Marketplace and Quality Assurance Presentation - Vincent Chirchir
Biz model 3 value proposition, cust selection
1. Value Propositions and
Customer Selection
A/Prof Jeffrey Funk
Division of Engineering and Technology Management
National University of Singapore
2. Business Model
Value proposition: what to offer and how to
differentiate
Customer selection: whom to serve and not serve
Value capture: dominant source of revenues
Scope of activities: what activities to carry out and
what relationships to have
Strategic control: how to sustain profitability
3. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
Quantitative methods
Conclusions
4. Simple Definition of Marketing
To determine the NEEDS and wants of
target market and deliver the desired
satisfaction more effectively and efficiently
than competitors
5. What is a Need?
Understand needs
from perspective of:
◦ Economic – what are the
costs and benefits?
◦ Functional – what does
a product do?
◦ Psychological value –
how do I feel and what
makes me feel better?
6. Don’t Assume Everyone is
Like You
Common mistake by
engineers
Many people emphasize
psychological value more than
do engineers, who are taught
to emphasize economic or
functional value
You need to see the world
through other people’s eyes
7. What is a Need? (continued)
Understand needs from perspective of:
◦ Economic, functional, and psychological value
Collecting data on customer needs
◦ Surveys
◦ Focus groups
◦ Analysis of buying patterns
What are the broad trends that impact on
customer needs?
◦ Social networking
◦ Mobile lifestyles
But mostly helps us with served and
articulated needs
8. What is a Need? (continued)
Today’s
Business
Customer
Needs
Unarticulated
Articulated
Customer Types
Served Unserved
9. Do People Know what they Need?
40 years ago did most people think they
needed
◦ Mobile phone
◦ Internet-compatible phone
◦ Computer, digital camera
◦ Foreign vacations
Surveys in early 1980s suggested that
users didn’t need/want mobile phones
But they ended up buying one and now,
many say they can’t live without one
Part of the problem is that surveys didn’t
take into account falling prices of mobile
phones
10. What if we Look at their
Purchasing Behavior?
Better than asking them about their
needs, but still not perfect
Does a person buying a drill need a drill?
No, they need a hole!
Or maybe they need a way to connect to
items with
◦ A screw
◦ A screw and a bolt
11. What if we Look at their
Purchasing Behavior? (2)
Do people need shoes?
Do Westerners only like Western food?
Westerners used to only eat Western food
But now they eat many kinds of foods
How should we have interpreted their
purchasing behavior when they only ate
Western food?
12. What if we Look at their
Purchasing Behavior? (3)
There are other reasons to be careful
when generalizing about countries
Generalizations only reflect “averages” or
“medians”
And we are interested in specific needs of
specific people
If you can find unserved or unarticulated
needs, you can be very successful
13. It’s not Just Consumers,
it’s Firms
Often can’t understand firms by what
they say or even what they do
Organizations do things inefficiently
because they
◦ have always done them this way or
◦ don’t know really understand what they need
30 years ago, many logistics people
didn’t know they needed deliveries to
assembly lines or retail floor, and not to
loading docks!
14. It’s not Just Consumers,
it’s Firms
Does NUS know that they need cloud
computing? Or that Google mail is
easier to use than NUS mail?
Part of the problem is that final users
have little impact on many
organizational decisions (e.g.,
purchasing computers or furniture)
15. As a Seller of
Products & Services
You need to know who makes decisions
Who are the key decision makers?
◦ Purchasing managers?
◦ Other managers?
Who are the key collaborators?
◦ Retail outlets and other distributors
◦ Suppliers of complementary products
Does your value proposition match their
needs?
16. Another way to look at needs
Empathy Map
From Business Model Generation,
Alexander Osterwalder
17. What does she
THINK AND FEEL
What really counts
Major preoccupations
Worries and aspirations
What does she
SEE
Environment
Friends
What the market offers
What does she
HEAR
What friends say
What boss says
What influencers say
What does she
SAY AND DO?
Attitude in public
Appearance
Behavior towards others?
PAIN
Fears
Frustrations
Obstacles
GAIN
Wants/needs
Measures of success
obstacles
18. Empathy Maps
Can you define empathy maps for a
variety of different segments?
Define a representative user for each
segment and define her characteristics,
needs, and what she
◦ Says and does
◦ Hears
◦ Thinks and feels
19. Different market segments, i.e., users
◦ have different willingness to pay and demand different levels
of performance
◦ demand different types of features or performance
◦ make different tradeoffs between performance, features, price
◦ fundamentally want different products
These segments emerge over time
◦ Often difficult to specify them before products begin to diffuse
◦ Some markets have more segments (i.e., sub-markets) than
other markets
◦ Understanding the differences and similarities between
segments is critical for businesses
Market Segments and Diffusion
20. Segmentation
Categorize customers in groups that have
distinct needs
◦ How many types of customers are there?
