Biz model 3 value proposition, cust selection

Value Propositions and Customer Selection

A/Prof Jeffrey FunkDivision of Engineering and Technology Management

National University of Singapore

Business ModelValue proposition: what to offer and how to

differentiate Customer selection: whom to serve and not serveValue capture: dominant source of revenuesScope of activities: what activities to carry out and

what relationships to haveStrategic control: how to sustain profitability

Outline

Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methodsConclusions

Simple Definition of Marketing

To determine the NEEDS and wants of target market and deliver the desired satisfaction more effectively and efficiently than competitors

What is a Need?

Today’s Business

Customer Needs

Unarticulated

Articulated

Customer Types

Served Unserved

What is a Need? (continued)

Understand needs from perspective of:◦ Economic value◦ Functional value◦ Psychological value

Collecting data on customer needs◦Surveys◦Focus groups◦Analysis of buying patterns

What are the broad trends that impact on customer needs?◦Social networking◦Mobile lifestyles

Do People Know what they Need?

40 years ago did most people think they needed◦Mobile phone◦Internet-compatible phone◦Computer, digital camera◦Foreign vacations

Surveys in early 1980s suggested that users didn’t need/want mobile phones

But they ended up buying one and now, many say they can’t live without one

Part of the problem is that surveys didn’t take into account falling prices of mobile phones

What if we Look at their Purchasing Behavior?

Better than asking them, but still not perfect

Does a person buying a drill need a drill?No, they need a hole!Or maybe they need a way to connect to

items with◦A screw◦A screw and a bolt

What if we Look at their Purchasing Behavior? (2)

Do Westerners only like Western food?

Westerners used to only eat Western food

But now they eat many kinds of foods

How should we have interpreted their

purchasing behavior when they only ate

Western food?

What if we Look at their Purchasing Behavior? (3)

There are other reasons to be careful when generalizing about countries

Generalizations only reflect “averages” or “medians”

And we are interested in specific needs of specific people

If you can find unserved or unarticulated needs, you can be very successful

It’s not Just Consumers, it’s FirmsOrganizations do things inefficiently because

they◦have always done them this way or◦don’t know really understand what they need

30 years ago, many logistics people didn’t know they needed deliveries to assembly lines or retail floor, and not to loading docks!

Does NUS know that they need cloud computing? Or that Google mail is easier to use than NUS mail?

Part of the problem is that final users have little impact on many organizational decisions (e.g., purchasing computers or furniture)

As a Seller of Products & Services

You need to know who makes decisionsWho are the key decision makers?

◦Purchasing managers?◦Other managers?

Who are the key collaborators?◦Retail outlets and other distributors◦Suppliers of complementary products

Does your value proposition match their needs?

Another way to look at needs

Empathy MapFrom Business Model Generation,

Alexander Osterwalder

What does she

THINK AND FEELWhat really counts

Major preoccupationsWorries and aspirations

What does she

SEEEnvironment

FriendsWhat the market offers

What does she

HEARWhat friends sayWhat boss says

What influencers say

What does she

SAY AND DO?Attitude in public

AppearanceBehavior towards others?

PAINFears

FrustrationsObstacles

GAINWants/needs

Measures of successobstacles

Empathy Maps

Can you define empathy maps for a variety of different segments?

Define a representative user for each segment and define her characteristics, needs, and what she◦Says and does◦Hears◦Thinks and feels

Outline


Different market segments, i.e., users◦have different willingness to pay and demand different levels of

performance◦demand different types of features or performance◦make different tradeoffs between performance, features, price◦fundamentally want different products

These segments emerge over time◦Often difficult to specify them before products begin to diffuse◦Some markets have more segments (i.e., sub-markets) than

other markets◦Understanding the differences and similarities between

segments is critical for businesses

Market Segments and Diffusion

Segmentation

Categorize customers in groups that have distinct needs◦How many types of customers are there?◦What differentiates them, how are their needs

distinct?◦How valuable might they be (size of market and

potential profitability)?◦Which segments will be the first adopters of the

new technology?◦How will the definitions of the segments evolve?

