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Know Your Product and Service

and Sell It!


Module 4
ChE EA11
Outline of course

Customers
- needs
- targets
- markets

Value
Proposition

Product/Service Business Model


- benefits - execution plan
- competitive advantage - financial analysis
- intellectual property - raising capital
Example: De-Boned Baby Back Rib Steak
Look for:
Customer need, how product provides benefit to fit need
Real person who personifies of target customer
Core of product that gives the competitive advantage
Intellectual property protection
Choice in models to generating revenue
Estimates of monetary value of company
Stages of company, relationship to investing
Example: Scrub Daddy

Look for:
Persona of target customer
Total Available Market
Cost of Goods Sold
Importance of IP
Competitors (who are they), product differentiation
Importance of partners
Channels of distribution: Disadvantage of retail in this case
Example: Fiber Fix

Look for:
Decision Making Process
Market segment to target, how to access them
Competition, differentiation
Direct vs indirect channels margins to intermediaries
Debt or equity to raise capital
Valuation of company
Assignment 3: Value Proposition
give top three priorities of target customer
describe as-is state, customer pain points, opportunities
potential solution given in general terms
describe anticipated Use Case with solution
identify key metric measuring how solution meets the need
give a clear, compelling Value Proposition statement
The Product/Service

Fail often in order to succeed sooner

If a picture is worth 1,000 words, then


a prototype is worth 1,000 pictures
The Product/Service

What is the product?


How does the product provide benefit to meet customer need?
Connect product to target customer persona
Is the product sustainable and scalable
What is the core the critical part of your product that gives
the competitive advantage? Could be IP, special capability,
market share, access to resources (suppliers, buyers, partners),
brand, cost, speed, etc.
Product and Service Design

Major factors in design strategy


Cost
Quality
Time-to-market
Customer satisfaction
Competitive advantage

Product and service design or redesign should be


closely tied to an organizations strategy
Product or Service Design Activities
1. Translate customer wants and needs into
product and service requirements
2. Refine existing products and services
3. Develop new products and services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specifications
Minimum Viable Product
idea
Rapid iterations of MVP with customer feedback
Start with proof of concept then demonstration
that product is not a total disaster then better Customer
product feedback MVP1

design implement
Customer MVP2
plan feedback

Idea MVP1 Customer


feedback MVP3

analyze test
evaluate Final
product
Life Cycles of Products or Services

Saturation

Maturity

Decline
Demand

Growth

Introduction

Time
Reasons for Product or Service Design

Economic
Social and demographic
Political, liability, or legal
Competitive
Cost or availability
Technological
Objectives of Product and Service
Design
Main focus
Customer satisfaction
Understand what the customer wants
Secondary focus
Function of product/service
Cost/profit
Quality
Appearance
Ease of production/assembly
Ease of maintenance/service
Phases in Product Development Process

1. Idea generation
2. Feasibility analysis
3. Product specifications
4. Process specifications
5. Prototype development
6. Design review
7. Market test
8. Product introduction
9. Follow-up evaluation
Idea Generation

Supply chain based

Ideas Competitor based

Research based
Reverse Engineering

Reverse engineering is the


dismantling and inspecting
of a competitors product to discover
product improvements.
Research & Development (R&D)
Organized efforts to increase scientific
knowledge or product innovation & may
involve:
Basic Research advances knowledge about a
subject without near-term expectations of
commercial applications.
Applied Research achieves commercial
applications.
Development converts results of applied
research into commercial applications.
Manufacturability

Manufacturability is the ease of fabrication


and/or assembly which is important for:
Cost
Productivity
Quality
Designing for Manufacturing
Beyond the overall objective to achieve
customer satisfaction while making a
reasonable profit is:
Design for Manufacturing(DFM)
The designers consideration of the
organizations manufacturing capabilities
when designing a product.
The more general term design for operations
encompasses services as well as
manufacturing
Concurrent Engineering

Concurrent engineering
is the bringing together
of engineering design and
manufacturing personnel
early in the design phase.
Computer-Aided Design

Computer-Aided Design (CAD) is product


design using computer graphics.
increases productivity of designers, 3 to 10
times
creates a database for manufacturing
information on product specifications
provides possibility of engineering and cost
analysis on proposed designs
Product design

Design for manufacturing (DFM)


Design for assembly (DFA)
Design for recycling (DFR)
Remanufacturing
Design for disassembly (DFD)
Robust design
Service Design

Service is an act
Service delivery system
Facilities
Processes
Skills
Many services are bundled with products
Service Design

Service design involves


The physical resources needed
The goods that are purchased or consumed by
the customer
Explicit services
Implicit services
Service Design
Service
Something that is done to or for a customer
Service delivery system
The facilities, processes, and skills needed to
provide a service
Product bundle
The combination of goods and services provided
to a customer
Service package
The physical resources needed to perform the
service
Differences Between Product
and Service Design
Tangible intangible
Services created and delivered at the same time
Services cannot be inventoried
Services highly visible to customers
Services have low barrier to entry
Location important to service
Range of service systems
Demand variability
Cost of Goods Sold

Important financial accounting metric

Money (direct costs only) to produce the product and hold in inventory

Includes cost of materials, labor, rent for facility producing and inventory

Excludes indirect costs such as distribution, sales, administration,


administration buildings, etc.

Example: Pizza shop. Which contributes to Cost of Goods Sold:


Pepperoni? Pizza boxes? Salary for chef? Salary for Pizza delivery person?
Salary for CEO? Rent for space to make pizza? Rent for accountants offices?
Product roadmap and development plan
Determine resources needed to complete design, specification, production:
human resources, equipment

Timeline for major phases of development, when to take product to market


advantage of early release: capture market share, become leader
advantage of late release: one chance to make first impression
include milestones
can use Gantt chart
Individual Purchase Process

Love
Buying
Intention
Shopping
Consideration
Awareness
What Is Selling?
The face to face meeting with your prospect at
the Intention or Buying level
Getting thereright place, right time, right
person
What Do Customers Care About?

THEMSELVES!!
Wants, Needs, Desires
What Do They Buy?

SOLUTIONS!!
What You Should Know About Your
Customers

Target Who are they decision maker?


Needs, Wants What do you need to solve?
Value Perception Their perceived value
equation.
The Value Equation

Value = Benefit/Cost
Before You Do Anything Else
Sell yourself
Know your product
Know the value equation
Know your competition
Know why your customer should buy from you
instead of your competition
Assignment 5: Product
specifically and concisely describe their product
include a visual representation of the product
what is the Core
how product creates value (connect to target customer, persona)
estimate the Cost of Goods Sold
describe Minimum Viable Product, how to test assumptions
Gantt chart for major phases of development, product to market
resources needed to complete design and production