◦ What differentiates them, how are their needs
distinct?
◦ How valuable might they be (size of market and
potential profitability)?
◦ Which segments will be the first adopters of the
new technology?
◦ How will the definitions of the segments evolve?
Understand the differences between product
and market segments (discussed in Session 2)
22. Examples of Psychographic Technique
Different People like Fast Food for Different Reasons
These Different
People
Represent
Different Market
Segments
Can new
entrants target
these
segments?
23. Targeting
Select the segment (s) that have the best
short and long-term prospects for the firm
◦ If a new technology, they must be early
adopters of new technology
◦ have a large potential value (Present/Future)
◦ fit with the company’s core competency
◦ preferably not fit with the competitor’s core
competency
You must justify your choice of target
segment(s)
24. Must Connect Customer Needs with
Company’s Capabilities
Require the effective and
efficient reconciliation of
any differences
Market Pull
What the market or
segment indicates it
needs/wants and is
willing to pay for
Company Pull
What the firm is
capable of and
willing to provide
to the market
Voice of the
Market
Voice of the
Firm
Market-
Based
Firm
25. Ideally, we would select not just a
segment, but the first customer in
that segment
In addition to whether the technology is appropriate
for the targeted segment,
◦ Do you have the connections with the right customers and
the decision makers for those customers?
◦ Will these customers tell others about the new technology?
◦ Will other customers listen to the first customers?
26. This an Iterative Process
1. Segment Market
2. Identify
needs in each market
existing products in each market
strengths and weaknesses of
each product
where are the opportunities?
3. Select segment (customer)
and propose value proposition
(and propose more than just a simple
and clear statement, more below)
27. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
Quantitative methods
Conclusions
28. Value Proposition
Value to
the
target
market
Benefits to
the
target
market
Price to
the
target
market
=
Relative
to
A simple and clear statement of the intended target market,
the benefits of the offering, and the price
New technologies/products diffuse because they offer a
superior value proposition to users
29. Value Proposition
But what constitutes a great value proposition?
◦ Large benefits and low price
◦ Large economic, functional and psychological value
The definition of value depends on the user
Thus, value proposition and customer selection cannot
be separated
◦ You must look at the product as a user not a seller
◦ Put yourself in various users’ situations
31. Value Proposition
Hard to explain in words
Must look at examples
Let’s look at some examples (all of them can be
defined as discontinuities). For each of them
◦ What is the value proposition?
◦ What enables them to have a great value proposition?
◦ To a lesser extent, what enabled them to be introduced at that
time?
32. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing economy
◦ Nano-technology
Quantitative methods
Conclusions
35. What is value proposition?
Who were first customers?
36. These Products Introduced
New Types of Value
iPod
◦ first portable MP3 player that actually worked
◦ excellent integration with online music site
◦ easy control with click wheel
iPad and iPhone
◦ better user interface for accessing Internet
◦ touch screen that eliminated need for keyboard
◦ large number of apps, supported by well-
designed operating system
37. Who were the Customers for
these Products
iPod
◦ Music lovers
◦ Young people
iPhone
◦ Also young people, why?
iPad
◦ Many young people, but not those that use
computers for creating documents, Why?
How about Apple’s laptops?
39. But not just final users, there
are also other customers
iPod
◦ Music companies: cooperation with them was
needed for iPod to succeed
iPhone
◦ Phone companies, application software providers
iPad
◦ Application software providers and also media
companies
Multiple types of customers exist for many
technologies
41. Timing (1)
What kind of changes determined their
timing?
Was it social, technological, or regulatory
changes?
Why weren’t these products introduced
much earlier than they were?
Could they have been introduced years
before they were?
42. Timing (2)
All of these products needed
◦ Large memory storage
◦ Fast processors
◦ But could these products have been introduced
without so much memory or processors?
What determined when ICs had sufficient memory
capacity and processor speed?
iPad and iPhone needed touch displays
◦ What determined the timing of the displays?
For more details: When do new technologies become economically feasible: the case of
electronic products. http://www.slideshare.net/Funk98/presentations
43. Why Did RIM Blackberry (and
Nokia and Motorola) Ineffectively
Respond
RIM Blackberry
has never
introduced an
effective touch
screen smart
phone
Why?
44. Brief History of RIM Blackberry
Began working on mobile e-mail in mid-1980s
◦ Focused on mail services for U.S. service providers in
1990s
Began offering pagers in 1996 and smart
phones in 2002
◦ High security, reliability
◦ Low battery consumption and bandwidth usage
Blackberry phone became one of the most
popular products of all time
Market capitalization of $83 Billion in June
2008
Source: Losing the Signal: The Spectacular Rise and Fall of Blackberry, 2015. Jacquie McNish, Sean Silcoff
45. Blackberry’s Response
to iPhone
Released Storm in 2008 and Storm 2 in
2010, with clickable touch screen
Clickable screen added less value than
problems
Poor browser and operating system, because
they hadn’t needed ones in the past
By the time they gave up on clickable touch
screen it was too late
◦ Android phones were emerging
◦ Stock was dropping even as its sales grew outside
U.S.