Understand the differences between product and market segments

Targeting

Select the segment (s) that have the best short and long-term prospects for the firm◦If a new technology, they must be early

adopters of new technology◦have a large potential value (Present/Future)◦fit with the company’s core competency◦preferably not fit with the competitor’s core

competencyYou must justify your choice of target

segment(s)

Must Connect Customer Needs with Company’s Capabilities

Require the effective and efficient reconciliation of

any differences

Market Pull

What the market or segment indicates it needs/wants and is willing to pay for

Company Pull

What the firm is capable of and willing to provide to the market

Voice of the Market

Voice of the Firm

Market-

Based

Firm

Ideally, we would select not just a segment, but the first customers in that segment

In addition to whether the technology is appropriate for the targeted segment, ◦Do you have the connections with the right customers and the

decision makers for those customers? ◦Will these customers tell others about the new technology? ◦Will other customers listen to the first customers?

This an Iterative Process

1. Segment Market2. Identify needs in each market existing products in each market strengths and weaknesses of each product where are the opportunities? 3. Select segment (customer) and propose value proposition (and propose more than just a simple and clear statement, more below)

Outline


Value Proposition

Value to

the target market

Benefits tothe

target market

Price tothe

target market

=Relative

to

A simple and clear statement of the intended target market, the benefits of the offering, and the price

New technologies/products diffuse because they offer a superior value proposition to users

Value PropositionBut what constitutes a great value proposition?

◦Large benefits and low price

This requires innovation!

Let’s look at some examples (all of them can be

defined as discontinuities). For each of them

◦What is the value proposition?

◦What enables them to have a great value proposition?

◦To a lesser extent, what enabled them to be introduced at that

time?

OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples

◦Apple’s recent products, touch screens◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity

Quantitative methodsConclusions

What is value proposition?

Who werefirst customers?

What is value proposition?

Who were first customers?

These Products Introduced New Types of Value

iPad and iPhone◦better user interface for accessing Internet◦touch screen that eliminated need for keyboard◦large number of apps, supported by well-

designed operating systemiPod

◦first portable MP3 player that actually worked◦excellent integration with online music site◦easy control with click wheel

Who were the Customers for these ProductsiPod

◦Music lovers◦Young people

iPhone◦Also young people, why?

iPad◦Many young people, but not those that use

computers for creating documents, Why?How about Apple’s laptops?

But not just final users, there are also other customers

iPod◦Music companies: cooperation with them was

needed for iPod to succeediPhone

◦Phone companies, application software providersiPad

◦Application software providers and also media companies

Multiple types of customers exist for many technologies

Timing (1)

What kind of changes determined their timing?

Was it social, technological, or regulatory changes?

Why weren’t these products introduced much earlier than they were?

Could they have been introduced years before they were?

Timing (2)

All of these products needed ◦Large memory storage◦Fast processors◦But could these products have been introduced

without so much memory or processors? What determined when ICs had sufficient memory

capacity and processor speed?iPad and iPhone needed touch displays

◦What determined the timing of the displays?

Looking to FutureWhat are limitations of Apple’s products?What do these limitations tell us about

potentially better value propositions, i.e., solutions, in the future?

Can improvements in memory and processor ICs or in touch displays lead to◦better products, ◦those with better value propositions? ◦Or might other improvements in other

technologies enable better value propositions?


◦Apple’s recent products, touch screens◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity


Touch Screens (1)Many kindsBut most are

variations of either◦Resistive ◦Capacitive (iPhone)

Depend on new materials that are deposited on top of an LCD display

Processors interpret the data

No “look” touch Interface◦ Existing screens require one to look carefully

at screen while touching specific place◦ Tactus offers overlay that

facilitates proper location of finger “Bubbles” rise out of display

when fingers touch display thus helping fingers find “right spot”

These bubbles are formed using MEMS (micro-electronic mechanical systems)

Studies have found that faster and more accurate typing are achieved with the Tactus overlay

How the Tactus System Works

Micro-channels are filled with fluid whose refractive index matches that of top polymer layerThus, transparency is even across surface

What about Customer Selection?

Who are the customers?Why might they want Tactus’ touch

screenWhat might they consider as they make

decisions about touch screen?How can we collect information about

what they consider?

