THE ENTREPRENEURIAL MIND • Build trust with customers

• Gain insights your competitors might not

I. Problem Identification & Opportunity have
Discovery • How you differentiate yourself
• How do you execute strategically based
Concepts: on the intensity of the need
• How your product fits into the life and
- Put the problem in the context for your
activity of your customer
venture
• How do you think about the elements of
- Identify the Problem Statement
your product, how it is introduced,
- Calibrate the Problem Statement on the
activated and what elements of your
Great Problem Litmus Test
products are really important
- Sharpen your Problem Pitch
• Why your customer would or would not
use the product (now).
1. The Problem Statement
2. Analyse your current problem
statement

The Great Problem Litmus Test:

1. Market Size:
“If I were give none hour to save the planet, Is this problem something that a lot of
I would spend 59 minutes defining the people face?
problem and one minute resolving it."
2. Pain Intensity:
– Albert Einstein How painful is this problem for those
people? Does this problem need to be
A common quality that many entrepreneurs solved?
are missing, especially younger ones, is Are people so desperate to find a solution to
working for long-term success. this problem that they will use a buggy
version?
In a fast-paced world, short-term successes
are over-highlighted and over-celebrated. 3. Existing Alternatives
This makes many people believe that many Is this problem being solved in other ways
of the successes out there just happen which are
overnight. adequate? Can this problem be solved in
other ways?
If you want to be a successful entrepreneur,
remember that it takes years and a lot of 3. Customer Psychology and Habit
effort to get to where bigcompanies are Change
today. Will people change their habits and adopt
my solution?
Entrepreneurs tend to be solutions-driven
people and will focus all of their energy on 4. Willingness to Pay
the product they are building. Being able to Willpeople pay to have this problem solved?
deeply understand the problem you are Will they pay ME to solve thisproblem for
solving is critical. It’s going to affect them?
everything about your business:
5. Lovability
• How to understand which customers to Will this solution become something they
talk to cannot ive without?
• How you pitch your startup
 → Explain the relevance and criticality of
the problem
6. Evangelisim → Substantiate your claims (market data,
Will they go out and tell all of their friends customer interviews)
about my solution? → Propose a solution
→ Explain the incremental benefits of your
For example: AirBnb, the popular and fast- proposed solution(s)
growing bed and breakfast startup chain,
defined its problem statement through three
issues faced by their customers – the price
of hotels, the disconnection in existing II. Customer and Markets
hotels, and the lack of methods to connect
with locals, or somehow become a host for Concepts:
a traveler. - Who is a consumer? How is a consumer
different from a customer?
- What is Segmentation and Targeting?
What is a niche market?
- What is a customer persona and why do
you need to create one?
- What are the major market types?

By the end of the week,

will be able to:
a. Identify the market type for your venture
b. Segment your customers and carve a
niche
c. Estimate your market size
d. Refine your customer persona
Call to Action! e. Conduct actionable customer
conversations
You have gone through the different steps of the
Problem Statement Canvas - identifying a Steps:
problem, acquiring the knowledge learning the 1. Market Identification
different tools that are needed to identify a 2. Customer segmentation
problem that you find interesting to start 3. Carving a Niche
working on and tackle. 4. Market sizing
5. Customer Persona
Now you have validated problem– one that you
are sure has some potential. a. Market Types

Always remember that documenting your

outcome from those 2 weeks will help you keep
track of the problem can always come back and
check your outcome. You have identified a problem and defined it
clearly and succinctly. Now, how can you
It is now time to define the problem statement gauge the market's demand without
in a clear and succinct manner: incurring heavy marketing spend or using
pricey tools? This is a question that has
Steps of Problem Definition: confounded entrepreneurs for decades. The
trick is in the words "gauge the market's
→ Put the problem in the context
demand. “To estimate market demand you between a Newmarket and an
need to identify which kind of market is your Existing market in the sense that it is
start-upgoing to operate in. There are a New Market created from a small
essentially 4 market types. Each of these segment from an existing market.
four market types has different sales The features of this market type are:
models, sales cycles, capital requirements • Low cost
and adoption rates. Lets look at each of • New Niche
them:
• Existing, In this market type:
• Re-segmented or Niche • Evaluate industry competed on and
• New eliminate those
• Clone • Evaluate what factors can be reduced well
below the industry standards
1. Existing Market - When investors • Evaluate what factors can be increased
and entrepreneurs go after an above the industry standards.
existing market – the advantage is • Evaluate what factors can be created that
that there’s little or no market risk. In have never been offered
this market type: • There is a bit of a chasm in this type of
• Competitors exist market
•Customers want and need better
performance Eg: South west airlines took on the airline
• Technology is usually the driving factor industry by bringing up the traditional hub-
• The positioning is driven by the product and-spoke model and providing just very
and how much value customers place on its limited services but for extremely low price.
features
• The risk is to thinking competitors or too 4. Clone Market: In a Clone market,
slow customers are known because you
• There is no "chasm" that you need to fill. copied an existing market. It is called
The chasm is the gap between early a Clone because, in this market
adopters and the mainstream customers in type, you are going to localize all
the market. those specific issues for your
country or region. That said, it takes
Eg: A venture trying to set up an e- a foreign business model and adapts
commerce site like Amazon is trying to enter it to local conditions. There are no
an existing competitors if you are the first one
Market. and the risks be in misjudging the
local needs.
2. New Market - In this market type:
• Customers do not exist in the present, so This market type:
revenue generation takes years • Adapts a foreign business model to a local
• Market size is zero condition(language, culture, import
• Customers need to be made aware of their restrictions, and local regulations)
needs • Needs a large number of customers,
• You must consider factors create that has typically>100million
never been offered Eg: Most countries have a local version of
• The chasm is biggest here because you Uber today and they have tried to clone the
will only be selling to the very early adopters business model by making suitable
Eg: SpaceX adjustments for local conditions.