46. Returning to Apple and Looking
to Future
What are limitations of Apple’s products?
What do these limitations tell us about
potentially better value propositions, i.e.,
solutions, in the future?
Can improvements in memory and
processor ICs or in touch displays lead to
◦ better products,
◦ those with better value propositions?
◦ Or might other improvements in other
technologies enable better value propositions?
47. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing economy
◦ Nano-technology
Quantitative methods
Conclusions
49. What is Next for Phones? (2)
New features, perhaps for high-end phones
◦ Health care: phones monitors health (heart rate,
brain wave, blood pressure) using sensors
◦ Home automation: use phones to control homes
◦ Better navigation, sharing economy
◦ Engineering assistant: environmental data
(temperature, pressure, air and water quality) and
maybe data from satellites
Different phones for different applications?
One phone does everything?
Multiple segments each with multiple
applications for phone?
50. What is Next? (3)
New forms of phones/
computers
◦ Belly sensors?
◦ Smart watches?
◦ Wrist displays?
◦ Head computers
51. What is Next for Phones? (4)
Low-cost option: Wi-Fi only phones?
Many young people only use WiFi
◦ Contracts with service provider become
unnecessary
◦ As WiFi becomes more available……..
Could cellular processors (and other
components) be eliminated from phones?
◦ If WiFi is main connection and it works good
enough, can memory and application processors
be eliminated?
◦ What about lower resolution cameras, displays,
and other components
52. Many Efforts to Link WiFi with
Cellular for Inexpensive Services
Concept of service
◦ Combine WiFi routers into integrated services
◦ Use cellular network when WiFi isn’t available: purchase network space
from cellular operators
◦ Much cheaper than existing cellular contracts
◦ How long will cellular service providers continue selling network space to
new entrants?
In U.S., Republic Wireless, Scratch Wireless, FreedomPop,
Google, soon cable companies. In France, service called “Free”
But Korea may be the leader – large use of WiFi, great phones
from Samsung, and great mobile content and services
http://www.wsj.com/articles/google-unveils-wireless-service-called-project-fi-1429725928; http://nyti.ms/1AFMiFW;
http://nyti.ms/1HI2BkW; http://www.economist.com/news/business/21654602-wi-fi-first-technology-will-be-great-consumers-disruptive-mobile-
firms-change
53. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing economy
◦ Nano-technology
Quantitative methods
Conclusions
55. Many Options for IoT
Sensors
◦ Many types of sensors: RFID, MEMS, QR codes,
GPS, temperature, pressure
Data Transport
◦ Cellular, WiFi
◦ Zigbee, Bluetooth (iBeacon)
Data Analysis, Interpretation, Control,
Automation
◦ Microprocessors
◦ Open source software
◦ Big data algorithms (Big Data is one of the fastest
growing recipients of venture capital)
56. The Big Questions
Where is most value and thus
will likely be connected first?
Where is revenue; how should
it be obtained?
Should one firm do everything?
Should work be shared among
firms (i.e., vertical
disintegration)
How can we answer these
questions?
Let’s focus on top question,
others in subsequent weeks
57. Where is the Most Value?
Web sites and phones already monitor
◦ Your actions
Manufactures monitor product usage
◦ Amazon Kindle?
◦ How about washing machines?
Insurance companies are monitoring
people
◦ Monitor vehicle driving
◦ Monitor health
◦ Monitor home safety (e.g., fire)
58. Where is the Most Value? (2)
Farms are major users of IoT in U.S.
Equipment is monitored, controlled, and
automated with GPS, lasers, and other
electronics
◦ Fields must be perfectly level for irrigation
◦ Seeds must be accurately placed
◦ Harvesting must be done at right speeds
Everything depends on the weather!
All of these things will be adopted by
the rest of the world (including
corporate farms)
59. Where is the Most Value? (3)
Retailers
◦ Promote products to customers
◦ Enable customers to access product details
◦ Automate check-out process
Owners keep track of products with GPS
◦ Vehicles, medical equipment
◦ Can nurse find equipment with phone app?
◦ For which products does location have most
value?
60. Where is the Most Value? (4)
Consumers can monitor
◦ Valuables (cars, yachts, phones)
◦ Homes (refrigerators, lights, locks, doors,
windows, even helpers)
◦ Their movements, health, money……
Transport companies
◦ Want to monitor your
movements
◦ Why?
61. Where is the Most Value? (5)
Manage updates to a product
◦ Phones, Desktop and tablet computers
◦ How about medical equipment?
