I need an assignment done for week 3 for my

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 3 Lecture Notes (1188) Page 1 of 5

JWI 575 New Business Ventures and Entrepreneurship

Week Three Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 3 Lecture Notes (1188) Page 2 of 5

UNIQUE VALUE PROPOSITION

What it Means It is not enough to have a creative and viable big idea. You must also have a way to differentiate your product or service from your competitors. The best way to identify the attributes that differentiate your product or service is to work out the unique value proposition for your idea. To arrive at this point, you will go through an iterative process of modifying and refining your idea, based on the needs and desires of your prospective customers and investors.

The unique value proposition is a brief statement describing the core value or benefits that your product or service offers to your customers and other stakeholders. It answers the question: Why would a customer buy my product or service, rather than one offered by my competitor? It highlights the features that set your business venture apart from the competition and enables you to separate yourself from the pack in the marketplace.

Why it Matters

• To understand your product’s value to the business and to the customer, look for its distinctive features • Defining the unique value proposition helps you to modify and refine your idea into a marketable product • Your unique value proposition will form the basis of your brand and support your marketing strategy

“Explain what your product does in the first thirty seconds. Explain the problem or pain that

it addresses in the second thirty seconds.”

Guy Kawasaki

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WHAT IS THE UNIQUE VALUE OF YOUR PRODUCT?

Value to the Customer

Before you can craft the unique value proposition that separates your innovative idea from the competition, you need to know how to define the value of your product or service to customers. What is value? The value customers derive from any offering – and consequently what they are willing to pay – depends on the nature of the offering. For example, customers will only be willing to pay once to purchase a lawnmower, but many customers are willing to pay a monthly fee for your lawn maintenance service. This understanding of value, in turn, affects your business strategy and it determines how you articulate the value of your product to your customers.

Another way to think about the customer value of a product or service is to start with a customer need. For example, an entrepreneur might decide to cure the common cold, and go on a quest for various products or services that would fill that customer need. Sometimes this happens the other way around – an entrepreneur starts by tinkering with ideas in a workshop, and eventually they invent something that they are convinced will be of use to someone. So their next step is to work out clearly who are the prospective buyers and what need it will satisfy for those customers.

How Does Value Relate to Profit?

If your innovation is to become the basis of a successful business, there must be some way to translate the product’s value into a profit for the business. Profit represents the value of the venture to you, the owner, and to your shareholders, if you have any. Your initial “big idea” must be modified and refined before you can arrive at a viable business proposition that will offer a unique benefit or value to your customers and, at the same time, offer a profitable business opportunity for you.

The simplest business proposition for making a profit is to mark up the product or service, so that the consumer pays more than the cost of production. However, the profit generated by this model is liable to be reduced as you compete with other providers for a limited group of customers. So many businesses use other profit models, such as the popular loss leader strategy, in which a base product is sold at or below market cost to stimulate sales of more profitable goods or services linked to it.

One famous example of an innovation that used the loss leader strategy was Gillette’s new business model for shavers, which replaced traditional one-piece razors with a razor handle and disposable blades. The founder, King Gillette, was content to make a minimal profit on the consumer’s initial purchase, the razor handle, because he knew the company would make a substantial and ongoing profit by selling the renewable supplies: the razor blades. This deceptively simple idea revolutionized the whole market for shaving supplies.

Your initial “big idea” must be modified and refined before you can arrive at a viable business proposition. One important element of a viable proposition is that it leads to a repeatable business model. The term repeatable refers to the recurring revenue a product or service produces. This business model represents the way in which you will get paid for providing value to customers. It defines how you add value, for whom you add value, and what special resources or connections you have that put you in a good position to capture this value.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 3 Lecture Notes (1188) Page 4 of 5

HOW TO CRAFT YOUR UNIQUE VALUE PROPOSITION

Understand your Customers

As you prepare to craft your unique value proposition, strive to understand how you create value for your customer. For a business selling to individual consumers, this involves learning about how customers live their daily lives, and identifying the product features that they find important. Study your target audience through market research, surveys, focus groups, and other such tools. Gain an understanding of what product features your prospective customers value the most.

Your research should enable you to identify the top two or three features that would persuade your prospective customers to change to a new product or service. It might be ease of use, superior customer service, advanced features, convenient shopping or shipping options, or some other factor. For example, if you are selling a TV remote, senior citizens are likely to prioritize ease of use and large buttons over advanced features. But teenage gamers would probably prefer advanced features and be less concerned about the size of the controls or ease of use. Senior citizens might prefer to buy locally, so that the seller can show them in person how to use the gadget. Teenagers will likely want to buy the gadget online and they will appreciate quick delivery and cheap shipping costs. It is therefore vital that you understand which audience you are targeting, and design the product to maximize the value for your intended customer segment.

Address the Customer’s Needs

Like an elevator speech, a unique value proposition should be short and succinct. It should state clearly and briefly what your product does, as well as explaining what problem it solves for the customer. Let’s look at a couple of sample unique value propositions and see how they do this.

Ø In this example, you provide a service that shreds documents for other businesses. Your unique value proposition might be: “We save you time, money and headaches, by preventing your confidential information from falling into the wrong hands.”

Ø In this example, you own a business that manufactures and installs solar panels. Your value proposition might be: “Our solar panels allow you to generate your own electricity, reducing your electricity bill by 25% or more. And we guarantee hassle-free, prompt installation with a one-year warranty.”

What do these two examples have in common? Both clearly address the needs, goals and preferences of the customers. Both define the key function of the Think like your buyer, and you are in a good position to express the unique value of your product or service. The best way to craft a persuasive, winning value proposition is to understand what your customer will value the most about your product or service. Then craft a brief statement that addresses your customers’ needs and concerns directly.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 3 Lecture Notes (1188) Page 5 of 5

GETTING THE MOST OUT OF THIS WEEK’S CLASS

As you read the materials and participate in class activities, stay focused on the key learning outcomes for the week:

• Understand the concept of a unique value proposition

A unique value proposition identifies the features of your product or service that are special and distinctive. Since it expresses how your product or service will satisfy the needs and desires of your buyers, it must be built on an understanding of the customer. Who are the people or organizations that will buy your product or service? What are their needs, goals and preferences? Are they buying your product or service for home or business purposes? What matters the most to them when making purchases for this type of product or service?

• Learn how to differentiate your product from the competition

What does your product do better for customers than other similar products? How does your service provide more convenience than other providers? In other words, what differentiates your company from the competition? What features do your customers care about the most? How can you design your product or service so that those features match your customers’ preferences? What pricing model will you use to make a profit for your company? How can you persuade your buyers that they are receiving good value, so that they will buy at the price point you have chosen to set for your product?

• Define the value of your “big idea” and identify opportunities and threats

What is the value that you can deliver to customers with a product or service based on your “big idea”? What opportunity does your innovation present for improving the customer experience? What key customer needs or desires does it fulfill? What significant customer worries or concerns does it relieve? What threats do you anticipate, from competitors or the business environment? How will you overcome these challenges? How can you summarize your unique value proposition in a brief statement that will appeal to your prospective buyers and simultaneously impress your other stakeholders?