This document contains notes from a lecture on entrepreneurship and business categories. It discusses defining the customer and value proposition for a business. It explores business-to-business, business-to-consumer, and channel-based value systems. It also covers how to position a product in an existing category versus a new category, and how to conduct a competitive analysis. Key lessons include the importance of a clear value proposition, understanding customer decision-making, and properly defining the relevant business category.

1. 3
Bob Caspe
The International Entrepreneurship Center
Entrepreneurial Action

2. Exercise – Design a
Business

3. Finish the Olympus Story
$3.2M Loan + 100k Camera Order
 Actually needed $3.5M
 Cancelled Contract
 We Went to CES

 Sold to Polaroid
 UMAX
 RCA
…

4. Some Q & A?

5. Exercise

For your Primary Product write down a
single sentence which describes the
value of your product to your customer

6. Aesop’s Fables


Aesop a Greek Slave and Story Teller lived
around 600BC.
His collection of fables (or stories) have lived for
thousands of years as tales of morality and
wisdom to be shared with children

7. Bob’s (True) Fables
The Venture Investment
 The Pizza man
 The Twins
 The Firing
 The Dentist
 The Lucky
 The Unlucky
 The Great Product


8. The Venture Investment

9. The Morals to the Story
The Venture Capital Industry is Broken
and there needs to be a new way to
bring together investors and inventors
that has more flexibility and a higher
probability of success.
 The Habit of Spending Other People’s
Money is Hard to Break.


10. The Pizza Man

Puzant Khatchadourian

11. The Morals of the Story
Passion can be Dangerous. Don’t be
passionate about your product, rather be
passionate about being an entrepreneur.
 Complexity is NOT a good idea.
 Listen to your customer.


12. The Twins

Daniel Cohen & Richard Joffe

13. The Moral of the Story
Pick a Partner who Compliments your
skills.
 Pick first on the basis of character.
 Don’t make Dual CEOs.


14. The Firing

Eric Andersen & MySeniorCenter.com

15. The Morals of the Story
Hire Late and Fire Early.
 Once you achieve positive cash flow
don’t allow yourself to return to losing
money.


16. The Dentist

Ziggy Ziggelbaum

17. The Morals of the Story
Avoid dishonest people. Life is too short
to waste your time.
 Learn to Listen to Your Inner Voice.


18. The Lucky

Bob Caspe

19. The Morals of the Story
Luck is a Big Part of Success in
Business.
 Allow yourself the luxury of moving to
opportunities when they appear.
 Don’t get too Full of Yourself if You Make
Money.


20. The Unlucky

Rick Alessi

21. The Morals of the Story
Life Sucks. But, get over it.
 Greed has a Cost.


22. The Great Product

Sound Vision Inc.

23. The Morals of the Story
Understand the difference between New
and Pre Existing Categories and how to
Market Each.
 Pay attention to the rest of this lecture.


24. Some Definitions
Customer
Transaction
Channel

25. Customer
Who’s
Your
Customer?

26. Who’s the Customer?
Google Googol Points
Cell Phone Manufacturer
1000 Points
Babson CollegePoints
100 Undergraduate
Coca Cola 10 Points

27. First Transaction
Enio
You Begin by Executing your First (single) Transaction
Model Its Cost to See if you have a Business (profitable)
Replicate if Profitable (Modify if not)

28. Channel Partner
Manufacturer
or Brand
Channel
Partner
End
Customer

29. Value Proposition
Keep it simple
 Strong Values are easy to sell
 Most businesses fail because of the high
cost of selling
 Defines whether a project is worthwhile

 Measured on the basis of the customer’s
value assessment

30. Value Proposition
The Value Proposition is the most important
opportunity indicator for your business.
 Western markets are value driven as opposed
to relationship driven.
 A strong Value Proposition can compensate
for a poor execution.
 A weak one may require perfection to achieve
success.

31. Impact of Weak Value
Weak Value implies a more expensive
sales process
 Most startups fail because the cost of
sales is not supportable by the
transaction margin
 Therefore – Weak Value Decreases
Your Likelihood for Success
 Therefore – Abandon Businesses with
Weak Value Propositions


32. Risk versus Value

33. Three Value Systems are
commonly used in western
business transactions
B2B
 B2C
 Channel


34. Business to Business

Simplest type of business to start.
Why?
 Rational Decision process by the customer
 Ability to monetize the value
 Ability to understand who the decision
makers are

35. B2B Value Propositions
Make
you money
Save
you money

36. Which is Easier?

Selling a CAT Scanner
to a hospital

Selling a PACs system
to a hospital

37. Monetizing the Value

Leaf Systems (~1990)
 Digital Camera Back to
replace a film camera back
for shooting commercial
images for magazines and
print advertising. Attached
to a high-end camera like a
Hasselblad or Sinar-Bron.
Typical cost $45,000 with
Macintosh Computer.