Provide value adding apps to products
◦ Phones
◦ Televisions?
◦ Medical equipment?
◦ Construction equipment?
Third parties might have more ideas than
the manufacturers
Who should be allowed to manage updates
and provide apps to products?
62. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing economy
◦ Nano-technology
Quantitative methods
Conclusions
63. Type of
Specs
Incandescent
Lamp
Fluorescent
lamp
LED OLED
Thickness Very Thick Very Thick 6.9 mm (for LED
TV)
1.8 mm
Flexibility Very inflexible,
and breakable
Very inflexible,
and breakable
Some flexibility Most flexible
Danger to eyes Can’t stare at
them
Can’t stare at
them
Can’t stare at
them
Okay to stare
Lifespan 500-700 hrs >10, 000 hrs 100, 000 hrs 15, 000 hrs
Price of 60 Watt
bulb
<1 USD <5 USD 9 USD Most expensive
Efficiency/
Brightness
300 USD/Year for
800 lumens
75 USD per
year
30 USD per year Not yet efficient
Environmental
friendliness
Low efficiency Contains
mercury
Most efficient, no
toxic chemical
Not yet efficient,
no toxic chemical
Comparison of Lighting in 2012
Source: Group presentation in MT5016 module and http://electronics.howstuffworks.com/led4.htm
http://www.theverge.com/2013/10/3/4798602/walmart-gets-aggressive-on-led-bulb-pricing
68. OLED Display Applications
Customer Types
CustomerNeeds
UnarticulatedArticulated
Served Un-Served
Consumers products display, e.g. TV,
mobiles, tablets etc.
Automotive Lighting & Displays
Digital Wall
Transparent Monitor
Household displays
3D glass
Rollable Display
69. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing Economy
◦ Nano-technology
Quantitative methods
Conclusions
70. Smart Services
Lighting as a Service
Smart water
Smart agriculture
Wireless or wired vehicle charging services
Bicycle sharing (sharing economy)
Smart roads for autonomous vehicles
Overall smart cities
71. Upgrades
lightings at no
upfront cost
Provides
maintenance
Provide free
energy audits,
technical
assistance and
its new financing
option
Share Electricity Savings
from using LEDs
More than 120
years in lighting
business
What is Lighting-as-a-Service?
72. Lighting as Service
Could target
◦ Cities (public lighting)
◦ Factories, Offices
Lighting represents more than 10% of the world’s
electricity costs
Use LEDs, motion sensors to reduce lighting costs
Value proposition
◦ No upfront costs
◦ Customers only pay percentage of cost savings
from smarter lighting
◦ Great for budget limited cities who are pressured
to be more green
73. Smart Roads and Services:
Can We Dedicate Roads to Autonomous Vehicles?
Can we move from
a parking lot (top)
to smoothly flowing
traffic that is highly
dense (right)
through services?
Magnetic
stripes or
RIFD
Tags?
Cellular
networks?
75. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing Economy
◦ Nano-technology
Quantitative methods
Conclusions
77. Is this New?
Sharing has always been done
What has changed?
◦ Technology
better mobile phones and apps
these improvements continue to occur
◦ Economic
Recession of 2008 still lingers in people’s minds
and continued problems in Greece and
elsewhere prevent us from forgetting
◦ Social
Social networking sites facilitate sharing
More concern for environment
How is the value proposition better or
different than before?
78. Sharing Economy (or Demand-
Based Economy) in San Francisco
For consumers
◦ Uber provides chauffeurs and logistics
◦ Handy supplies cleaners
◦ SpoonRocket delivers restaurant meals
◦ Instacart keeps your fridge stocked
◦ Medicasts gives you a doctor at your house
◦ BloomThat delivers flowers
◦ TaskRabbit will send somebody out to pick up a
last-minute gift
79. Sharing Economy (or Demand-Based
Economy) in San Francisco (2)
For businesses
◦ Elance-oDesk offers companies the services of
10m freelancers
◦ Innocentive gives firms solutions from
freelancers
◦ Kaggle gives firms solutions to data problems
from freelancers
◦ Amazon’s Mechanical Turk breaks down tasks
into smaller activities to be done online
These examples can also be thought of as
examples of vertical disintegration (see
Session 6)
80. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
◦ Apple’s recent products
◦ What is next for phones
◦ Internet of Things
◦ Lighting and displays
◦ Smart services, Sharing Economy
◦ Nano-technology
Quantitative methods
Conclusions
81. Fullerenes, Graphene, Carbon Nanotubes
Fullerenes: specific number of
carbon atoms arranged as
sphere
Graphene: flat sheet of
carbon atoms
Carbon Nanotubes: flat sheet
is rolled so that sides are
connected, thus creating tube
multiple walled tube contains
multiple tubes
82. Graphene
Very low electrical resistance
high thermal conductivity (4,000 W/m-K)
high mobility (about 200,000 cm2/Vs at room
temperature, compared to 1,400 in silicon and
77,000 in indium antimonide)
One of strongest materials, but yet flexible
Unusual optical behavior: equally transparent to
ultraviolet, visible and infrared light
But very expensive!
