Illustrating Customer Segments & Value Propositions with Ridiculous Toys

an interactive workshop based on the Business Model Canvas

Leslie Forman@leslieforman — leslie@leslieforman.com

Updated August 2014

This presentation is based on the book Business Model Generation, by Alexander Osterwalder, Yves Pigneur and hundreds of co-authors from all over the world

AND my experiences teaching these topics to a wide variety of audiences in Chile.

The core of Business Model Generation is the Business Model Canvas, a visual tool with 9 blocks for the 9 most important elements of any business.

This is what it looks like:

Today we'll focus on these two blocks:

Customer Segments

These are specific groups of people or organizations that your enterprise aims to reach and serve.

It may be tempting to say "everyone who can afford it!" but you must decide which people to focus on and which to ignore.

You might focus on demographic factors, such as::

age ethnicity genderincome location nationality season of life profession etc.

Or psychographic factors (related to how people see the world) such as:

is she a risk-taker??... early adopter?? ... evangelist? ... investor? ... spontaneous buyer?? ... traditionalist? ... trendsetter??

The best way I've found to teach this concept is by presenting each pair of students with a photo of a ridiculous toy...

... like these!

Barnoculars via FunSlurp.com

Handlebar Wine Opener via Funslurp.com

Frozen Smiles Ice Mold via FunSlurp.com

Activity One:

Each pair will answer these questions.

1. What are the demographics of thesegment that needs this product?

2. What are the psychographics?

3. How might you reach these people?

What is a Value Proposition? A Value Proposition is the specific way that your product or service helps people in your Customer Segment.

A Simple Example

The Value Proposition is the end result when a Customer in a certain Segment uses it.

If you have a cold…

Product: XYZ Remedy

Customer Segment: busy people aged 15-65 who wake up in the morning with a cold but need to go to school/work

Value Proposition: feeling good enough to go out and enjoy the day instead of having to stay home feeling sick

Here are a few examples of Value Propositions:

1. Newness

New technology. New invention. New product category.

2. Performance

Bigger. Better. Faster. More effective.

3. Customization

Product or service designed for specific customer

Technology recommends products or services for specific customer (like how Amazon recommends books)

4. “Getting the Job Done”

Enhances customer’s productivity

Gives customer time and space to focus on other things

5. Design

Style Look Feel Color    

6. Price

Priced to sell to a new customer segment

Similar to existing products and services at a lower price

7. Risk Reduction

Makes people safer

Makes people feel safer

Guarantees to fix problems for a certain amount of time

8. Status

Makes customers look powerful, important or cool

What other Value Propositions can you think of?

1. Newness2. Performance3. Customization4. “Getting the job done”5. Design6. Price7. Risk Reduction8. Status

9. 10. 11. 12.

13. 14.  15. 16. 17. ……………………

Activity Two:

Describe the value proposition for your pair's product in as much detail as possible.

Get ready to share this with the group.

I've led this workshop with many groups of students, executives and entrepreneurs in Chile, often extending the questions to cover all 9 blocks of the Business Model Canvas. It's memorable and fun!

If you'd like to do a similar activity with your organization, I'd love to hear about it. Write to me any time: leslie@leslieforman.com :)

Thank you!!