Texture Touch DisplaysSensation of texture can provide more

information for usersThis can be done using changes in

vibration with ◦small motors or ◦transparent electrodes (Senseg), which provide information about texture, etc. http://www.youtube.com/watch?v=1oARSmw21rg (from 1 minute mark)

Early applications: 3D modeling or remote surgery can benefit from data on texture of materials or organs

What about Customer Selection?

Who are the customers?Why do they want Senseg’s touch

screenWhat will they consider as they make

decisions about touch screen?How can we collect information about

what they consider?

Applications for Touch Displays

Not just smart phonesBut also

◦Advertising displays at bus stops or MRT stations

◦Mall information displays◦Self checkout in stores◦Information counter in stores

◦Sony’s AtracTable is being developed for these applications


◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity


Microelectronic Mechanical Systems (MEMS)

Small feature devices or machines

Fabricated with techniques similar to those used

with integrated circuits

But use many different materials

◦Silicon

◦Polymers

◦Metals

◦Ceramics

Ratchet Mechanism Actuator Torsional Acutator Early Optical Switch Clutch Mechanism Anti-reverse mechanism

http://www.memx.com/

http://www.memx.com/images/mems-thermal-actuator-pic.gif

http://www.memx.com/images/mirror.jpg

http://www.memx.com/images/torsional-actuator.jpg

http://www.memx.com/images/clutch.jpg

http://www.memx.com/images/mems-gears.jpg

Source: MEMS Technology Roadmapping, Michael Gaitan, NIST Chair, iNEMI and ITRS MEMS Technology Working Groups Nano-Tec Workshop 3, 31 May 2012

Source: Clark Ngyuen, August and September 2011 Berkeley lectures; ppb: parts per billion; ppt: parts per trillion

For Each Application

Who are the customers?What is the specific value proposition for

each of them?How are MEMS better than the current

technology?◦In terms of performance◦In terms of price

MEMS for Inkjet Printers

MEMS are used to eject ink

Benefits

◦Smaller and thus higher resolution nozzles

◦Faster printing because print head covers width

of page

◦Less ink usage

◦Lower cost through IC-based technology

Gesture InterfacesKey Components

2D/3D Camera (image sensor)

Tracking, Recognition &

Gesture Understanding

Software

Key dimensions that need improvement are Accuracy, Throughput and Affordability

Leap has Generated Excitement

http://www.youtube.com/watch?v=_d6KuiuteIA

Leap uses multiple camera sensors to recognize gesturesWorkspace is about 3 cubic metersBetter sensors will enable larger work spaces$70 control system that plugs into any computerMIT’s Technology Review calls Leap, “The most important new technology since the smart phone…”

How about Microsoft’s Kinect? http://www.youtube.com/watch?v=o4U1pzVf9hY

Types of Augmented Reality

Glasses

Phones

For each of these technologiesWho are the customers?What is the specific value proposition for

each of them?How are MEMS better than the current

technology?◦In terms of performance◦In terms of price

What about Putting Eye Tracking Technology in Google Glasses

Other Applications of Eye TrackingUse cameras to

track eye movements◦Monitor drivers or

other operators of machines

◦Help paralyzed people use computers

As cost of cameras fall◦Eye tracking might

become user interface for non-paralyzedSource: http://www.economist.com/news/technology-quarterly/21567195-computer-interfaces-ability-determine-location-persons-gaze

Type of Specs

Incandescent Lamp

Fluorescent lamp

LED OLED

Thickness Very Thick Very Thick 6.9 mm (for LED TV)

1.8 mm

Flexibility Very inflexible, and breakable

Very inflexible, and breakable

Some flexibility Most flexible

Danger to eyes Can’t stare at them

Can’t stare at them

Can’t stare at them

Okay to stare

Lifespan 500-700 hrs >10, 000 hrs 100, 000 hrs 15, 000 hrs

Price of 60 Watt bulb

A few USD <5 USD 70 USD Most expensive

Efficiency/ Brightness

300 USD/Year for 800 lumens

75 USD per year

30 USD per year Not yet efficient

Environmental friendliness

Low efficiency Contains mercury

Most efficient, no toxic chemical

Not yet efficient, no toxic chemical

Comparison of Lighting in 2012

Source: Group presentation in MT5016 module and http://electronics.howstuffworks.com/led4.htm

Applications for OLED Lighting

Value Proposition: New Displays

OLED Display Applications

Customer Types

Cu

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Needs

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ted

Art

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late

d

Served Un-Served

Consumers products display, e.g. TV, mobiles, tablets etc.