Two current markets (composites for strength and
electrodes for conductivity) but also displays,
computer chips, and solar cells
Source: Segal, Michael (2009). "Selling graphene by the ton". Nature Nanotechnology 4 (10): 612–4
Nature 483, S29 (15 March 2012). Also http://www.azom.com/news.aspx?newsID=11679
83. Other Ultra-Thin Materials
More than 10 materials that are two-
dimensional with complementary properties that
could be integrated with graphene to provide
extra functionality
Boron nitride also one-atom thick and instead of
being a conductor it is an insulator (of heat), the
best insulator we know – possible project?
If you go to three atoms thick, molybdenum
disulfide is a semiconductor, like silicon, but
lighter and stronger.
These materials can then be combined to
fabricate completely new material structures
Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-
miracle-material/index.html?hpt=hp_c3
84. Carbon Nanotubes (1)
Diameters and axes impact on
◦ levels of conduction and thus
◦ whether the carbon nanotube is a conductor,
semiconductor, or an insulator
Conducting nanotubes
◦ 1000 times higher conductivities than copper
◦ 100 times higher current densities than
superconductors
Strongest materials known in tension
High thermal conductivity
But hard to fabricate (Easier to make
long superconductors)
85. Potential Applications
Composites for structural materials
(e.g., racing bikes)
Anti-fouling paint for ships
Printed CNT transistors on polymer film
Transparent electrodes for displays,
solar cells
But which ones have the largest need
for high performance and the greatest
willingness to pay?
86. How About Environmentally
Friendly Materials?
Can use of agricultural
waste to reduce use of
plastics and other non-bio-
degradable products for
packaging?
Use “mushroom” material
to bind agricultural waste
Fill a mold with this
combination
And wallah, we have less
trash
87. How is Mushroom Material made?
Agricultural Waste
(e.g. Corn Stalks)
Root Structure of Mushrooms
called MYCELLIUM
Mycellium branches out to form
a matrix around the agricultural
waste and is put into molds
Solid, strong mass
aka
MUSHROOM MATERIAL
88. More Information on these
Technologies
Can be found in many places, but one
place is my slideshare account
http://www.slideshare.net/Funk98/presentations
This account has slides with
◦ Time series data on improvements
◦ Drivers of improvements
◦ New “systems” that are emerging from these
improvements
◦ Group presentations
89. Outline
Customer needs
Market segments and customer
selection
Definition of value proposition
Examples
Semi-Quantitative methods
◦ Strategy canvas, i.e., Blue Ocean Strategy
◦ Product development specifications
Conclusions
90. Previous Slides
Provided qualitative descriptions of value
propositions for technologies that are now
considered far superior to previous ones
We would like to have quantitative data or
at least justifications for value
propositions
◦ To show how technologies are superior or may
become superior to the old technologies
◦ To show this before or during the transition
◦ To also help us understand the niches that
many technologies occupy for short and long
periods of time
92. Many of these factors are
related to an elite image
Enological
terminology: Tannins
and Oak
Above-the line
marketing
Wine Complexity
Aging Quality
Wine Range, i.e.,
Variety
93. The Four Actions Framework (Blue Ocean Strategy)
A New
Value
Curve
Note: factors are price, features,
and dimension of performance.
You can also think about them
as part of a value proposition.
95. 1. Wine maker or winery:
2. Appellation: The country or
region where the grapes for this
wine were grown
3. Vintage; 4. Variety
5. Ripeness; 6. Estate
bottling and winery
information
96. The Strategy Canvas of Southwest Airline
Low
Price
Meals
Lounges
Seating
Class
choices
Hub
connectivity Friendly
service
Speed Frequent
point- to-point
departure (new
dimension)
High
Average Airline
Southwest
Car Transport
97. The Strategy Canvas of Cirque du Soleil
Low
Price Star
performers
Animal
shows
Aisle
concessions
Multiple
Show
arenas
Unique
venue
Theme Refined
Watching
environment
High
Multiple
Productions
Artistic
Music
and
dance
Fun And
humor
Thrillsand
danger
Smaller Regional
Circuses
Ringling Bros. and Barnum &Bailey Value Curve
Cirque du Soleil
Value Curve
New Dimensions
102. Key Aspects of Strategy Canvas
Identify dimensions of performance (i.e.,
customer needs) for single market segment
Identify existing products and their levels of
performance and price
Quantify performance (and price)
Find dimensions of performance that are
currently being ignored
◦ see four action framework
Conceptualize new types of products that
can provide new types of performance
This is an iterative process
103. For Your Presentation
If you describe a strategy canvas in your
presentation, you must justify your
strategy canvas with data and/or logic
104. Outline
Customer needs
Market segments and customer selection
Definition of value proposition
Examples
Quantitative methods
◦ Strategy canvas, i.e., Blue Ocean Strategy
◦ Product development specifications
Conclusions
105. Establishing Target Specs for
Products
Choose a specific segment
Start with customer needs for the segment
Prepare a list of metrics for the segment
Collect data on metrics for products in the
segment
Set ideal and marginally acceptable target
values for the specifications
Reflect on the results and process
Very similar to value proposition and
customer selection! But much more complex!
