This article is first in a series of articles called 'Survival of the Quickest: Reinvent, Innovate or Die'
For whom are we creating value?
Who are our most important customers?
At the heart of your business are paying customers. To better identify and serve your customers an entrepreneur must group them into segments with common needs and behaviors.
The basis for doing customer segmentation are if:
- Their needs require and justify a unique offer
- They are reached through different distribution channels
- They require different types of relationships
- They have substantially different profitabilities
- They are willing to pay for different aspects of the offer
It is equally important to ignore segments as much as it is to decide which ones to serve to. You might think I am crazy to suggest ignoring a potential revenue stream but read further and then decide.
All my competitors are huge names in the matrimonial industry - Shaadi.com, Bharat Matrimony.com etc. Few years ago they realized that the divorce rates are increasing at an alarming rate and since they are already in the business of matchmaking they can market themselves to this new breed of customers. After all, nothing excites an existing business like a new revenue stream they hadn't thought about. They opened their doors to anyone and everyone looking to remarry and people came in loads for sign up. Shortly after both the customers and the companies realized that their expectations weren't being met.
Why? Well, from the company's point of view they didn't realize the different ‘needs and behaviors’ of this new segment. They added a new segment but never customized their services to serve them. People signed up, but they only for a free trial and never converted into a paid one. One of my biggest competitors has close to 60,000 remarriage members on its site but only 5% are paid customers.
From the customer's point of view, they were initially happy that someone noticed them and reached out. However after signing up they too came to the realization that second marriage is nothing like first and that their needs weren't being met here.
That is what had led me to start MarriageWise. By focusing on just the second marriage segment I have more control over my services, deliver what is expected and fill in a market gap.
When starting off, go as narrow as possible. In my case if (when) my services work for people getting married the second time and stay married then I should be able to easily sell the same formula to people getting married for the first time! Not the other way around...
Your product or service might be suited for multiple customer segments in same or different industries. That’s perfectly fine as long as you figure out what each of their Value Proposition, Distribution Channels, Customer Relationships and Revenue Streams are.
Once you decide what customer segment you are going after, a business model can be designed around the needs and behavior of your customers.
As I have mentioned before, there are 9 pillars of a business model. To make this process even clearer we will build a model for a product that doesn't exist in the market today. I have decided to launch a product line of healthy snacks made from locally grown oranges of my hometown, Nagpur. This will be our case study for the next 9 weeks.
If you've been thinking about starting a new business or launch a new product / service start this process with me today. Download and print the business model template here.
Make sure you let me know in the comments area below what your idea is, your progress and if I can help out. Don't worry about people stealing your idea. Not many are willing to put in the hard work to make it happen as you are.
What’s the first thing person in India think about when they hear the word Nagpur? Yeah, that's right - Oranges!
If you live in Nagpur, you know how your relatives and friends from other cities are crazy about oranges from Nagpur. They even ask you to personally deliver 'santra tokris' when they are passing through by rail.
Vidarbha region has been cultivating oranges for the past 115 years since Shri Raghujirale Bhonsle first tested it in his kitchen as a garden plant.
NOGA (Nagpur Orange Growers Association) is the leading organization that manufactures Nagpuri orange products. Their orange related products include squashes, jams and juices.
I have seen their products since I was a little kid and not much have changed. Customer's palettes’ on the other hand have changed. We are looking for foods and flavor that are unique, quick and healthy.
Oranges are known for their high content of vitamin C and good amount of dietary fiber. These nutritional benefits are good for digestion and prevention against diseases like colon cancer.
The business segment that I want to position my line of products is health conscious adults.
Here are their common needs, behaviors and attributes:
Between the ages of 25 – 40
Live in the metros
Lead a busy demanding lifestyle
Both husband and wife work for a living
Staying healthy is a priority
Adventurous when it comes to trying new foods and flavors
Here's my business model template for this week.
Next article: Survival - Pillar #2 Value Proposition
About The Author:
Akhil Dua is an IT entrepreneur in Nagpur working on launching MarriageWise; a safe online portal for people looking to remarry. Visit his blog.
He studied at Florida International University, Miami and worked as a Manager for Deloitte Consulting. He quit his consulting job to start a health food business before returning to India. He loves the Indian outdoors and is currently planning his annual white water rafting trip to Rishikesh. You can contact him at firstname.lastname@example.org.
Akhil's Twitter ID: http://twitter.com/duaakhil
You may also like to read
- Survival Pillar # 4: Build Long Lasting Customer Relationships
- Survival Pillar # 2: Value Proposition
- Survival Pillar # 5: Discovering revenue streams for your business
- Survival Pillar # 3: Channels
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