105 85 115 80 10019 14 Time in spray chamber w/o water entry 5 s 1300 2900 >3600 >3600 2300 >360020 15 Cycles in mud chamber w/o contamination 5 k-cycles 15 19 15 25 18 3521 16,17 Time to disassemble/assemble for maintenance 3 s 160 245 215 245 200 42522 17,18 Special tools required for maintenance 3 list hex hex hex hexlonghexhex,pinwrnch23 19 UV test duration to degrade rubber parts 5 hours 400+ 250 400+ 400+ 400+ 25024 19 Monster cycles to failure 5 cycles 500k+ 500k+ 500k+ 480k 500k+ 330k25 20 Japan Industrial Standards test 5 binary pass pass pass pass pass pass26 20 Bending strength (frontal loading) 5 MN 55 89 75 75 62 102
    • 108. Assign Marginal and Ideal ValuesMetric UnitsMarginalValueIdealValue1 Attenuation from dropout to handlebar at 10hz dB >10 >152 Spring pre-load N 480 - 800650 - 7003 Maximum value from the Monster g <3.5 <3.24 Minimum descent time on test track s <13.0 <11.05 Damping coefficient adjustment range N-s/m 0 >2006 Maximum travel (26in wheel) mm 33 - 50 457 Rake offset mm 37 - 45 388 Lateral stiffness at the tip kN/m >65 >1309 Total mass kg <1.4 <1.110 Lateral stiffness at brake pivots kN/m >325 >65011 Headset sizes in1.0001.1251.0001.1251.25012 Steertube length mm15017019021015017019021023013 Wheel sizes list 26in26in700c14 Maximum tire width in >1.5 >1.7515 Time to assemble to frame s <60 <3516 Fender compatibility list none all17 Instills pride subj >3 >518 Unit manufacturing cost US$ <85 <6519 Time in spray chamber w/o water entry s >2300 >360020 Cycles in mud chamber w/o contamination k-cycles >15 >3521 Time to disassemble/assemble for maintenance s <300 <16022 Special tools required for maintenance list hex hex23 UV test duration to degrade rubber parts hours >250 >45024 Monster cycles to failure cycles >300k >500k25 Japan Industrial Standards test binary pass pass26 Bending strength (frontal loading) MN >70 >100
    • 109. Set Final SpecificationsMETRIC Units Value1 Attenuation from dropout to handlebar at 10hz dB >122 Spring pre-load N 6503 Maximum value from the Monster g <3.44 Minimum descent time on test track s <11.55 Damping coefficient adjustment range N-s/m >1006 Maximum travel (26in wheel) mm 437 Rake offset mm 388 Lateral stiffness at thetip kN/m >759 Total mass kg <1.410 Lateral stiffness at brake pivots kN/m >42511 Headset sizes in1.0001.12512 Steertubelength mm15017019021023013 Wheel sizes list 26in14 Maximum tire width in >1.7515 Time toassembleto frame s <4516 Fender compatibility list Zefal17 Instills pride subj >418 Unit manufacturing cost US$ <8019 Time in spray chamber w/owater entry s >360020 Cycles inmud chamber w/o contamination k-cycles >2521 Time todisassemble/assemble for maintenance s <20022 Special tools requiredfor maintenance list hex23 UV test durationto degrade rubber parts hours >45024 Monster cycles tofailure cycles >500k25 Japan Industrial Standards test binary pass26 Bending strength (frontal loading) MN >100
    • 110. Quality Function Deployment(House of Quality)technicalcorrelationsbenchmarkingon needscustomerneedsengineeringmetricstarget and final specsrelativeimportancerelationships betweencustomer needs andengineering metrics
    • 111. Multiple Houses of QualityEngineeringMetricsEngineeringMetrics
    • 112. Differences and Similarities ofSetting Target Specs and QFD Like marketing analysis and strategy canvas,there is a focus on◦ customer needs◦ existing products in each market◦ strengths and weaknesses of each product There is also an iterative process Differences, “setting product specifications”focuses◦ a single market segment◦ relative importance of different needs and settingdetailed specifications for not only products, butnot parts and processes
    • 113. Level of Detail in Analysis You must make decision about level of detailto include in analysis Some needs are more important than othersto customers and thus require more analysis Some needs are easier to quantify thanothers and thus quantitative data is moreapplicable and necessary for yourpresentations But remember why someone buys a drill –because they want a hole!
    • 114. Conclusions (1) Successful products (including technologicaldiscontinuities) provide users with superior valueproposition A superior value proposition providers users with morevalue in some way◦ Lower price, New dimension of performances◦ New features, New forms of access/distribution These superior value propositions often involve◦ New concepts◦ New categories of customers
    • 115. Conclusions (2) Finding new concepts and understanding when theymight be technological feasible are difficult tasks Finding new concepts◦ New technical concepts are often widely available fromresearchers in laboratories◦ But determining the form that concepts will take is moredifficult, particularly when concepts involve art/aesthetic design Understanding when new concepts might becometechnically feasible is also difficult◦ Sometimes technological trends help us such as thoserepresented by Moore’s Law (covered extensively in MT5009)
    • 116. Conclusions (3) Finding new dimensions of performance or new featuresis often the key factor in success◦ Or at least finding ones that have been underemphasized Another key factor is finding customers who value thesedimensions of performance, new features How can firms find these new value propositions andthese unmet needs?◦ By thoroughly investigating the needs of customers in manysegments◦ By understanding the technological and other changes that aremaking new value propositions possible
    • 117. Conclusions (4) Finding new dimensions of performance, newfeatures, and new customers is only the first step Then a firm must◦ define the product’s specs, scope of activities, and methods ofvalue capture and strategic control (some of this covered in latersessions)◦ develop and promote the product (not covered in this module)◦ make the product available to customers (not covered in thismodule)◦ firms must be good at both identifying and implementing newvalue propositions