38. Understanding the workflow
Stage
Shoot
Proof
Review
Process
Photographer
Page
Layout
Art Director
retouch
Scan
Photographer
Graphic Artist

39. Leaf Camera Summary of
Values

Increase Revenue
 Scanning Services
 Rapid Turn
Incremental Revenue
 Retouch

Decrease costs
 Eliminate Film and Processing
 Eliminate Re-Shoot Labor
 Eliminate Bracketing Time
Cost Reduction

40. Leaf Systems
Direct
comparison to
film
photography
 Monetized
actual value of
ownership.


41. Business to Consumer

42. B2C Values for Disposable
Income?

43. B2C Value Propositions





Youth
Sex
Health (lose weight…)
Fun
Less tangible – all
compete with each other
for discretionary
spending

44. Chinese Product Names
New York Times, November 12, 2011

45. Channel Value Propositions

Similar to B2B

46. Channel Value Exercise
YOU
ME

47. Wal-Mart Film Processing
$6B in revenue out of $285B
 Average customer spends an additional
$25 when picking up prints
 Wait time is tuned to 20 minutes to keep
the customer in the store
 Kiosk is positioned at the back of the
store to increase traffic


48. The Elevator Pitch
Goals – Succinct and Clear
 Create a Compelling Narative


49. 4
3
2
1

50. Common Pitch Errors
Talk too fast
 Say too much
 Not from the frame of reference of the
customer
 Must Practice With Real Potential
Customers


51. 4
3
2
1

52. 4
3
2
1

53. Category
Determining the Marketing Strategy by
starting with the definition of the
category.
 Defining value within the concept of
category


54. Defining the Category
 Pre-Existing
 New
 Which
way to go?

55. Pre-Existing Category
 The
Customer has Pre-Conceptions
 About the Channel – where to find it?
 About the Product – what values to
expect?

56. How to know if it’s a Pre-Existing
Category?
 Try to position it in retail
 Look in the Yellow Pages
 Are there competitors?

57. For a Pre-Existing Category it
must be specific enough
Too Vague

58. Pre Existing Category
 Must
Meet the
Customer
 Established Channel
 Meet
the Values
 Add your
Incremental Value
 Goal
is a Share Shift
 How do competitors
respond?

59. Pre-Existing Values

Car
 Brand
 Power
 Gas
Efficiency
 Price
• Television
▫
▫
▫
▫
Size
Technology
Price
Picture
Quality
• Shoes
▫
▫
▫
▫
Brand
Style
Comfort
Price

60. Not just Products

Channels
 Hair Salon
 Grocery Store

Services
 House Cleaning
 Tax Preparation

61. Competitive Matrix
Price
Speed
Size
Weight
Your
Product
$500
55
4
15
Competitor
A
Competitor
B
$650
55
5
15
$900
60
5
12

62. The Relative Importance of Each
Value to the customer
Relative Value Importance
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Price
V2
V3
V4

63. Normalized Competitive Values
Relative Product Value
1
0.9
0.8
0.7
P1
0.6
P2
0.5
P3
0.4
0.3
0.2
P3
0.1
P2
0
Price
V2
P1
V3
V4

64. A Weighted Comparison
Weighted Values with Sum
1
0.9
0.8
0.7
P1
0.6
P2
0.5
P3
0.4
0.3
0.2
0.1
P3
0
P2
Price
V2
V3
P1
V4
Sum

65. The Decoy Effect
1990’s Experiment in Consumer Choice
Product
Price
Percent Sold
Percent Sold
Emerson Microwave
$110
57%
27%
Panasonic Microwave
$180
43%
60%
Panasonic Microwave
$200
13%
Courtesy James Surowiecki, The New Yorker 12 24 07

66. Huber’s Experiment
Two Values: Convenience and Quality
|
--miles--
3
4
5
6
Courtesy NPR -Vedantam, Shankar, Washington Post re: J. Huber et al 6 82

67. Retail Pre-Existing Category
 What
is the differentiator?
 Package design or advertising must
emphasize the innovation

68. In Category Innovation

Razor blades





Safety razor
Disposable safety razor
2 blade safety razor
3 blade safety razor
3 blade with vibrator safety
razor
 5 blades with battery
?

69. How would you position the
Vela-Rosa Candle Holder?

70. Candle Holders

Channel
 Home furnishing
Retail

Pre-existing
Values
 Aesthetics

71. Steps to Enter a Market
Competitive Analysis
 Channel Analysis

 Sometimes a late product can still have
success through the development of a
critical partnership with a key player

72. For Each of Your
Innovations
What is the true Competitive Landscape
 What additional product development
may be needed
 Who are the real customers
 What are the compelling values
 Who are the proper Channel Partners


73. Let’s take a break