Communicating The Value Proposition For New Products And Startups, Key Elements, Dr Phil Hendrix, immr, 201002

The Value Proposition for New Products and
Startups – Key Elements to Communicate

Part of the immr Series on “New-to-Market Products and Services”

February 2010

Dr. Phil Hendrix Contact:
Director, immr www.immr.org
1 (770) 612-1488
phil.hendrix@immr.org

1 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org

Preface
Startups and established companies often fail miserably in expressing
the value proposition for a new product or service.
Typically deficient are answers to such fundamental questions as:
The problem(s) the product is solving
Dr. Phil Hendrix Who the product is for (and not for)
Director, immr
www.immr.org Key benefits and substantiating claims
and other key elements
Much of the work that we do involves investigating potential for “new-
to-market” products that are new and unfamiliar to customers.
To reliably gauge interest and calibrate demand, we’ve found that it’s
important to describe and convey “very new” product concepts in a
deliberate and systematic fashion.
We’ve developed and use the template on the next page to articulate
and communicate product concepts clearly, concisely and efficiently.

I hope you find 10 Key Elements of Value Propositions useful
in communicating with customers, prospects and investors.


Value Proposition for New Products – 10 Key Elements†
1 Name Provide a distinctive, descriptive name that (ideally) conveys the essence of the
concept.
2 Tagline Provide a memorable phrase that – with the name – captures and conveys the
key benefit(s) of and/or target for the product.
3 Target Describe who is likely to find it useful and why. Make it easy for prospects to
recognize and answer “Am I part of the target market for the product or service?"
4 Problem With as few words as possible, describe the problem the product or service is
Solved solving – put differently, answer “What ‘job’ does the product do?”
5 Explanation Concisely explain how the product works – what technology it uses, the
platform(s) that it runs on, etc. State or briefly allude to (without revealing IP)
“What is the ‘secret sauce’?”
6 Benefits Assert key claims in terms of benefits. Relate back to the problem(s) solved.
7 Verification Quantify key benefits. Answer “How much better is it?” and “Why should I
believe the claim(s)?”
8 Position State how it’s similar to, different from or better than alternatives the respondent
is familiar with, accustomed to or has used in the past.
9 Requirements Make explicit “What do I have to do to purchase, install and use the service?”
(e.g.,device(s) the service works on; where the product or service can be used;
drawbacks or limitations that need to be considered?; etc.)
10 Provider Identify the provider (specifically or generically) and briefly describe their
qualifications.
†Using a combination of text, images and graphics Source: Dr. Phil Hendrix, immr


Communicating the Value Proposition for New-to-Market
Products and Services is Challenging, but Critical
Category Examples of Once New-to-Market Products Characteristics of
New-to-Market Products
Health HSAs - A tax-advantaged
Insurance spending and savings account 1. Customers’ first reaction is often
that can be used to pay qualified “what is it?”
medical expenses.
2. Usually do not readily fit into
Media Amazon Kindle - existing product categories
A new type of portable reader
that can wirelessly download 3. Often deliver benefits that are
books, newspapers, magazines, new, different from existing
and blogs.
4. Frequently described by features
Consumer MIDs (Mobile Internet that are new, unfamiliar
Electronics Devices) - A new class of
lightweight (1-3 lbs), handheld 5. Awareness low, familiarity with
PC’s with 5-9” displays, powerful features and benefits even lower
enough to run many applications

Transportation Zipcar - Provides cars that 6. Prospects unsure of questions to
members in urban locations can ask, criteria, options to consider
rent by the hour.
7. Limited adoption reduces
opportunity to learn from others
Entertainment IPTV - Delivers TV
broadcasts and video over the 8. Effort required by prospects to
Internet, using a broadband learn about, evaluate, and decide
connection.
9. Standards, features expected to
Medical Stresseraser - An FDA- mature, and prices drop over time
regulated medical device that
relaxes the body and calms the
mind using clinically proven
10. To adopt, customers must often
biofeedback training. change, learn new behaviors


Misstated Value Propositions Missed Market Opportunities
In testing new product concepts, incomplete value propositions severely bias estimates of
market size – typically overestimating but sometimes underestimating potential.

Brief, partial Respondent
description unable to
requires experience,
respondents to assess user
“fill-in-blanks” experience

Drawbacks not Key FAQs
mentioned, unanswered (in
shown, or made both research
explicit and real world)

Text-only description fails Requirements to use the
to convey aesthetic, product (install, configure,
design features etc.) not made explicit

For further discussion, see Dr. Phil Hendrix, Estimating Market Potential for New-to-Market Products, http://bit.ly/9kJ1tZ


About the Author
Founder and director of immr (research and consulting firm based in
Atlanta); GigaOM Pro Analyst
Help organizations identify, verify and capitalize on opportunities for
products and services that are new-to-customers and very often new-to-
market
Dr. Phil Hendrix Specialize in research and consulting that focuses on:
Director, immr
Uncovering customers’ unmet needs
www.immr.org
Revealing hurdles slowing adoption
Triggering interest and accelerating purchase
Determining features, prices to maximize market penetration
Selected Clients

Professional Experience Education
Principal/Partner with: Served on faculties of: Ph.D.
DiamondCluster Consulting Emory University (Business School) (Marketing,
Mercer Consulting U. of Michigan (Joint App’t: Business U. of Michigan)
Integrated Measurement School and Survey Research Center)


Recent Publications


Communicating The Value Proposition For New Products And Startups, Key Elements, Dr Phil Hendrix, immr, 201002

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