Formulating a good value proposition is an essential step for any start-up and lies at the core of many of the other tools entrepreneurs need to develop, including market analysis, business modeling, finding funding and delivering an investor or customer pitch.

2. Joseph Wilson
jwilson@marsdd.com
"
"

3. Agenda
What is a value proposition?
Examples
Dimensions of value
Testing your hypothesis
The strategy canvas

4. How to (not) articulate value:

5. A value proposition is a
statement of the unique benefits
delivered by your offering to the
target customer

6. A value proposition is a
hypothesis that your offering will
bring certain values to a target
customer. *
* Like any hypothesis, it needs to be
rigorously tested in the lab (read:
marketplace) before money is put into
scaling.

7. Value Proposition is Not:
An elevator pitch: a 30 second
conversation starter
I buy dead magazines…
We un-think marketing…

8. Value Proposition is Not:
A tag-line: an ad compliment
We know money
What Happens Here, Stays Here
The City That Never Sleeps
Built for the road ahead

9. Value Proposition is Not:
A mission statement: a statement
of the purpose of your business.
The University of Toronto is committed to being an
internationally significant research university, with
undergraduate, graduate and professional programs of
excellent quality.
Google's mission is to organize the world's information and
make it universally accessible and useful

10. The value proposition statement
should consist of these components:
1. What your product/service is
2. The target customer
3. The value you provide them
Emergent property: why your
product is unique

11. What is it?
Examples:
For whom?
Values?
Good: Winners is a
Bad: Winners is an
department store that off-price department
offers fashion conscious store owned by TJX
consumers the latest that employs
brand names for up to international
60 per cent sourcing and buying
off. (Winners)
power.

12. What is it?
Examples:
For whom?
Values?
Good: Winners is a
Bad: Winners is an
department store that off-price department
offers fashion conscious store owned by TJX
consumers the latest that employs
brand names for up to international
60 per cent sourcing and buying
off. (Winners)
power.

13. What is it?
Examples:
For whom?
Values?
Good: A1 Industries has
Bad: A1 Industries
developed an economical has discovered a
and easy-to-use chemical chemical isomer
additive that allows paint additive that allows
manufacturing companies for a reduction of VOC
to reduce the emissions.
environmental impact of
their products

14. What is it?
Examples:
For whom?
Values?
Good: A1 Industries has
Bad: A1 Industries
developed an economical has discovered a
and easy-to-use chemical chemical isomer
additive that allows paint additive that allows
manufacturing companies for a reduction of VOC
to reduce the emissions.
environmental impact of
their products

15. What is it?
Examples:
For whom?
Values?
Good: Google is the
Bad: Google uses a
world s largest search patented page-
engine that allows ranking algorithm to
internet users to find make money through
relevant information ad placement.
quickly and easily.

16. What is it?
Examples:
For whom?
Values?
Good: Google is the
Bad: Google uses a
world s largest search patented page-
engine that allows ranking algorithm to
internet users to find make money through
relevant information ad placement.
quickly and easily.
Are Internet Users really Google s customers?

17. What is it?
Examples:
For whom?
Values?
Good: Google is the
Bad: Google uses a
world s largest search patented page-
engine that ranking algorithm to
automatically provides make money through
advertisers with ad placement.
potential customers
tailored to the ad
content, increasing
click-through rates and
conversion rates.”

18. Selling to Selling to
Customer
Business
Usability
Health
Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Enabling function
Self-Actualization
Convenience
Environmental
Quality
Ethical
Social
Inclusion
Customizable

19. Selling to Selling to
Customer
Business
Usability
Health
Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Enabling function
Self-Actualization
Convenience
Environmental
Quality
Ethical
Social
Inclusion
Customizable

20. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

21. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

22. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

23. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

24. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

25. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

26. Selling to
Business
Lower risk
Saving time
Saving/making money
Enabling function
Convenience
Quality
Customizable

27. Selling to
Business
Lower risk
B2B Sales:
Saving time
Saving/making money
- Rational
Enabling function
decision making
Convenience
Quality
- Overt values
Customizable

28. Selling to Selling to
Customer
Business
Usability
Health
Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Enabling function
Self-Actualization
Convenience
Environmental
Quality
Ethical
Social
Inclusion
Customizable

29. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

30. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

31. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

32. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

33. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

34. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

35. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

36. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

37. Selling to
Customer
Usability
Health
Aesthetics
Status
Newness
Self-Actualization
Environmental
Ethical
Social
Inclusion

