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Value Proposition - Entrepreneurship 101

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Formulating a good value proposition is an essential step for any start-up and lies at the core of many of the other tools entrepreneurs need to develop, including market analysis, business modeling, finding funding and delivering an investor or customer pitch.

Published in: Business, Technology

Value Proposition - Entrepreneurship 101

  1. 1. Joseph Wilsonjwilson@marsdd.com""
  2. 2. AgendaWhat is a value proposition?ExamplesDimensions of valueTesting your hypothesisThe strategy canvas
  3. 3. How to (not) articulate value:
  4. 4. A value proposition is astatement of the unique benefitsdelivered by your offering to thetarget customer
  5. 5. A value proposition is ahypothesis that your offering willbring certain values to a targetcustomer. ** Like any hypothesis, it needs to berigorously tested in the lab (read:marketplace) before money is put intoscaling.
  6. 6. Value Proposition is Not:An elevator pitch: a 30 second conversation starter I buy dead magazines… We un-think marketing…
  7. 7. Value Proposition is Not:A tag-line: an ad compliment We know money What Happens Here, Stays Here The City That Never Sleeps Built for the road ahead
  8. 8. Value Proposition is Not:A mission statement: a statement of the purpose of your business. The University of Toronto is committed to being an internationally significant research university, with undergraduate, graduate and professional programs of excellent quality. Googles mission is to organize the worlds information and make it universally accessible and useful
  9. 9. The value proposition statementshould consist of these components:1. What your product/service is2. The target customer3. The value you provide them Emergent property: why your product is unique
  10. 10. What is it?Examples: For whom? Values? Good: Winners is a Bad: Winners is an department store that off-price department offers fashion conscious store owned by TJX consumers the latest that employs brand names for up to international 60 per cent sourcing and buying off. (Winners) power.
  11. 11. What is it?Examples: For whom? Values? Good: Winners is a Bad: Winners is an department store that off-price department offers fashion conscious store owned by TJX consumers the latest that employs brand names for up to international 60 per cent sourcing and buying off. (Winners) power.
  12. 12. What is it?Examples: For whom? Values? Good: A1 Industries has Bad: A1 Industries developed an economical has discovered a and easy-to-use chemical chemical isomer additive that allows paint additive that allows manufacturing companies for a reduction of VOC to reduce the emissions. environmental impact of their products
  13. 13. What is it?Examples: For whom? Values? Good: A1 Industries has Bad: A1 Industries developed an economical has discovered a and easy-to-use chemical chemical isomer additive that allows paint additive that allows manufacturing companies for a reduction of VOC to reduce the emissions. environmental impact of their products
  14. 14. What is it?Examples: For whom? Values? Good: Google is the Bad: Google uses a world s largest search patented page- engine that allows ranking algorithm to internet users to find make money through relevant information ad placement. quickly and easily.
  15. 15. What is it?Examples: For whom? Values? Good: Google is the Bad: Google uses a world s largest search patented page- engine that allows ranking algorithm to internet users to find make money through relevant information ad placement. quickly and easily. Are Internet Users really Google s customers?
  16. 16. What is it?Examples: For whom? Values? Good: Google is the Bad: Google uses a world s largest search patented page- engine that ranking algorithm to automatically provides make money through advertisers with ad placement. potential customers tailored to the ad content, increasing click-through rates and conversion rates.”
  17. 17. Selling to Selling to Customer Business Usability Health Lower risk Aesthetics Saving time Status Saving/making money Newness Enabling functionSelf-Actualization Convenience Environmental Quality Ethical Social Inclusion Customizable
  18. 18. Selling to Selling to Customer Business Usability Health Lower risk Aesthetics Saving time Status Saving/making money Newness Enabling functionSelf-Actualization Convenience Environmental Quality Ethical Social Inclusion Customizable
  19. 19. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  20. 20. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  21. 21. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  22. 22. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  23. 23. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  24. 24. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  25. 25. Selling to BusinessLower risk Saving time Saving/making money Enabling function Convenience Quality Customizable
  26. 26. Selling to Business Lower riskB2B Sales: Saving time Saving/making money- Rational Enabling functiondecision making Convenience Quality- Overt values Customizable
  27. 27. Selling to Selling to Customer Business Usability Health Lower risk Aesthetics Saving time Status Saving/making money Newness Enabling functionSelf-Actualization Convenience Environmental Quality Ethical Social Inclusion Customizable
