Monthly Archives: January 2018

Business Model Canvas #2 Customer Segments

Every business model needs profitable customers to insist on the market. To get a better understanding of their customers, entrepreneurs can organize them in segments. A segment describes a group of people with the same characteristics e.g. in terms of their behavior, needs or sociographic characteristics. A company must consciously decide which customer groups it will ignore and which customer groups will be served. Following this decision, a business model can be aligned based on the deeper analysis of customer needs.

There are a large number of different customer segments. Some are to be described here:

  • Mass market: The mass market is a very general customer segment, which represents the largest possible group with largely similar needs and problems. Business models that focus on a mass market do not distinguish between different customer segments.
  • Niche market: Business models targeting niche markets address specific, specialized customer segments. Value offers, distribution channels and customer relationships are all tailored to the specific requirements of a niche market.
  • Diversify: In this case a business model serves two or more unrelated customer segments. The customer segments have completely different needs and characteristics
  • Segmented: A company with a diversified customer segment applies additional segmentation within the existing customer segment. The differences between the segments sometimes is very little but the effect on the other blocks of the canvas model, e.g. Channels, Customer Relations or value propositions is clearly noticeable.
  • Multi-sided Platforms / Multi-sided Markets: In contrast to diversified segments here a company serves two interdependent customer segments. Both segments are necessary to make the business model viable.

Lean Startup #3 MVP and Prototyping

The Minimum Viable Product means doing “the smallest thing possible to learn [something]” (Maurya, 2012), a version of the product that has just enough features to be released. Or in other words, building an MVP means getting the highest return-on-investment in the form of learning.

We have also prepared some more questions for you below.

Lean Startup #2 Problem-Solution-Fit

According to Ask Maurya, the author of Running Lean (2012), a startup evolves through three distinct stages. The first stage concerns the Problem/Solution fit which this lesson will focus on. To learn more about problem/market fit and scaling click on the image below.

Figure: Author’s compilation adapted from Maurya (2012)

During the first stage your primary focus is to align your solution with the problem your startup idea is trying to adress. The crucial question you need to be able to answer is: Do I have a problem worth solving? 

Maurya (2012) says a problem worth solving boils down to three fundamental questions:

Q1) Is it something customers want? 

Q2) Will they pay for it? And if not, who will? 

Q3) Can it be solved? 

Click on the hotspots to find out more about each question.

Get together in a team of two to three people (ideally) and run your first experiments to answer the above questions.

Lean Startup #1 Introduction

The Lean Startup is an approach from Eric Ries. In his book “The Lean Startup”, he talks about his story and his unique way of founding a business. While working in different teams as a product developer, Ries faced a lot of failures. After a while he found a way for startups to grow faster and cheaper.

To follow the Lean Startup philosophy means to launch a product in a phase in which it hasn’t reached the point of complete perfection. By selling a first version of the product and continuously collecting data and feedback from the customers, it is then easier to optimize the product step by step until the point of complete satisfaction is reached.

Instead of wasting months through making assumptions about what the customer wants, it is quicker to bring it to the customer straight away and either fail and start new or find a market and improve.