The Value Proposition for New Products and
    Startups – Key Elements to Communicate

    Part of the immr Series on “New...
Preface
                       Startups and established companies often fail miserably in expressing
                     ...
Value Proposition for New Products – 10 Key Elements†
     1 Name                  Provide a distinctive, descriptive name...
Communicating the Value Proposition for New-to-Market
    Products and Services is Challenging, but Critical
    Category ...
Misstated Value Propositions                                                    Missed Market Opportunities
In testing new...
About the Author
                           Founder and director of immr (research and consulting firm based in
          ...
Recent Publications




7                Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendr...
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Communicating The Value Proposition For New Products And Startups, Key Elements, Dr Phil Hendrix, immr, 201002

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Outlines 10 key elements that should be included in communicating the value proposition for new products and startups. Describes how incomplete, partial descriptions lead to overly optimistic estimates of market potential.
Dr. Phil Hendrix, immr

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Communicating The Value Proposition For New Products And Startups, Key Elements, Dr Phil Hendrix, immr, 201002

  1. 1. The Value Proposition for New Products and Startups – Key Elements to Communicate Part of the immr Series on “New-to-Market Products and Services” February 2010 Dr. Phil Hendrix Contact: Director, immr www.immr.org 1 (770) 612-1488 phil.hendrix@immr.org 1 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  2. 2. Preface Startups and established companies often fail miserably in expressing the value proposition for a new product or service. Typically deficient are answers to such fundamental questions as: The problem(s) the product is solving Dr. Phil Hendrix Who the product is for (and not for) Director, immr www.immr.org Key benefits and substantiating claims and other key elements Much of the work that we do involves investigating potential for “new- to-market” products that are new and unfamiliar to customers. To reliably gauge interest and calibrate demand, we’ve found that it’s important to describe and convey “very new” product concepts in a deliberate and systematic fashion. We’ve developed and use the template on the next page to articulate and communicate product concepts clearly, concisely and efficiently. I hope you find 10 Key Elements of Value Propositions useful in communicating with customers, prospects and investors. 2 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  3. 3. Value Proposition for New Products – 10 Key Elements† 1 Name Provide a distinctive, descriptive name that (ideally) conveys the essence of the concept. 2 Tagline Provide a memorable phrase that – with the name – captures and conveys the key benefit(s) of and/or target for the product. 3 Target Describe who is likely to find it useful and why. Make it easy for prospects to recognize and answer “Am I part of the target market for the product or service?" 4 Problem With as few words as possible, describe the problem the product or service is Solved solving – put differently, answer “What ‘job’ does the product do?” 5 Explanation Concisely explain how the product works – what technology it uses, the platform(s) that it runs on, etc. State or briefly allude to (without revealing IP) “What is the ‘secret sauce’?” 6 Benefits Assert key claims in terms of benefits. Relate back to the problem(s) solved. 7 Verification Quantify key benefits. Answer “How much better is it?” and “Why should I believe the claim(s)?” 8 Position State how it’s similar to, different from or better than alternatives the respondent is familiar with, accustomed to or has used in the past. 9 Requirements Make explicit “What do I have to do to purchase, install and use the service?” (e.g.,device(s) the service works on; where the product or service can be used; drawbacks or limitations that need to be considered?; etc.) 10 Provider Identify the provider (specifically or generically) and briefly describe their qualifications. †Using a combination of text, images and graphics Source: Dr. Phil Hendrix, immr 3 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  4. 4. Communicating the Value Proposition for New-to-Market Products and Services is Challenging, but Critical Category Examples of Once New-to-Market Products Characteristics of New-to-Market Products Health HSAs - A tax-advantaged Insurance spending and savings account 1. Customers’ first reaction is often that can be used to pay qualified “what is it?” medical expenses. 2. Usually do not readily fit into Media Amazon Kindle - existing product categories A new type of portable reader that can wirelessly download 3. Often deliver benefits that are books, newspapers, magazines, new, different from existing and blogs. 4. Frequently described by features Consumer MIDs (Mobile Internet that are new, unfamiliar Electronics Devices) - A new class of lightweight (1-3 lbs), handheld 5. Awareness low, familiarity with PC’s with 5-9” displays, powerful features and benefits even lower enough to run many applications Transportation Zipcar - Provides cars that 6. Prospects unsure of questions to members in urban locations can ask, criteria, options to consider rent by the hour. 7. Limited adoption reduces opportunity to learn from others Entertainment IPTV - Delivers TV broadcasts and video over the 8. Effort required by prospects to Internet, using a broadband learn about, evaluate, and decide connection. 9. Standards, features expected to Medical Stresseraser - An FDA- mature, and prices drop over time regulated medical device that relaxes the body and calms the mind using clinically proven 10. To adopt, customers must often biofeedback training. change, learn new behaviors 4 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  5. 5. Misstated Value Propositions Missed Market Opportunities In testing new product concepts, incomplete value propositions severely bias estimates of market size – typically overestimating but sometimes underestimating potential. Brief, partial Respondent description unable to requires experience, respondents to assess user “fill-in-blanks” experience Drawbacks not Key FAQs mentioned, unanswered (in shown, or made both research explicit and real world) Text-only description fails Requirements to use the to convey aesthetic, product (install, configure, design features etc.) not made explicit For further discussion, see Dr. Phil Hendrix, Estimating Market Potential for New-to-Market Products, http://bit.ly/9kJ1tZ 5 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  6. 6. About the Author Founder and director of immr (research and consulting firm based in Atlanta); GigaOM Pro Analyst Help organizations identify, verify and capitalize on opportunities for products and services that are new-to-customers and very often new-to- market Dr. Phil Hendrix Specialize in research and consulting that focuses on: Director, immr Uncovering customers’ unmet needs www.immr.org Revealing hurdles slowing adoption Triggering interest and accelerating purchase Determining features, prices to maximize market penetration Selected Clients Professional Experience Education Principal/Partner with: Served on faculties of: Ph.D. DiamondCluster Consulting Emory University (Business School) (Marketing, Mercer Consulting U. of Michigan (Joint App’t: Business U. of Michigan) Integrated Measurement School and Survey Research Center) 6 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
  7. 7. Recent Publications 7 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org

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