Automotive Lighting & Displays

Digital Wall

Transparent Monitor

Household Lighting

?

3D glass

Rollable Display

Build a stretchy

mesh with electronics

on thin islands

connected by springy

bridgesprint mesh

onto thin plastic which

holds the entire mesh

together

Even Greater Flexibility with Conformal Electronics

Build body-worn

stickers that

measure body

activity

Water-proof

Breath-able

Early Applications: cardiac pacemaker and cochlear implant.

http://www.siliconsemiconductor.net/article/69596-Efficient-mixing-in-milliseconds-with-lab-on-a-Chip.php

Another Type of Bio-Electronics:Simple form of MEMS with Micro-Fluidic Channels

http://www.siliconsemiconductor.net/article/69596-Efficient-mixing-in-milliseconds-with-lab-on-a-Chip.php

Example of Inputs, Outputs and Processing on Bio-Electronic IC

Applications in Laboratories and in Homes are Emerging as Improvements are Made to Bio-Electronics

Labs:

Customers and Value PropositionsHospitals?Doctor Offices?Homes?

Would less training be needed to use these devices than current devices?

Can patients use them on their own?How about rural areas where there are few

doctors? Can chips and cartridges be placed inside

mobile phones?

Composition of a Bionic Eye

Source: Building the bionic eye: an emerging reality and opportunity, Lotfi B. Merabet (2011)

Source: Biomaterials 29(24–25): 3393–3399

MEMS-BasedElectrode

Electrode Implanted Into Retina

MEMS-based Electrode is Implanted into Retina

Fullerenes, Graphene, Carbon Nanotubes

Fullerenes: specific number of carbon atoms arranged as sphere Graphene: flat sheet of carbon atoms

Carbon Nanotubes: flat sheet is rolled so that sides are connected, thus creating tubemultiple walled tube containsmultiple tubes

Graphene A single layer of carbon atoms gives high specific surface

area (1000 -1800 m2/g) with theoretical maximum of 2,600 m2 per gram

Very low electrical resistance, high thermal conductivity (4,000 W/m-K), and high mobility (about 200,000 cm2/Vs at room temperature, compared to 1,400 in silicon and 77,000 in indium antimonide)

One of strongest materials, but yet flexible Unusual optical behavior: equally transparent to ultraviolet,

visible and infrared light Two current markets (composites for strength and electrodes

for conductivity) but also displays, computer chips, and solar cells

Very expensive! But cheaper than carbon nanotubes because less energy and lower purity gaseous feedstock are needed. Also more surface area per gram than carbon nanotube

Source: Segal, Michael (2009). "Selling graphene by the ton". Nature Nanotechnology 4 (10): 612–4Nature 483, S29 (15 March 2012). Also http://www.azom.com/news.aspx?newsID=11679

Improvements in Graphene (and other Materials)

Single layer of graphene with 30 inch diameterFabricate graphene in a roll to roll process in

futureNow there are more than 10 materials that are all

two-dimensional with complimentary properties that could be integrated with graphene to provide extra functionality.

Boron nitride is also one-atom thick and instead of being a conductor it is an insulator (of heat), the best insulator we know

Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3

Improvements in Graphene (and other Materials) - continued

If you go to three atoms thick we have another material called molybdenum disulfide which is a semiconductor, like silicon, but lighter and stronger.

These materials can then be combined in order to fabricate completely new material structures that don't exist in nature.

Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3

Carbon Nanotubes (1)

Diameters and axes impact on ◦levels of conduction and thus ◦whether the carbon nanotube is a conductor, semiconductor, or an insulator

Conducting nanotubes ◦1000 times higher conductivities than copper◦100 times higher current densities than superconductors

Strongest materials known in tensionHigh thermal conductivityBut hard to fabricate (Easier to make long

superconductors)

Potential Applications

Composites for structural materials (e.g., racing bikes)

Anti-fouling paint for shipsPrinted CNT transistors on polymer filmTransparent electrodes for displays,

solar cells

But which ones have the largest need for highest performance and the lowest price sensitivity?

