Week 10 class

1. Idea+team Market Product Biz Model Execution Finance Project
Flow of CourseFlow of CourseFlow of CourseFlow of Course
Plan to
create value
Plan to
capture value
Segment
Direct Validation
Competition
VP
Competitive Advantage
Development Plans
Where extract rent
Pricing
Go to Market
Sales
Marketing
Fin Statements
Investor Strategy

2. PricingPricingPricingPricing
and CLTVand CLTVand CLTVand CLTV

3. Pricing requiresPricing requiresPricing requiresPricing requires
• knowing your customers well (+DMU+DMP)
• knowing what they're willing to pay
• knowing what your competitors are charging

4. Some questionsSome questionsSome questionsSome questions
• What is the customer willing to pay for my product? (value)
Interviews.
Different customers have a different willingness to pay,
and even the same customer will vary in their willingness
to pay based upon the purchasing occasion.
• What kind of customer do I want to target?
customers who value your product the most + charge a
high price.
mass market + a lower-priced product .

5. Some questionsSome questionsSome questionsSome questions
• How should I react to my competitor's prices?
Who provides an alternative to my product?
Is mine better or worse? (Real vs perceived benefits)
Does the customer care?
• Can I offer different levels of products or services at
different price points?

6. Some questionsSome questionsSome questionsSome questions
• Have I given the customer a reason to pay more for my
product?
Real vs perceived differences.
With Hershey's you're getting a great chocolate bar, but
Godiva is selling love and a means of pampering yourself.
• Should I discount to get people to buy my product?
Promotions are fine from time to time.

7. Some questionsSome questionsSome questionsSome questions
• How does the customer want to buy my product or
service?

8. Customer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime Value

9. CLTV attempts to determine the
economic value a customer brings over
their “lifetime” with the business

11. Photo by clemsonunivlibrary (CC BY-SA 2.0)

12. Breaking down CLTVBreaking down CLTVBreaking down CLTVBreaking down CLTV
• Marginal profit / Gross Margin
• Customer retention rate (RR)
• Customer’s lifetime: 1 / (1-RR)
• Discount rate (cost of capital)