Lesson Goals
- Understand the importance and types of Customer Segments & Markets
- Investigate Value Propositions and their purpose with examples
Bring to Class- PC9
- For your venture, complete the table for every relevant customer segment:
Customer Segment | Attributes of the Customer Segment
(At least 10 attributes per segment) |
Value Proposition for the Customer Segment
(Why should they care about your product?) |
Segment 1 | ||
Segment 2 | ||
Segment 3 | ||
Segment 4 | ||
Segment 5 |
Concepts & Definitions
Customer – someone who has a problem to solve
Market – broad landscape of buyers (customers) looking to solve different types of problems
Customer Segment – subgroup of customers in the market with similar problems, who together:
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- have needs which justify a distinct offer
- And/or are reached through different channels
- And/or require different relationships
- And/or have different profitabilities
- And/or are willing to pay for different aspects of the offer
Types of Customer Segments
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- Mass Market – one large group with similar needs (consumer electronics: Blockbuster)
- Niche Market – specialized group (wholesalers targeting retail: car part manufacturers)
- Segmented – distinguished population with slightly different needs/problems (banks: middle-class and upper-class)
- Diversified – two unrelated groups of people (Amazon retail & cloud computing)
- Multi-sided Platforms – two or more interdependent groups (credit card companies’ merchants & buyers)
Total Available Market – the population (of consumers, businesses, schools, NGOs, etc) that may be interested in your product/service/concept
-
- How big it is?
- What characteristics (demographic, socioeconomic) does it have?
Total Addressable Market – specific group of customers/users you (your venture) will reach
- “Top-Down” Estimate – big-picture goal of what share of the total market you will get (usually in fraction of money transferred)
- “Bottom-Up” Estimate – fact-based estimate considering the capabilities of your venture. “How many can I produce and sell in a week/year?”
Top-Down & Bottom-Up Addressable Market Estimates for (Fake) Companies
Asterisk * numbers are invented (would actually be based on venture research), all others are approximations
CellService Startup
Top-Down:
Bottom-Up:
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GreenEnergy Co.
Top-Down:
Bottom-Up:
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MosquitoNets Inc.
Top-Down:
Bottom-Up:
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WaterSafe Works
Top-Down:
Bottom-Up:
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Value Proposition – what value does it create for the buyer?
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- Why should people chose to buy this?
- Which customer problem are you helping to solve?
- What customer needs are you addressing?
- What value are you delivering?
Methods of Value Addition
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- Design – uniqueness (Apple products)
- Cost Reduction (better economic sustainability for buyer)
- Convenience/Usability
- Rick Reduction
- Brand/Status
- Accessibility
- Newness
Pre-Class Activities
- What are some pros and cons of targeting various customer segments?
- What challenges might arise is determining, creating, presenting and/or proving a value proposition?
- What might be some more specific or different means of value addition?
Connection to Venture
- Examining your customer segment: who you are designing your product for? Under what conditions will they likely use it?
- Identifying your value proposition
- Defining your accessible & addressable markets