SuperconductivityCharacteristics of superconducting

materials◦zero electrical resistance◦expulsion of magnetic fields

Most superconducting materials do so at very low temperatures and thus phenomenon was not useful until recently

Recent Increases in Critical Temperature…

http://www.ccas-web.org/superconductivity/

http://www.ccas-web.org/superconductivity/

ProblemsExpensiveOften brittleOnly operate at very low temperatures,

which require liquid nitrogen or even helium

Superconductivity disappears at high currents and/or magnetic fields

Which applications have the largest need for highest performance and the lowest price sensitivity?

Potential ApplicationsMagnetic Resonance Imaging (MRI)Energy usage and transmission

◦Transformers◦Motors and generators◦Cables◦Fault current limiters

Electronic devices (very fast and very low energy consumption) ◦Used in quantum computers

Magnetic levitating trainsFusion

More Information on these Technologies

Can be found in many places, but one place is my slideshare account

http://www.slideshare.net/Funk98/presentations

Slides on technology change from my MT5009 module◦Time series data on improvements◦Drivers of improvements◦Group presentations



OutlineCustomer needsMarket segments and customer

selectionDefinition of value propositionExamplesQuantitative methods

◦Strategy canvas, i.e., Blue Ocean Strategy◦Product development specifications

Conclusions

Previous SlidesProvided qualitative descriptions of value

propositions for technologies that are now considered far superior to previous ones

We would like to have quantitative data◦To show how technologies are superior or may

become superior to the old technologies◦To show this before or during the transition◦To also help us understand the niches that

many technologies occupy for short and long periods of time

The Strategy Canvas of Southwest Airline

LowPrice Meal

s

Lounges

Seating

Class

choices

Hub connectivity

Friendly service

Speed

Frequent

point- to-

point departure (new dimension)

High

Average Airline

Southwest

Car Transport

Mainframe Computers

Mini-computers

Strategy Canvas for Computers in late 1970s

LowPrice

Processing Speed

MemoryCapacity

SmallPhysical Size

User Interface

Customizability

Personal Computers

High

LowShortResponse Time

Personal Computers

Mini-computers

Mainframe Computers

High________________________________________________________________________________________

Premium Wines

________________________________________________________________________________________

________________________________________________________________________________________

Budget Wines

Strategy Canvas of U.S. Wine Industry in Late 1990s

Low________________________________________________________________________________________ Price

Enological terminology

Above-the-line marketing Aging

quality

Vineyard prestige & legacy

Wine complexity

Winerange

Source: W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy, Harvard Business School Press

Many of these factors are related to an elite image

Enological terminology: Tannins and OakAbove-the line marketingWine ComplexityAging QualityWine Range, i.e., Variety

The Four Actions Framework (Blue Ocean Strategy)

ReduceWhich factors should be reduced well below the industry’s standard?

EliminateWhich of the factors that the industry takes for granted should be eliminated?

RaiseWhich factors

should be raised well above the industry’s standard?

Create Which factors should be created that the industry has never offered?

A New Value Curve

Note: factors are price, features, and dimension of performance. You can also think about them as needs.

High_______________________________________________________________________________________________

Premium Wines

_______________________________________________________________________________________________

_______________________________________________________________________________________________

Budget Wines

The Strategy Canvas of Yellow Tail

Low______________________________________________________________________________________________

PriceEnological terminology

Above-the-line marketing

Agingquality

Vineyard prestige & legacy Wine

complexity

Winerange

EasyDrinking

Ease ofSelection

Fun andAdventure

Casella Wines: Yellow Tail

1. Wine maker or winery:2. Appellation: The country or region where the grapes for this wine were grown3. Vintage; 4. Variety5. Ripeness; 6. Estate bottling and winery information

