Chapter 6 Flashcards
what questions does bmc answer
Is there a market out there? Who is the customer? Is the business idea worthwhile? How does the business reach its customers? How does the business source, make and distribute its products and services? How does it make money?
Is the bmc a flat canvas
no, it asks entrepreneurs to follow a hierarchy made up of 1. Customer segments. 2. Value propositions. 3. Channels. 4. Customer relationships. 5. Revenue streams. 6. Key resources. 7. Key activities. 8. Key partners. 9. Cost structure.
it first focuses on product- market fit and that will beg further questions about the other parts of the bmc
product- market fit
the fit between a customer and a product
Why should start-ups focus on a niche
because start-ups have limited resources and have to concentrate their sales and marketing efforts on whoever their first target customer is.
liability of smallness
their available financial resources are just too limited to reach all the customers in a large market
Liability of newness
they are an unknown quantity to suppliers and financiers who are worried about if the start-up will deliver what they promise and pay what they owe, new businesses are often preoccupied in the early stages with working out how to do business and what resources, such as plants, people and machinery, they need to build their infrastructure.
born globals
the start-up aims to open up from the very beginning in multiple markets
difference industry and market attractiveness
Industry the entire world and all markers and market attractiveness focus solely on 1 market or submarket like a country or a province.
what can withhold market attractiveness
geography, the opportunity and place could be perfect but if you have no connection in a specific country or region there is a small change you will set something up.
4 formal ways that b2c can segment potential customers
Demography – dividing individuals by their personal attributes, such as age, gender, sexuality, education,
Geography
Psychology – dividing people by their personality attributes, values or preferences
Behaviour – focusing on how people use existing products, what they want from them and how loyal they are to the existing offering.
3 formal ways that b2b can segment potential customers
Business characteristics – dividing businesses by sector, size, organisational structure, the technology they use and their location, Purchasing characteristics – focusing on why and how the key decision-making unit, such as the purchasing department, business owner or information technology department, buys products, Attitudes – a business customer’s willingness to take risks, the similarities buyers and sellers have and the strength of customer loyalty.
what is tha tam sam and som method
another way to find target audience
tam:Total Addressable Market
sam:Serviceable Available Market
som: Serviceable Obtainable Market
1 small negative about secondary data tam,sam,som
it is limited using a bottom-up will provides a more detailed picture of the target customer.
Features
what a product or service is to the customer.
Benefits
what a product or service does for the customer.
Why are Benefits useful
they identify core Unique Selling Propositions (USPs) that are at the heart of the competitive advantage of the business.
What USPs (Unique Selling Propositions) can a business provide
Saves them time, money, energy or space. Reduces their worries and limits their risks. Increases their satisfaction levels. Brings them convenience. Improves their status or image. Makes it easier for them to earn more money.
What is a method to show product-market fit
Value Proposition Canvas
What does the Value Proposition Canvas consist of
On the right-hand side (customer segment), it identifies three customer discovery activities: Jobs (‘jobs to be hired’) that a customer wants to do such as getting from A to B, or meeting their social, physical and emotional needs, What pains the customer, such as what frustrates them about their daily commute, What their gains are, or what they are looking to achieve from buying a good.
On the left, the canvas lists products and services and how these either alleviate the pain the customer experiences or will add value.It then maps out the ways in which the gain creators or pain relievers solve problems or provide benefits for a customer.
What is another way of capturing the product-market alignment and how does it work
Use a product (or service) positioning statement. - ‘For (customer niche) who (what are they looking for), the (name of product/service) is a (what is it) that (list benefits).
what 3 strategies are used for customer benefits
cost: focuses on low costs and or low prices, differentiation: being creative and innovative, focus: maintaining close customer relationships.
two ways marketing
direct and indirect
direct marketing
the startup itself promoting and selling direct to customers through social media, flyers, launch parties, hosting or attending networking events, cold calling or public relations, opening a shop, employing a salesperson or building a website
indirect marketing
others, such as agents, resellers, retailers or wholesalers, to promote and sell on the business’s behalf.
What are some practical issues to focus on with channels
Likely profits from a channel. Ability to deliver products and services successfully in a channel. Ability to market and sell into a channel.
BMC ways to acquire, retain and develop a customer base
Personal assistance, Dedicated personal assistance, Self-service, Automation, User communities, Co-creation. (The choice of the kind of customer relationship used should match what customers want)
What is the negative of Greater levels of human interaction
maybe requires a (sales) team which will add on the base cost of the start up. → higher price
aida model
awareness, interest, desire, action
Leads
target customers who are unaware of the offer
converting leads into suspects
developing their interest, might have to spend time and money increasing their knowledge about its offer by highlighting its benefits (USPs).
how do you overcome risks and habits from customers
Guarantees, positive customer reviews, sales promotions and discounts for first-time customers can help reduce these risks and change customer habits. (Discounting, though, can bite into profit margins)
A direct sales model
selling your product or service directly to customers
The ‘bait and hook” model
Men’s razors are often sold at cost price (the bait), but the manufacturer recoups the costs through replacement blades (the hook).
A freemium model
offer free trial
Fining models
paying a surcharge for being late in returning or paying for a good or service
Subscription models
payment of a regular fee for the use of a service or good
Brokerage models
charge a percentage fee for services/sale
Advertising-based models
advertisment (facebook) /affiliate marketing
Peer-to-peer models
one peer can connect with another peer through the internet to make use of the resource, either in exchange for a fee or for agreeing to offer a service in return (airbnb, uber)
Circular economy models
make consumption ethically, socially and environmentally sustainable. prolong the life of materials or goods, or design-out waste and pollution.
importance distinction between users and customers
customers give you money users maybe only waste valuable resources so focus on who you sell to and spend most of not all marketing budget on the customers, not on the users.
Three core elements of business infrastructure
Key resources, such as specialist workers, physical assets including machinery and vehicles, Key activities, such as producing a good or service, Key partners to provide key resources or conduct key activities for the business
Operational issues
ownership of activities gives startups control, but it also inhibits growth as many lack the resources needed to scale the business quickly.
The importance of key partners
even a simple lemonade stand in a park requires a permit from the local council. Understanding the motivations for collaborating is important.
fixed costs & variable costs
costs that do not change such as salaries and rent & costs that change as the business scales such as production expenses.
Problem BMC
may be a one-time-only, will not fit all circumstances or provide a universal blueprint for every type of start-up, no evidence provides better start-up outcomes, not fully detail the opportunity (may not matter), lack of consideration for competitors and team strengths.