107. Start with the Customer Needs
# NEED Imp
STTritrack
Maniray2
1 The suspension reduces vibration to the hands. 3 • ••••
2 The suspension allows easy traversal of slow, difficult terrain. 2 •• ••••
3 The suspension enables high speed descents on bumpy trails. 5 • •••••
4 The suspension allows sensitivity adjustment. 3 • ••••
5 The suspension preserves the steering characteristics of the bike.4 •••• ••
6 The suspension remains rigid during hard cornering. 4 • •••
7 The suspension is lightweight. 4 • •••
8 The suspension provides stiff mounting points for the brakes. 2 • ••••
9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• •••••
10 The suspension is easy to install. 1 •••• •••••
11 The suspension works with fenders. 1 ••• •
12 The suspension instills pride. 5 • ••••
13 The suspension is affordable for an amateur enthusiast. 5 ••••• •
14 The suspension is not contaminated by water. 5 • •••
15 The suspension is not contaminated by grunge. 5 • •••
16 The suspension can be easily accessed for maintenance. 3 •••• •••••
17 The suspension allows easy replacement of worn parts. 1 •••• •••••
18 The suspension can be maintained with readily available tools. 3 ••••• •••••
19 The suspension lasts a long time. 5 ••••• •••••
20 The suspension is safe in a crash. 5 ••••• •••••
108. Metric#
Need#s
Metric Imp Units
1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB
2 2,6 Spring pre-load 3 N
3 1,3 Maximum value from the Monster 5 g
4 1,3 Minimum descent time on test track 5 s
5 4 Damping coefficient adjustment range 3 N-s/m
6 5 Maximum travel (26in wheel) 3 mm
7 5 Rake offset 3 mm
8 6 Lateral stiffness at the tip 3 kN/m
9 7 Total mass 4 kg
10 8 Lateral stiffness at brake pivots 2 kN/m
11 9 Headset sizes 5 in
12 9 Steertube length 5 mm
13 9 Wheel sizes 5 list
14 9 Maximum tire width 5 in
15 10 Time to assemble to frame 1 s
16 11 Fender compatibility 1 list
17 12 Instills pride 5 subj
18 13 Unit manufacturing cost 5 US$
19 14 Time in spray chamber w/o water entry 5 s
20 15 Cycles in mud chamber w/o contamination 5 k-cycles
21 16,17 Time to disassemble/assemble for maintenance 3 s
22 17,18 Special tools required for maintenance 3 list
23 19 UV test duration to degrade rubber parts 5 hours
24 19 Monster cycles to failure 5 cycles
25 20 Japan Industrial Standards test 5 binary
26 20 Bending strength (frontal loading) 5 MN
Establish Metrics and Units
109. Link Metrics to Needs1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Need
Metric
Attenuationfromdropouttohandlebarat10hz
Springpre-load
MaximumvaluefromtheMonster
Minimumdescenttimeontesttrack
Dampingcoefficientadjustmentrange
Maximumtravel(26inwheel)
Rakeoffset
Lateralstiffnessatthetip
Totalmass
Lateralstiffnessatbrakepivots
Headsetsizes
Steertubelength
Wheelsizes
Maximumtirewidth
Timetoassembletoframe
Fendercompatibility
Instillspride
Unitmanufacturingcost
Timeinspraychamberw/owaterentry
Cyclesinmudchamberw/ocontamination
Timetodisassemble/assembleformaintenance
Specialtoolsrequiredformaintenance
UVtestdurationtodegraderubberparts
Monstercyclestofailure
JapanIndustrialStandardstest
Bendingstrength(frontalloading)
1 reduces vibration to the hands.• • •
2 allows easy traversal of slow, difficult terrain.•
3 enables high speed descents on bumpy trails.• • •
4 allows sensitivity adjustment. •
5 preserves the steering characteristics of the bike. • •
6 remains rigid during hard cornering. • •
7 is lightweight. •
8 provides stiff mounting points for the brakes. •
9 fits a wide variety of bikes, wheels, and tires. • • • •
10 is easy to install. •
11 works with fenders. •
12 instills pride. •
13 is affordable for an amateur enthusiast. •
14 is not contaminated by water. •
15 is not contaminated by grunge. •
16 can be easily accessed for maintenance. •
17 allows easy replacement of worn parts. • •
18 can be maintained with readily available tools. •
19 lasts a long time. • •
20 is safe in a crash. • •
110. Benchmark on
Customer Needs
# NEED Imp
STTritrack
Maniray2
RoxTahxQuadra
RoxTahxTi21
TonkaPro
GunhillHeadShox
1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••
2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••
3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••
4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••
5 The suspension preserves the steering characteristics of the bike.4 •••• •• • •• ••• •••••
6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••
7 The suspension is lightweight. 4 • ••• • ••• •••• •••••
8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••