3. Re-segmented Market: The Re-

segmented market is a hybrid
 b. Market Segmentation
Let’s say you have a brilliant idea for a an
everyday utility item like a Mop – who would
be the target customer segment? Well if you
say –” anyone who needs a mop” – then
you’re falling into a classic trap,i.e.a non-
c. Customer Niche
specific market.
Identifying your Niche - A niche marketing
strategy focuses on a micro-segment of the
market. Niche markets get better referrals
for entrepreneurs, more repeat business,
and less competition due to their unique
nature. All these advantages also result in
easier
As an entrepreneur with limited resources, marketing of products/service. To find your
you need to have segment the market and Niche:
identify the slice of the market that you are • Understand what prompts customers to
going to go after. That is your Niche. want to buy products/services
• Develop a mental picture of your
Market Segmentation is the practice of customers
dividing your target market into • Acquire focused knowledge about your
approachable groups. You create subsets of market
a market based on demographics, needs,
priorities, common interests, and other
psychographic or behavioral criteria used to
better understand the target audience. Here
are the 4 basic types of Market Segments.

Key questions to ponder on:

• From the market segmentation – which
slice would you like to own? What is your
niche?
• How are the needs of your Niche different
from the rest of the market?
• What is the size of your Niche?

d. Market Sizing
By now you have segmented the market
and defined your niche. Before you
progress further, it may be well worth it to
estimate your market size and assess your
strategy to this market. To do this you need
to get conversant with concepts:
 • SAM = Target segment of TAM * average
price of product
• SOM = Last year’s market share# *
average price of product
• # In case Last year’s market share is not
available you can substitute with the share
that you would like to take away from your
closest competitor

Bottom-up Approach: A bottom-up

approach to estimate the actual users of the
product and how many would realistically
TAM - Total addressable market or TAM become customers.
refers to the total market demand for a • Total number of users
product or service. It’s the maximum • Total number of users within my
amount of revenue a business can possibly geographical reach
generate by selling it product or service in a • % of users who can be reached my
specific market. company (SAM)
• % of users who may actually show interest
SAM – Serviceable Addressable Market- (SOM)
estimates the portion of the TAM, that you
can acquire given your limitations–
geographic, demographic, marketing and e. Customer Persona
advertising spend, logistics, etc.
Now that you have identified your niche, the
By now you have segmented the market next step is to dive into it and own it. You
and defined your niche. Before you need to know your customer better than
progress further, it maybe well worth it to anyone else and here the concept of
estimate your market size and assess your Customer persona comes in very handy.
strategy to cater to this market. To do you But hang-on. Remember that even within
need to get conversant with concepts: your niche you need to go to those who will
adopt your product first. Here the concept of
SOM – Serviceable Obtainable Market- the Innovation – Diffusion Curve also known
Determine many customers from the SAM as the Product Adoption Curve comes
would realistically purchase your product. handy.
The SOM is a subset of the SAM that is
restricted by:
• Natural barriers such as distance or
language
• Limited capacity, for example production
capacity or marketing reach
• Loss of market share to competitors

Two Approaches to Calculating Market Size:

Top Down Approach: A top-down analysis
is calculated by determining the total
market,
then estimating your share of that market. Innovators - They are these buyers who
• TAM = Total no. of customers * average love to have innovative products. They are
price of product seeking this all the time and it is part of their
lifestyle.
Early adopters - appreciate innovations
and are ready to adopt new products even if
they are perfect or not developed from a
technical point of view.
Early Majority & Late Majority- Innovative
technology is not the key to making their
decision. They are driven by analysis of
different standard factors such as Price,
quality, needs, etc.

