value proposition - entrepreneurship 101
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Joseph Wilson jwilson@marsdd.com ��
Agenda
What is a value proposition?
Examples Dimensions of value Testing your hypothesis The strategy canvas
How to (not) articulate value:
A value proposition is a statement of the unique benefits delivered by your offering to the target customer
A value proposition is a hypothesis that your offering will bring certain values to a target customer. * * Like any hypothesis, it needs to be rigorously tested in the lab (read: marketplace) before money is put into scaling.
Value Proposition is Not:
An elevator pitch: a 30 second conversation starter
“I buy dead magazines…”
“We un-think marketing…”
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”
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.”
“Google's mission is to organize the world's information and make it universally accessible and useful”
The value proposition statement should consist of these components: 1. What your product/service is
2. The target customer
3. The value you provide them
Emergent property: why your product is unique
Examples:
Good: “Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.” (Winners)
Bad: “Winners is an off-price department store owned by TJX that employs international sourcing and buying power.”
What is it?
For whom?
Values?
Examples:
Good: “Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.” (Winners)
Bad: “Winners is an off-price department store owned by TJX that employs international sourcing and buying power.”
What is it?
For whom?
Values?
Examples:
Good: “A1 Industries has developed an economical and easy-to-use chemical additive that allows paint manufacturing companies to reduce the environmental impact of their products
Bad: “A1 Industries has discovered a chemical isomer additive that allows for a reduction of VOC emissions.”
What is it?
For whom?
Values?
Examples:
Good: “A1 Industries has developed an economical and easy-to-use chemical additive that allows paint manufacturing companies to reduce the environmental impact of their products
Bad: “A1 Industries has discovered a chemical isomer additive that allows for a reduction of VOC emissions.”
What is it?
For whom?
Values?
Examples:
Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”
Bad: “Google uses a patented page-ranking algorithm to make money through ad placement.”
What is it?
For whom?
Values?
Examples:
Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”
Bad: “Google uses a patented page-ranking algorithm to make money through ad placement.”
What is it?
For whom?
Values?
Are Internet Users really Google’s customers?
Examples:
Good: “Google is the world’s largest search engine that automatically provides advertisers with potential customers tailored to the ad content, increasing click-through rates and conversion rates.”
Bad: “Google uses a patented page-ranking algorithm to make money through ad placement.”
What is it?
For whom?
Values?
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Usability
Social Inclusion
Health
Aesthetics
Status
Newness
Environmental
Self-Actualization
Ethical
Selling to Business
Selling to Customer
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
- Overt values
- Rational decision making
B2B Sales:
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Selling to Business
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
Usability
Social Inclusion
Self-Actualization
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to Customer
- Latent values
- Emotional decision making
B2C Sales:
Saving/making money
Saving time
Lower risk
Enabling function
Convenience
Quality
Customizable
Usability
Social Inclusion
Health
Aesthetics
Status
Newness
Environmental
Self-Actualization
Ethical
Selling to Business
Selling to Customer
Process: Draft a value proposition
Version 1.0: I think A1 Industries’ product/service will…
The Customer Development Triangle
Product
Target Customer
✗
The Customer Development Triangle
Product = solution
Target Customer
Problem
The Customer Development Triangle
Product = solution
Target Customer
Problem
Process: Test your value proposition
Version 2.0: A1 Industries provides…
Blank, Steve Four Steps to Epiphany
State your hypothesis
Test problem
hypothesis
Test product concept
Verify
Get out of your office!
Understanding Customer Problems:
Empathy with Target Customers!
Osterwalder, Alexander, Business Model Generation, 2009
Day in the Life Scenario
Ernie: fixes airplanes
Current situation & desired outcome
Problem encountered & economic consequences
Enabling factors of your product
New outcomes and economic rewards
Before
After
Understanding customer problems:
¢ Market research methods for entrepreneurs
Pretend to be the customer
Customer Interview Program
Lead user
QFD - Quality Function Deployment
Customer archetype
¢ Methods that require professionals
Concept testing
Cojoint analysis
Empathic deisgn
Prototype/Beta testing
Primary Market Research
Industry specific
vendors
IDC Forrester Gartner
Lux Research Cleantech Group LLC
Thomson Pharma MedTrack
Business Insights IMS
Multiple Industry coverage vendors
Frost & Sullivan BCC Research Total Patents
Delphion/Thomson Innovation
Datamonitor Venture Source
Chemical Abstracts
Aggregator of other vendor
resources
Dialog Pro Market Research
Factiva Meltwater News
1. Access to reports/data from 20 databases
2. Access to industry analysts through inquiry
time
Key: Red – ICT Green – Cleantech & Nanotech Blue – Life Sciences
U of T- $ 50 M collection
Secondary Market Research
Process: Test your value proposition
Blank, Steve Four Steps to Epiphany
State your hypothesis
Test problem
hypothesis
Test product concept
Verify
The Three Outcomes:
Verify
Validate: Confirmed
value proposition
Iterate: change value
proposition
Exit: Don’t spend any
more money!
The Customer Development Triangle
Pg 52
Product = solution
Target Customer
Problem
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.
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.
Iterations in the Market
TIME!
VALUE!
Minimum Viable Product!
Whole Product!
Progress is iterative!
Iterations in the Market State your hypothesis
Test problem
hypothesis
Test product concept
Verify
Process: Decide what features to include
Which features do my target customers value most? Which are they willing to pay for? Which are easy to roll out and which require more R&D
Product differentiation
Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005
What is the criteria people use when solving their problem?
How does your business rate on that criteria?
High
Medium
Low
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
Process: Testing your MVP
Consider Eliminating the features that don’t add value.
Consider Reducing the features you must have but isn’t that valuable.
Consider Raising the features that differentiate you from your competition.
Look to Create new value factors your customers have never seen before.
Process: Test Your MVP
State your hypothesis
Test problem
hypothesis
Test product concept
Verify
Blank, Steve Four Steps to Epiphany!
Verify
Validate: Confirmed
value of MVP
Iterate: change your
product features
Exit: Don’t spend any
more money!
The value proposition statement should consist of these components: 1. What your product/service is
2. The target customer
3. The value you provide them
Write – Test – Iterate Prototype – Test - Iterate
Joseph Wilson jwilson@marsdd.com ��
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