Chapter 6

Question 1

what questions does bmc answer

Answer 1

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?

Question 2

Is the bmc a flat canvas

Answer 2

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

Question 3

product- market fit

Answer 3

the fit between a customer and a product

Question 4

Why should start-ups focus on a niche

Answer 4

because start-ups have limited resources and have to concentrate their sales and marketing efforts on whoever their first target customer is.

Question 5

liability of smallness

Answer 5

their available financial resources are just too limited to reach all the customers in a large market

Question 6

Liability of newness

Answer 6

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.

Question 7

born globals

Answer 7

the start-up aims to open up from the very beginning in multiple markets

Question 8

difference industry and market attractiveness

Answer 8

Industry the entire world and all markers and market attractiveness focus solely on 1 market or submarket like a country or a province.

Question 9

what can withhold market attractiveness

Answer 9

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.

Question 10

4 formal ways that b2c can segment potential customers

Answer 10

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.

Question 11

3 formal ways that b2b can segment potential customers

Answer 11

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.

Question 12

what is tha tam sam and som method

Answer 12

another way to find target audience

tam:Total Addressable Market
sam:Serviceable Available Market
som: Serviceable Obtainable Market

Question 13

1 small negative about secondary data tam,sam,som

Answer 13

it is limited using a bottom-up will provides a more detailed picture of the target customer.

Question 14

Features

Answer 14

what a product or service is to the customer.

Question 15

Benefits

Answer 15

what a product or service does for the customer.

Question 16

Why are Benefits useful

Answer 16

they identify core Unique Selling Propositions (USPs) that are at the heart of the competitive advantage of the business.

Question 17

What USPs (Unique Selling Propositions) can a business provide

Answer 17

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.

Question 18

What is a method to show product-market fit

Answer 18

Value Proposition Canvas

Question 19

What does the Value Proposition Canvas consist of

Answer 19

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.

Question 20

What is another way of capturing the product-market alignment and how does it work

Answer 20

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).

Question 21

what 3 strategies are used for customer benefits

Answer 21

cost: focuses on low costs and or low prices, differentiation: being creative and innovative, focus: maintaining close customer relationships.

Question 22

two ways marketing

Answer 22

direct and indirect

Question 23

direct marketing

Answer 23

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

Question 24

indirect marketing

Answer 24

others, such as agents, resellers, retailers or wholesalers, to promote and sell on the business’s behalf.

Question 25

What are some practical issues to focus on with channels

Answer 25

Likely profits from a channel. Ability to deliver products and services successfully in a channel. Ability to market and sell into a channel.

Question 26

BMC ways to acquire, retain and develop a customer base

Answer 26

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)

Question 27

What is the negative of Greater levels of human interaction

Answer 27

maybe requires a (sales) team which will add on the base cost of the start up. → higher price

Question 28

aida model

Answer 28

awareness, interest, desire, action

Question 29

Leads

Answer 29

target customers who are unaware of the offer

Question 30

converting leads into suspects

Answer 30

developing their interest, might have to spend time and money increasing their knowledge about its offer by highlighting its benefits (USPs).

Question 31

how do you overcome risks and habits from customers

Answer 31

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)

Question 32

A direct sales model

Answer 32

selling your product or service directly to customers

Question 33

The ‘bait and hook” model

Answer 33

Men’s razors are often sold at cost price (the bait), but the manufacturer recoups the costs through replacement blades (the hook).

Question 34

A freemium model

Answer 34

offer free trial

Question 35

Fining models

Answer 35

paying a surcharge for being late in returning or paying for a good or service

Question 36

Subscription models

Answer 36

payment of a regular fee for the use of a service or good

Question 37

Brokerage models

Answer 37

charge a percentage fee for services/sale

Question 38

Advertising-based models

Answer 38

advertisment (facebook) /affiliate marketing

Question 39

Peer-to-peer models

Answer 39

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)

Question 40

Circular economy models

Answer 40

make consumption ethically, socially and environmentally sustainable. prolong the life of materials or goods, or design-out waste and pollution.

Question 41

importance distinction between users and customers

Answer 41

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.

Question 42

Three core elements of business infrastructure

Answer 42

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

Question 43

Operational issues

Answer 43

ownership of activities gives startups control, but it also inhibits growth as many lack the resources needed to scale the business quickly.

Question 44

The importance of key partners

Answer 44

even a simple lemonade stand in a park requires a permit from the local council. Understanding the motivations for collaborating is important.

Question 45

fixed costs & variable costs

Answer 45

costs that do not change such as salaries and rent & costs that change as the business scales such as production expenses.

Question 46

Problem BMC

Answer 46

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.