Laggards: They are the last to adopt an

innovation. Unlike some of the previous
categories, individuals in this category show
little to no opinion leadership. These
individuals typically have an aversion to
change agents.

So, within your niche take your products the

innovators and early adopters. It is
important to remember that the purchase
process is not as simple and straightforward
as we would imagine it to be. There are
many people that can influence the buying
decision. In many cases, the end user may
not be the economic
buyer. You need to take these factors and
all these personas into consideration.
Call to action!
How to create a Persona? Your customer
persona has to have the following: Step 1: Identify which kind of market you will
• A name – something relatable be functioning in
• A face – a photograph (fictional but Identify the aspects with respect to:
indicative) 1. Key Players
• Demography, Geography – Age, City, 2. Recent Innovations
Occupation 3. Sales Cycles
• A Day in the Life– What are the highlights? 4. Adoption Rates
What are the frustrations?
• Fears and Motivators– What drives me?
What keeps me awake at night?
For B2B ventures, the persona should be
drawn up for the key decision makers.

Customer Conversations
Step 2: Create your customer segments
o Gather data about your potential
customers
o Select your segmentation variables
o Validate your customer segments
Step 3: Identify a ‘Niche Market’:
• Which would you like to own? What is your
niche?
• How are the needs of your Niche different
from the rest of the market?
• What is the size of your Niche?

Step 4: Estimate your market size Brainstorm to come up with Effective

• Use both the top-down and bottom- Solutions
approach
• Analyse which one suits your venture You have validated that the problem isworth
better solving. You have also identified the target
market segment. You have created your
Step 5: Create your Customer Persona customer. persona.
Template in the Handbook
But you may wonder—is there just one
Step 6: Have meaningful Customer possible solution to the problem? What if
Conversations the problem could be solved in multiple
ways? Which solution would add value to
the customer?
III. Creating a Compelling Value Proposition
Brainstorming is a great technique and
Concepts: exercise that you as an entrepreneur will
need throughout yourjoumey. Whether you
- What is brainstorming, how to do it and are kicking off or looking for a solution to
how would help entrepreneurs come up with other problems through out your venture
solutions? building phases, this will help. Start
- What is "Value"? How do you create Value brainstorming for potential ideas now and
for your customer? filter the best ideas to move forward.
- Why do investors look for the Value
Proposition Canvas? The next step is to start brainstorming for
- How to create sustainable differentiation ideas that would solve the problem you
for your solution? identified. Brainstorming, simply put ,is to
come up with as many ideas as possible to
solve a specific issue. You should get
everything out of your head and start
narrowing it down to focus on ideas that
seem the best solution for the customers.
The golden rule in brainstorming is to be
open to all possible ideas and suggestions
and filter as you go. Throughout the content
below, you will learn more about the
brainstorming process, the next steps, and
the expected outcome:

Innovators Must Master the Art of

Brainstorming

Brainstorming is a great technique and

exercises that you as an entrepreneur will
need throughout your journey. Whether you
are kicking off or looking for a solution to
Crafting Value Proposition
other problems throughout your venture-
There were taxis on the road before Uber
building phases, this will help. Start
existed. Then why did we start paying
brainstorming for potential ideas now and
moneyto Uber? What value did Uber bring
filter the best ideas to move forward.
to the customers?
Value Propositions Canvas
Is it the convenience of booking a taxi from
a phone? The door-step pickup? No need to
Let's now look at a very valuable tool that
worry about directions? Easy payment
will help you design your value proposition -
options?Choiceofcabsbasedonneed?
the Value Proposition Canvas. Using this
Some of these features have addressed
tool, you will be able to arrive at a solution
acute pain points for the customer while
that will solve your customer's problems and
some are added benefits. Collectively they
at the same time, bring them benefits that
form Uber's value proposition for its
the existing alternatives do not. Here are
customers.
some videos explaining its uses and how to
set it up.
Knowing that you are creating a solution,
you should look at it from the customer
The Value Proposition Canvas helps you
perspective. Always keep in mind, how
understand the customer and how your
would aproduct or service you are creating
products and services create value. It has
help the user: This is called adding valueto
two sides. With the Customer Profile, you
the customer.
clarify your customer understanding. With
the Value Map, you describe how you intend
Any idea that you come up with will be
to create value for that customer. You
either solving a significant pain that the user
achieve Fit between the two when one
is experiencing or improving an existing
meets the other.
service that they are receiving but not
satisfied enoughand in both cases this is an
added value.

Create your Competitive Advantage

 Call to Action!

Sustainable Differentiation