The Strategy Canvas of Cirque du Soleil

LowPriceStar

performers

Animalshows

Aisleconcessio

nsMultiple

Showarenas

Unique

venue

Theme

RefinedWatchingenvironm

ent

High

MultipleProductions

ArtisticMusic and

dance

Fun And

humor

Thrills and

danger

Smaller RegionalCircuses

Ringling Bros. and Barnum &Bailey Value Curve

Cirque du Soleil Value Curve

New Dimensions

Ringling Brothers

Cirque de Soleil

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Key Aspects of Strategy CanvasIdentify dimensions of performance (i.e.,

customer needs) for single market segmentIdentify existing products and their levels of

performance and price Quantify performance (and price)Find dimensions of performance that are

currently being ignoredConceptualize new types of products that

can provide new types of performanceThis is an iterative process

For Your Presentation

If you describe a strategy canvas in your presentation, you must justify your strategy canvas with data and/or logic

Outline

Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methods

◦Strategy canvas, i.e., Blue Ocean Strategy◦Product development specifications

Conclusions

Establishing Target Specs for ProductsChoose a specific segmentStart with customer needs for the segmentPrepare a list of metrics for the segmentCollect data on metrics for products in the

segmentSet ideal and marginally acceptable target

values for the specificationsReflect on the results and process

Product Specifications Example:Mountain Bike Suspension Fork

Start with the Customer Needs

# NEED Imp ST

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1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••5 The suspension preserves the steering characteristics of the bike.4 •••• •• • •• ••• •••••6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••7 The suspension is lightweight. 4 • ••• • ••• •••• •••••8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •

10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •11 The suspension works with fenders. 1 ••• • • • • •••••12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••

Met

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Metric Imp Units1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB2 2,6 Spring pre-load 3 N3 1,3 Maximum value from the Monster 5 g4 1,3 Minimum descent time on test track 5 s5 4 Damping coefficient adjustment range 3 N-s/m6 5 Maximum travel (26in wheel) 3 mm7 5 Rake offset 3 mm8 6 Lateral stiffness at the tip 3 kN/m9 7 Total mass 4 kg

10 8 Lateral stiffness at brake pivots 2 kN/m11 9 Headset sizes 5 in12 9 Steertube length 5 mm13 9 Wheel sizes 5 list14 9 Maximum tire width 5 in15 10 Time to assemble to frame 1 s16 11 Fender compatibility 1 list17 12 Instills pride 5 subj18 13 Unit manufacturing cost 5 US$19 14 Time in spray chamber w/o water entry 5 s20 15 Cycles in mud chamber w/o contamination 5 k-cycles21 16,17 Time to disassemble/assemble for maintenance 3 s22 17,18 Special tools required for maintenance 3 list23 19 UV test duration to degrade rubber parts 5 hours24 19 Monster cycles to failure 5 cycles25 20 Japan Industrial Standards test 5 binary26 20 Bending strength (frontal loading) 5 MN

Establish Metrics and Units

Link Metrics to Needs1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

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Tim

e in

spr

ay c

ham

ber

w/o

wat

er e

ntry

Cyc

les

in m

ud c

ham

ber

w/o

con

tam

inat

ion

Tim

e to

dis

asse

mbl

e/as

sem

ble

for

mai

nten

ance

Spe

cial

too

ls r

equi

red

for

mai

nten

ance

UV

tes

t du

ratio

n to

deg

rade

rub

ber

part

s

Mon

ster

cyc

les

to f

ailu

re

Japa

n In

dust

rial S

tand

ards

tes

t

Ben

ding

str

engt

h (f

ront

al lo

adin

g)

1 reduces vibration to the hands. • • •2 allows easy traversal of slow, difficult terrain. •3 enables high speed descents on bumpy trails. • • •4 allows sensitivity adjustment. •5 preserves the steering characteristics of the bike. • •6 remains rigid during hard cornering. • •7 is lightweight. •8 provides stiff mounting points for the brakes. •9 fits a wide variety of bikes, wheels, and tires. • • • •

10 is easy to install. •11 works with fenders. •12 instills pride. •13 is affordable for an amateur enthusiast. •14 is not contaminated by water. •15 is not contaminated by grunge. •16 can be easily accessed for maintenance. •17 allows easy replacement of worn parts. • •18 can be maintained with readily available tools. •19 lasts a long time. • •20 is safe in a crash. • •

