Customer Segments Flashcards
What forms the core of the business model?
Relationship between VP and CS forms core of business model
What are customer segments?
Defines the different groups of people or organisations an enterprise aims to reach and serve
What represents seperate CS’s and what is the implication?
- Have distinct needs
- Are reached through different channels
- Require different kinds of relationship
- Provide different level/types of profit
- Value different aspects of the offer
- Implication is that from a Business Model perspective, it is clearer to segment on the basis of VPs
What types of customer jobs are there in the VP canvas?
- Functional Jobs
- Specific tasks, such as mowing the lawn, writing a report or helping a client
- Social Jobs
- Describe how a customer wants to be perceived by others, and involve improving status or gaining power
- Personal/Emotional Jobs
- Include when a customer wants to achieve a particular emotional state, such as safety or fun
- Supporting Jobs
- Thos that occur during purchase or consumption of value, such as buying, co-creating or transferring that value
What is a pain in the VP canvas?
Things that annoy your customers before, during or after they are trying to complete a job, or something that prevents them from getting the job done altogether
What is a customer job in the VP canvas?
The tasks your customers are trying to get done in their work or in their life. They can represent problems they are trying to solve or needs they are trying to satisfy
What is a gain in the VP canvas?
- Describe the outcomes or benefits a customer wants.
- Includes functional utility, social gains, positive emotions and cost gains
What types of gains are there in the VP canvas?
- Required gains
- Those that a solution must provide in order to work e.g. phones must be able to make calls
- Expected gains
- Relatively basic gains that we expect from a solution, even if it could work without them
- Desired gains
- Those beyond what we expect from a solution but would love to have if given the option
- Unexpected gains
- Those that go beyond the customer’s desires, that they could not have told you about even if asked
- aka latent needs
What types of pains are there in the VP canvas?
- Undesired outcomes and problems
- Can be functional, social, emotional or ancillary
- May also include characteristics the customer does not like
- Obstacles
- Things that prevent customers form getting started or slow them down when completing a job
- Risks
- Things that could go wrong and have important negative consequences
What are the segmentation strategies?
- Mass Market
- Doesn’t distinguish between segments and focuses on one large group with similar needs
- Niche market
- Tailored to a specific specialised segment
- Segmented
- Distinguish between segments based on their slightly different needs and problems
- Diversified
- Distinguish between segments based on their very different needs and problems
- Multi-Sided Platform
- Delivering multiple asymmetric sets of value
- Or what one customer does with your value proposition then provides value to a seperate customer
Where is value created?
- Trend away from value-in-exchange view towards notion of value being produced not by the supplier, but by the customer when using offerings and interacting with the suppliers
- i.e. Value is not what goes into the offering, it is what the customer gets out of them
What is true of the traditional view of market?
- The market is seperate from the value creation process
- In the traditional conception, ‘market’ refers to either aggregations of consumers or the locus for exchange, and its function is the exchange and extraction of said value
- This concept of value chain epitomises a unilateral role of firms as the creators of value
- Consumers exist outside of organisations, who must be able to target and manage them
What is the evolving view of market?
- The increasing availability of information networks has led consumers becoming more informed and understanding of their ability to extract value at the locus of exchange
- Co-creation
What is (vs isn’t) co-creation?
- Joint creation of value (not products)
- Allowing the consumer to co-construct a solution based on their context
- Joint problem definition and solving
- Creating an environment where there is active dialogue
- Experiencing the business as consumers do in real time
- Understanding that different users can experience offerings in different ways
What isn’t co-creation?
- ‘Consumer focus’
- Delviering good consumer service
- Mass customisation or variety of offerings
- Transfer of activities from the firm to the consumer
- Customer as co-designer or product manager
- Meticulous market research
- Demand-side innovation
What is the value-in-use of co-creation?
- An outside in, customer-centric view
- It is not the customers who get opportunities to engage themselves in the suppliers processes, rather the supplier can create opportunities to engage itself with the customer’s value-generating processes
What are the interactions that support value creation?
The physical goods elements of the offering are part of an on-going process of supporting the customer also including a host of the activities and sub-processes
What is true of marketing?
- Marketing cannot be separated into one function that is the responsibility of one department only
- marketing as a distinct functional department only works in contexts where the offering is commoditised
- Marketing competence needs to be dispersed across the organisation
How are customers engaged through the business model?
- If other functional areas of the organisation do not take a customer focus, value will probably not emerge in the customers’ processes
What is the customer process?
Through value facilitation and co-creation, the firm supports value creation by its customers
What is value facilitation?
- Supplier’s production process
- Value facilitation
- Supplier by providing goods and core service offerings
- Value facilitation
What is value co-creation?
- Customer’s co-production participation
- Value co-creation
- Customer and supplier together during interactions; joint value co-creation
- Value co-creation
What is sole value creation?
- Customer’s Value Creation
- Sole value creation
- Customer alone
- Sole value creation
What is the co-creation of VP and how is this done?
- Forming a VP through knowledge exchange between resource-integrating actors whose knowledge is situated in their respective practice
- This requires recognising the specific characteristics of each resource-integrating actor (i.e. stakeholders from the 6 market domains):
- Understandings
- Are their practice-related knowledge, skills and experiences
- Procedures
- Their practices related rules, principles and cultural norms
- Engagements
- Their practice related wants, needs, goals and purpose
What is the DART model?
Of value co-creation
- Dialogue
- Interactivity: deep engagement: ability and willingness to act on both sides, removing unnecessary asymmetries
- Access
- Creating instances for participation in the development processes for a diverse range of stakeholders
- Risk-benefits
- Providing tools and methods that allow consumers to make their own decisions and assessments about risk
- Transparency
- Provide opportunities for information transfer between and among the organisations and consumers
Broadly what is the Frow and Payne co-creaiton model?
- Identify Stakeholders
- Determine core values
- Facilitate dialogue and knowledge sharing
- Identify value co-creation opportunities
- Co-create stakeholder value propositions
What are the two key competencies in organisations which take a dialogue perspective in co-creation?
- Collaborative capablity
- The ability to work with other parties in an open , honest and symmetric manner
- Absorbative capability
- The ability to incorporate new information form stakeholders and the environment
What are the types of undbundels BM’s, what is the purpose of unbundling?
- Customer Relationship
- Product Innovation
- Infrastructure
- Each has different economic, competitive and cultural imperatives
- By unbundling, help to avoid conflict and trade offs between the three
What are the imperatives of product innovation businesses?
- Economic imperatives
- Early entry = high prices and large market share
- Speed is key
- Competitive imperatives
- Battle for talent
- Low barrier to entry: small players thrive
- Cultural imperatives
- Employee centred
- Coddle creative start
What are the imperatives of customer relationship businesses?
- Economic imperatives
- High cost of customer acquisition: must gain large wallet share
- Economies of scope key
- Competitive imperatives
- Battle for scope
- Rapid consolidation
- Few big players
- Cultural imperatives
- Service oreitned
- Customer comes first
What are the imperatives of infrastructure businesses?
- Economic imperatives
- High fixed costs: large volumes essential to lower price
- Economies of scale key
- Competitive imperatives
- Battle for scale
- Rapid consolidation
- Few big players
- Cultural imperatives
- Cost focused
- Stresses standardisation and efficiency