38. Selling to
Customer
Usability
Health
B2C Sales:
Aesthetics
Status
Newness
- Emotional
decision making
Self-Actualization
Environmental
Ethical
- Latent values
Social
Inclusion

39. Selling to Selling to
Customer
Business
Usability
Health
Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Enabling function
Self-Actualization
Convenience
Environmental
Quality
Ethical
Social
Inclusion
Customizable

40. Process: Draft a value proposition
Version 1.0: I think A1
Industries product/service will…

41. The Customer Development Triangle
Target Customer
✗
Product

42. The Customer Development Triangle
Target Customer
Problem
Product = solution

43. The Customer Development Triangle
Target Customer
Problem
Product = solution

44. Process: Test your value proposition
State your
hypothesis
Test
Verify problem
hypothesis
Test
product Blank, Steve Four Steps to Epiphany
concept
Version 2.0: A1 Industries provides…

45. Get out of your office!

46. Understanding Customer Problems:
Empathy with Target Customers
!
Osterwalder, Alexander, Business Model Generation, 2009

47. Day in the Life Scenario
Before
Current Problem
situation
encountered &
& desired economic
outcome
consequences
After
Ernie:
Enabling New
fixes factors of outcomes and
airplanes
your economic
product
rewards

48. Understanding customer problems:
¢ Market research methods for entrepreneurs
Pretend to be the customer
Customer Interview Program
Lead user
QFD - Quality Function Deployment
Primary
Customer archetype
Market
¢ Methods that require professionals
Research
Concept testing
Cojoint analysis
Empathic deisgn
Prototype/Beta testing

49. Secondary
Market
Research
1. Access to reports/data
from 20 databases
2. Access to industry
analysts through inquiry
Industry specific time Multiple Industry
vendors coverage vendors
IDC Frost & Sullivan
Forrester BCC Research
Gartner Total Patents
Lux Research Delphion/Thomson
Cleantech Group LLC Innovation
Aggregator of
Thomson Pharma other vendor Datamonitor
MedTrack resources Venture Source
Business Insights Chemical Abstracts
IMS Dialog Pro
Market Research
Factiva
Meltwater News
U of T- $ 50 M Key:
Red – ICT
collection Green – Cleantech &
Nanotech
Blue – Life Sciences

50. Process: Test your value proposition
State your
hypothesis
Test
Verify problem
hypothesis
Test
product
concept
Blank, Steve Four Steps to Epiphany

51. The Three Outcomes:
Validate:
Confirmed
value
proposition
Iterate: change
Verify value
proposition
Exit: Don’t
spend any
more money!

52. The Customer Development Triangle
Target Customer
Problem
Product = solution
Pg 52

53. Whole Product
A whole product is the
combination of all the things
that give your customers a
compelling reason to buy. This
includes not only your core
product, but also any services
and ancillary products that
augment it.

54. Minimum Viable Product
A minimum viable product is a
product launched to early
adopters that has only the
minimum set of features
required to get feedback from
potential customers.

55. Iterations in the Market
Whole Product!
VALUE!
Progress is iterative!
Minimum
Viable Product!
TIME!

56. Iterations in the Market
State your
hypothesis
Test
Verify problem
hypothesis
Test
product
concept

57. Process: Decide what features to include
Which features do my target
customers value most?
Which are they willing to pay for?
Which are easy to roll out and which
require more R&D

58. Product differentiation
High
How does your
business rate on that
criteria?
Medium
What is the criteria
people use when
Low
solving their
problem?
Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

59. Product differentiation
The goal is not to be the
highest in each category,
but to have a unique profile
that highlights where your
value lies.
Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

60. Process: Testing your MVP
Consider Eliminating the features that don t
add value.
Consider Reducing the features you must
have but isn t that valuable.
Consider Raising the features that
differentiate you from your competition.
Look to Create new value factors your
customers have never seen before.

61. Process: Test Your MVP
Validate:
Confirmed
value of MVP
State your
hypothesis
Iterate:
change your
product
Test features
Verify problem
hypothesis
Verify
Test
product
concept
Exit: Don’t
spend any
more money!
Blank, Steve Four Steps to Epiphany!

62. The value proposition statement
should consist of these components:
1. What your product/service is
2. The target customer
3. The value you provide them
Write – Test – Iterate
Prototype – Test - Iterate

63. Joseph Wilson
jwilson@marsdd.com
"
"