Business Plan Entrepreneurship 4543

Module leader: Dr Shehryar ShahidOffice: 418-CEmail: mshehryar@ucp.edu.pk

VALUE PROPOSITIONS

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what are you offering them? what is that getting done for them? do they care?

BUT WHO WILL BUY?

Agenda

• Customers• Customers• Customers

CUSTOMER SEGMENTS

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which customers and users are you serving? which jobs do they really want to get done?

Test Hypotheses:• Problem you assume to fix• Buyer• User• Payer

Mind You

• Be Focused & Diligent

• Start-ups are ONLY meant for NICHES, so always find one

• You are SO SO SO full of constraints

• Learn to say NO!

Market TypeExisting Resegmented New

Customers Known Possibly Known Unknown

Customer Needs Performance Better fit Transformational improvement

Competitors Many Few None

Risk Lack of branding, sales and distribution ecosystem

Market and product re-definition

Evangelism and education cycle

Examples Google Southwest Groupon

Market Type determines:Rate of customer adoption

Sales and Marketing strategiesCash requirements

Existing MarketCharacteristics:•Customers are always hungry for better performance•Incumbents exist•Usually technology driven

•Positioning driven by product and how much value customers place on its features

•Risks:– Incumbents will defend their

turf– Network effects of incumbent– Continuing innovation

Resegmented Market • Low cost provider (Southwest)• Unique niche via positioning

(Whole Foods)

• What factors can you eliminate that your industry has long competed on?

• Which factors should be reduced well below the industry standard?

• Which factors should be raised well above the industry’s standard?

• Which factors should be created that the industry has never offered? (blue ocean)

New Market• Customers don’t exist

today• How will they find out

about you?• How will they become

aware of their need?• How do you know the

market size is compelling?

• Which factors should be created that the industry has never offered? (blue ocean)

• High rewards

The Ecosystem (“Customers”)

End UserEnd User Day to day users May actually have zero influence in buying process

Preferences and decisions influence or impact buying decisions

The person who controls the purse strings or is in charge of the budget

The buck stops here

Influencer / Recommender

Influencer / Recommender

Economic BuyerEconomic Buyer

Decision MakerDecision Maker

Customer Types

Corporate? Consumer?

• Business to Business (B to B)– Use or buy inside a company

• Business to Consumer (B to C)– Use or buy for themselves

• Business to Business to Consumer (B to B to C)– Sell a business to get to a consumer– Other Multi-sided Markets with multiple

customers

Corporate Customers

Business to Business (B to B)

What do they want you to do?

• Increase revenue?• Decrease costs?• Get them new customers?• Keep up with or pass competitors?• How important is it?

Corporate Market Type

• Existing Market? • Resegmenting an Existing Market?

– niche or low cost

• New Market?

Who’s the Customer in a Company?

• User?• Influencer?• Recommender?• Decision Maker?• Economic Buyer?

Consumer Customers

Business to Consumer (B to C)

What do they want you to do?

• Does it entertain them?• Does it connect them with others?• Does it make their lives easier?• Does it satisfy a basic need?• How important is it?• Can they afford it?

Market Type

• Existing Market? • Resegmenting an Existing Market?

– niche or low cost

• New Market?

Consumer Customers

• Do they buy it by themselves?• Do they need approval of others?• Do they use it alone or with others?

Multi-Sided Markets

Business to Business to Consumer (B to B to C)

Who’s The Customer?

• Consumer End Users, Corporate Customers Pay

• Multiple Consumers

Multiple Customer Segments

• You can always choose to serve more than 1 customer segment

• Each has its own Value Proposition• Each has its own Revenue Stream• One segment cannot exist without the other• Which one do you start with?

Pass/Fail Signals & Experiments

• How do you test interest?– Experimentation – General observation – Literature survey

• What kind of experiments can you run?– Street testing – Social networking sites, blogs etc. – Offline surveys

• Where do you test interest?– Who is most likely to buy? – Who is most accessible?

• How many do you test?– There is no magical number– The more, the better – DO NOT wait for absolute certainty

Pass/Fail Signals & Experiments

In Class Exercise

• Draw the customer segment block for the given business concept

• What market type? Why? – Existing, resegmented and/or new?

• What customer type? Why? – Corporate, consumer or both?