Benchmark on Customer Needs

# NEED Imp ST

Trit

rack

Ma

nira

y 2

Ro

x Ta

hx

Qu

ad

ra

Ro

x Ta

hx

Ti 2

1

Ton

ka P

ro

Gu

nh

ill H

ea

d S

ho

x

1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••5 The suspension preserves the steering characteristics of the bike.4 •••• •• • •• ••• •••••6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••7 The suspension is lightweight. 4 • ••• • ••• •••• •••••8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •

10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •11 The suspension works with fenders. 1 ••• • • • • •••••12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••

Benchmark on Metrics

Met

ric #

Nee

d #s

Metric Imp Units ST

Trit

rack

Man

iray

2

Rox

Tah

x Q

uadr

a

Rox

Tah

x T

i 21

Tonk

a P

ro

Gun

hill

Hea

d S

hox

1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB 8 15 10 15 9 132 2,6 Spring pre-load 3 N 550 760 500 710 480 680

3 1,3 Maximum value from the Monster 5 g 3.6 3.2 3.7 3.3 3.7 3.44 1,3 Minimum descent time on test track 5 s 13 11.3 12.6 11.2 13.2 115 4 Damping coefficient adjustment range 3 N-s/m 0 0 0 200 0 0

6 5 Maximum travel (26in wheel) 3 mm 28 48 43 46 33 387 5 Rake offset 3 mm 41.5 39 38 38 43.2 39

8 6 Lateral stiffness at the tip 3 kN/m 59 110 85 85 65 1309 7 Total mass 4 kg 1.409 1.385 1.409 1.364 1.222 1.1

10 8 Lateral stiffness at brake pivots 2 kN/m 295 550 425 425 325 650

11 9 Headset sizes 5 in1.0001.125

1.0001.1251.250

1.0001.125

1.0001.1251.250

1.0001.125 NA

12 9 Steertube length 5 mm

150180210230255

140165190215

150170190210

150170190210230

150190210220 NA

13 9 Wheel sizes 5 list 26in 26in 26in26in

700C 26in 26in

14 9 Maximum tire width 5 in 1.5 1.75 1.5 1.75 1.5 1.515 10 Time to assemble to frame 1 s 35 35 45 45 35 85

16 11 Fender compatibility 1 list Zefal none none none none all17 12 Instills pride 5 subj 1 4 3 5 3 518 13 Unit manufacturing cost 5 US$ 65 105 85 115 80 10019 14 Time in spray chamber w/o water entry 5 s 1300 2900 >3600 >3600 2300 >360020 15 Cycles in mud chamber w/o contamination 5 k-cycles 15 19 15 25 18 35

21 16,17 Time to disassemble/assemble for maintenance 3 s 160 245 215 245 200 425

22 17,18 Special tools required for maintenance 3 list hex hex hex hexlonghex

hex,pin

wrnch23 19 UV test duration to degrade rubber parts 5 hours 400+ 250 400+ 400+ 400+ 250

24 19 Monster cycles to failure 5 cycles 500k+ 500k+ 500k+ 480k 500k+ 330k25 20 Japan Industrial Standards test 5 binary pass pass pass pass pass pass

26 20 Bending strength (frontal loading) 5 MN 55 89 75 75 62 102

Assign Marginal and Ideal Values

Metric Units Mar

gina

l Val

ue

Idea

l Val

ue

1 Attenuation from dropout to handlebar at 10hz dB >10 >152 Spring pre-load N 480 - 800 650 - 7003 Maximum value from the Monster g <3.5 <3.24 Minimum descent time on test track s <13.0 <11.05 Damping coefficient adjustment range N-s/m 0 >2006 Maximum travel (26in wheel) mm 33 - 50 457 Rake offset mm 37 - 45 388 Lateral stiffness at the tip kN/m >65 >1309 Total mass kg <1.4 <1.1