9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •
10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •
11 The suspension works with fenders. 1 ••• • • • • •••••
12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••
13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••
14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••
15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••
16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •
17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •
18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •
19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •
20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••
111. Benchmark on
Metrics
Metric#
Need#s
Metric Imp Units
STTritrack
Maniray2
RoxTahxQuadra
RoxTahxTi21
TonkaPro
GunhillHeadShox
1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB 8 15 10 15 9 13
2 2,6 Spring pre-load 3 N 550 760 500 710 480 680
3 1,3 Maximum value from the Monster 5 g 3.6 3.2 3.7 3.3 3.7 3.4
4 1,3 Minimum descent time on test track 5 s 13 11.3 12.6 11.2 13.2 11
5 4 Damping coefficient adjustment range 3 N-s/m 0 0 0 200 0 0
6 5 Maximum travel (26in w heel) 3 mm 28 48 43 46 33 38
7 5 Rake offset 3 mm 41.5 39 38 38 43.2 39
8 6 Lateral stiffness at the tip 3 kN/m 59 110 85 85 65 130
9 7 Total mass 4 kg 1.409 1.385 1.409 1.364 1.222 1.1
10 8 Lateral stiffness at brake pivots 2 kN/m 295 550 425 425 325 650
11 9 Headset sizes 5 in
1.000
1.125
1.000
1.125
1.250
1.000
1.125
1.000
1.125
1.250
1.000
1.125 NA
12 9 Steertube length 5 mm
150
180
210
230
255
140
165
190
215
150
170
190
210
150
170
190
210
230
150
190
210
220 NA
13 9 Wheel sizes 5 list 26in 26in 26in
26in
700C 26in 26in
14 9 Maximum tire w idth 5 in 1.5 1.75 1.5 1.75 1.5 1.5
15 10 Time to assemble to frame 1 s 35 35 45 45 35 85
16 11 Fender compatibility 1 list Zefal none none none none all
17 12 Instills pride 5 subj 1 4 3 5 3 5
18 13 Unit manufacturing cost 5 US$ 65 105 85 115 80 100
19 14 Time in spray chamber w /o w ater entry 5 s 1300 2900 >3600 >3600 2300 >3600
20 15 Cycles in mud chamber w /o contamination 5 k-cycles 15 19 15 25 18 35
21 16,17 Time to disassemble/assemble for maintenance 3 s 160 245 215 245 200 425
22 17,18 Special tools required for maintenance 3 list hex hex hex hex
long
hex
hex,
pin
wrnch
23 19 UV test duration to degrade rubber parts 5 hours 400+ 250 400+ 400+ 400+ 250
24 19 Monster cycles to failure 5 cycles 500k+ 500k+ 500k+ 480k 500k+ 330k
25 20 Japan Industrial Standards test 5 binary pass pass pass pass pass pass
26 20 Bending strength (frontal loading) 5 MN 55 89 75 75 62 102
112. Assign Marginal and Ideal Values
Metric Units
MarginalValue
IdealValue
1 Attenuation from dropout to handlebar at 10hz dB >10 >15
2 Spring pre-load N 480 - 800 650 - 700
3 Maximum value from the Monster g <3.5 <3.2
4 Minimum descent time on test track s <13.0 <11.0
5 Damping coefficient adjustment range N-s/m 0 >200
6 Maximum travel (26in wheel) mm 33 - 50 45
7 Rake offset mm 37 - 45 38
8 Lateral stiffness at the tip kN/m >65 >130
9 Total mass kg <1.4 <1.1
10 Lateral stiffness at brake pivots kN/m >325 >650
11 Headset sizes in
1.000
1.125
1.000
1.125
1.250
12 Steertube length mm
150
170
190
210
150
170
190
210
230
13 Wheel sizes list 26in
26in
700c
14 Maximum tire width in >1.5 >1.75
15 Time to assemble to frame s <60 <35
16 Fender compatibility list none all
17 Instills pride subj >3 >5
18 Unit manufacturing cost US$ <85 <65
19 Time in spray chamber w/o water entry s >2300 >3600
20 Cycles in mud chamber w/o contamination k-cycles >15 >35
21 Time to disassemble/assemble for maintenance s <300 <160
22 Special tools required for maintenance list hex hex
23 UV test duration to degrade rubber parts hours >250 >450
24 Monster cycles to failure cycles >300k >500k
25 Japan Industrial Standards test binary pass pass
26 Bending strength (frontal loading) MN >70 >100
113. Set Final Specifications: Like Value Proposition
METRIC Units Value
1 Attenuation from dropout to handlebar at 10hz dB >12
2 Spring pre-load N 650
3 Maximum value from the Monster g <3.4
4 Minimum descent time on test track s <11.5
5 Damping coefficient adjustment range N-s/m >100
6 Maximum travel (26in wheel) mm 43
7 Rake offset mm 38
8 Lateral stiffness at the tip kN/m >75
9 Total mass kg <1.4
10 Lateral stiffness at brake pivots kN/m >425
11 Headset sizes in
1.000
1.125
12 Steertube length mm
150
170
190
210
230
13 Wheel sizes list 26in
14 Maximum tire width in >1.75
15 Time to assemble to frame s <45
16 Fender compatibility list Zef al
17 Instills pride subj >4