  28. 28. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  29. 29. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  30. 30. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  31. 31. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  32. 32. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  33. 33. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  34. 34. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  35. 35. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  36. 36. Selling to Customer Usability Health Aesthetics Status NewnessSelf-Actualization Environmental Ethical Social Inclusion
  37. 37. Selling to Customer Usability Health B2C Sales: Aesthetics Status Newness - Emotional decision makingSelf-Actualization Environmental Ethical - Latent values Social Inclusion
  38. 38. Selling to Selling to Customer Business Usability Health Lower risk Aesthetics Saving time Status Saving/making money Newness Enabling functionSelf-Actualization Convenience Environmental Quality Ethical Social Inclusion Customizable
  39. 39. Process: Draft a value propositionVersion 1.0: I think A1Industries product/service will…
  40. 40. The Customer Development Triangle Target Customer ✗ Product
  41. 41. The Customer Development Triangle Target Customer Problem Product = solution
  42. 42. The Customer Development Triangle Target Customer Problem Product = solution
  43. 43. Process: Test your value proposition State your hypothesis Test Verify problem hypothesis Test product Blank, Steve Four Steps to Epiphany conceptVersion 2.0: A1 Industries provides…
  44. 44. Get out of your office!
  45. 45. Understanding Customer Problems: Empathy with Target Customers !Osterwalder, Alexander, Business Model Generation, 2009
  46. 46. Day in the Life Scenario Before Current Problem situation encountered & & desired economic outcome consequences AfterErnie: Enabling Newfixes factors of outcomes andairplanes your economic product rewards
  47. 47. Understanding customer problems:¢  Market research methods for entrepreneurs Pretend to be the customer Customer Interview Program Lead user QFD - Quality Function Deployment Primary Customer archetype Market¢  Methods that require professionals Research Concept testing Cojoint analysis Empathic deisgn Prototype/Beta testing
  48. 48. Secondary Market Research 1. Access to reports/data from 20 databases 2. Access to industry analysts through inquiry Industry specific time Multiple Industry vendors coverage vendors IDC Frost & Sullivan Forrester BCC Research Gartner Total Patents Lux Research Delphion/Thomson Cleantech Group LLC Innovation Aggregator of Thomson Pharma other vendor Datamonitor MedTrack resources Venture Source Business Insights Chemical Abstracts IMS Dialog Pro Market Research Factiva Meltwater NewsU of T- $ 50 M Key: Red – ICT collection Green – Cleantech & Nanotech Blue – Life Sciences
  49. 49. Process: Test your value proposition State your hypothesis Test Verify problem hypothesis Test product concept Blank, Steve Four Steps to Epiphany
  50. 50. The Three Outcomes: Validate: Confirmed value proposition Iterate: change Verify value proposition Exit: Don’t spend any more money!
  51. 51. The Customer Development Triangle Target Customer Problem Product = solution Pg 52
  52. 52. Whole Product A whole product is the combination of all the things that give your customers a compelling reason to buy. This includes not only your core product, but also any services and ancillary products that augment it.
  53. 53. Minimum Viable Product A minimum viable product is a product launched to early adopters that has only the minimum set of features required to get feedback from potential customers.
  54. 54. Iterations in the Market Whole Product!VALUE! Progress is iterative! Minimum Viable Product! TIME!
  55. 55. Iterations in the Market State your hypothesis Test Verify problem hypothesis Test product concept
  56. 56. Process: Decide what features to includeWhich features do my targetcustomers value most?Which are they willing to pay for? Which are easy to roll out and whichrequire more R&D
  57. 57. Product differentiation High How does your business rate on that criteria? Medium What is the criteria people use when Low solving their problem? Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005
  58. 58. Product differentiation The goal is not to be the highest in each category, but to have a unique profile that highlights where your value lies. Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005
  59. 59. Process: Testing your MVPConsider Eliminating the features that don tadd value.Consider Reducing the features you musthave but isn t that valuable.Consider Raising the features thatdifferentiate you from your competition. Look to Create new value factors yourcustomers have never seen before.
  60. 60. Process: Test Your MVP Validate: Confirmed value of MVP State your hypothesis Iterate: change your product Test featuresVerify problem hypothesis Verify Test product concept Exit: Don’t spend any more money!Blank, Steve Four Steps to Epiphany!
  61. 61. The value proposition statementshould consist of these components:1. What your product/service is2. The target customer3. The value you provide them Write – Test – Iterate Prototype – Test - Iterate
  62. 62. Joseph Wilsonjwilson@marsdd.com""

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