10 Lateral stiffness at brake pivots kN/m >325 >650

11 Headset sizes in1.0001.125

1.0001.1251.250

12 Steertube length mm

150170190210

150170190210230

13 Wheel sizes list 26in26in

700c14 Maximum tire width in >1.5 >1.7515 Time to assemble to frame s <60 <3516 Fender compatibility list none all17 Instills pride subj >3 >518 Unit manufacturing cost US$ <85 <6519 Time in spray chamber w/o water entry s >2300 >360020 Cycles in mud chamber w/o contamination k-cycles >15 >3521 Time to disassemble/assemble for maintenance s <300 <16022 Special tools required for maintenance list hex hex23 UV test duration to degrade rubber parts hours >250 >45024 Monster cycles to failure cycles >300k >500k25 Japan Industrial Standards test binary pass pass26 Bending strength (frontal loading) MN >70 >100

Set Final SpecificationsMETRIC Units Value

1 Attenuation from dropout to handlebar at 10hz dB >122 Spring pre-load N 6503 Maximum value from the Monster g <3.44 Minimum descent time on test track s <11.55 Damping coefficient adjustment range N-s/m >1006 Maximum travel (26in wheel) mm 437 Rake offset mm 388 Lateral stiffness at the tip kN/m >759 Total mass kg <1.4

10 Lateral stiffness at brake pivots kN/m >425

11 Headset sizes in1.0001.125

12 Steertube length mm

150170190210230

13 Wheel sizes list 26in14 Maximum tire width in >1.7515 Time to assemble to frame s <4516 Fender compatibility list Zefal17 Instills pride subj >418 Unit manufacturing cost US$ <8019 Time in spray chamber w/o water entry s >360020 Cycles in mud chamber w/o contamination k-cycles >2521 Time to disassemble/assemble for maintenance s <20022 Special tools required for maintenance list hex23 UV test duration to degrade rubber parts hours >45024 Monster cycles to failure cycles >500k25 Japan Industrial Standards test binary pass26 Bending strength (frontal loading) MN >100

Quality Function Deployment(House of Quality)

technicalcorrelations

benchmarking on needs

customerneeds

engineeringmetrics

target and final specs

relativeimportance

relationships betweencustomer needs andengineering metrics

Multiple Houses of Quality

Engineering Metrics

Eng

inee

ring

Met

rics

Differences and Similarities of Setting Target Specs and QFD

Like marketing analysis and strategy canvas, there is a focus on ◦customer needs◦existing products in each market◦strengths and weaknesses of each product

There is also an iterative processDifferences, “setting product specifications”

focuses ◦a single market segment◦relative importance of different needs and setting

detailed specifications for not only products, but not parts and processes

Level of Detail in Analysis

You must make decision about level of detail to include in analysis

Some needs are more important than others to customers and thus require more analysis

Some needs are easier to quantify than others and thus quantitative data is more applicable and necessary for your presentations

But remember why someone buys a drill – because they want a hole!

Conclusions (1)Successful products (including technological

discontinuities) provide users with superior value proposition

A superior value proposition providers users with more value in some way◦Lower price, New dimension of performances◦New features, New forms of access/distribution

These superior value propositions often involve ◦New concepts◦New categories of customers

Conclusions (2)Finding new concepts and understanding when they

might be technological feasible are difficult tasksFinding new concepts

◦New technical concepts are often widely available from researchers in laboratories

◦But determining the form that concepts will take is more difficult, particularly when concepts involve art/aesthetic design

Understanding when new concepts might become technically feasible is also difficult◦Sometimes technological trends help us such as those

represented by Moore’s Law (covered extensively in MT5009)

Conclusions (3)Finding new dimensions of performance or new features

is often the key factor in success◦Or at least finding ones that have been underemphasized

Another key factor is finding customers who value these dimensions of performance, new features

How can firms find these new value propositions and these unmet needs?◦By thoroughly investigating the needs of customers in many

segments◦By understanding the technological and other changes that are

making new value propositions possible

Conclusions (4)

Finding new dimensions of performance, new features, and new customers is only the first step

Then a firm must◦define the product’s specs, scope of activities, and methods of

value capture and strategic control (some of this covered in later sessions)

◦develop and promote the product (not covered in this module)◦make the product available to customers (not covered in this

module)◦firms must be good at both identifying and implementing new

value propositions

Biz model 3 value proposition, cust selection

Business

Transcript of Biz model 3 value proposition, cust selection