18 Unit manufacturing cost US$ <80
19 Time in spray chamber w/o water entry s >3600
20 Cycles in mud chamber w/o contamination k-cy cles >25
21 Time to disassemble/assemble for maintenance s <200
22 Special tools required for maintenance list hex
23 UV test duration to degrade rubber parts hours >450
24 Monster cycles to failure cy cles >500k
25 Japan Industrial Standards test binary pass
26 Bending strength (frontal loading) MN >100
114. Quality Function Deployment
(QFD) and House of Quality
technical
correlations
benchmarking
on needs
customer
needs
engineering
metrics
target and final specs
relative
importance
relationships between
customer needs and
engineering metrics
115. Multiple Houses of Quality for QFD
Engineering
Metrics
Engineering
Metrics
116. Differences and Similarities of
Setting Target Specs and QFD
Like marketing analysis and strategy canvas,
there is a focus on
◦ customer needs
◦ existing products in each market
◦ strengths and weaknesses of each product
There is also an iterative process
Differences, “setting product specifications”
focuses
◦ a single market segment
◦ relative importance of different needs and setting
detailed specifications for not only products, but
not parts and processes
117. Level of Detail in Analysis
You must make decision about level of detail
to include in analysis
Some needs are more important than others
to customers and thus require more analysis
Some needs are easier to quantify than
others and thus quantitative data is more
applicable and necessary for your
presentations
But remember why someone buys a drill –
because they want a hole!
118. Conclusions (1)
Successful products (including technological
discontinuities) provide users with superior value
proposition
A superior value proposition providers users with more
value in some way
◦ More economic, functional, or psychological value
◦ These include lower price, new dimension of performances new
features, new forms of access/distribution
Value propositions and customer selection cannot be
separated
◦ Value propositions only have value for specific customers
119. Conclusions (2)
Finding new dimensions of performance or new features
is often the key factor in success
◦ Or at least finding ones that have been underemphasized
Another key factor is finding customers who value these
dimensions of performance, new features
How can firms find these new value propositions and
these unmet needs?
◦ By thoroughly investigating the needs of customers in many
segments
◦ By understanding the technological and other changes that are
making new value propositions possible
120. Conclusions (3)
Finding new dimensions of performance, new features,
and new customers is only the first step
Then a firm must
◦ define the product’s specs, scope of activities, and methods of
value capture and strategic control (some of this covered in later
sessions)
◦ develop and promote the product (not covered in this module)
◦ make the product available to customers (not covered in this
module)
◦ firms must be good at both identifying and implementing new
value propositions
Notas del editor
People don’t know what they want with respect to many things. We arent very rational in many ways
Tell them the old story about shoes. Two marketing analysts went to a poor country to investigated the market for shoes. One reported: no market, nobody wears shoes. The second reported: huge market, nobody wears shoes.
Tell story about how people often give reasons why a technology wont succeed even when they don’t know. They feel like they have to say something. Tell story about SUP and indexing
And this is easier to read than when u read in full-screen mode. Then u only see one page at a time. Why do we even have pages in electronic documents? Must think critically about products, not just try to use them
Anybody hear of kickstarter?
Who were the customers for these products?
who
Why might a consumer want the feeling of texture?
These slides focus on the hardware and not the software. Besides developing the software, running it requires computing power. How much?
Why would we want a smaller or more flexible light? Who must be involved in order to take advantage of small and flexible lights?
Where do we want thinness, response time. How about readability in daylight?
How much better are OLED displays for these applications? Will someone pay the extra price?
Bio-electronic chip senses electric charges, elasticities, forces and pressures
What kinds of products can we make as we combine these different materials?