Lecture 3 - What Are You Worth?

How do people create successful products today when everything seems like it has already been done before? How can you convince your target audience to buy your product over someone else's?

If you do things the way that everyone else is doing it chances are you won't get noticed or get very far. There are a lot of products that are very uninteresting and that don't attract customers, because they don't know what customers want.

What is the value of your creativity?

Drucker (1985) argued that innovation is the tool of entrepreneurship. In addition, both innovation and entrepreneurship demand creativity. Creativity is a process by which culture is changed. New songs, new ideas, new machines are what creativity is about. We don't have ownership of creativity. Creativity should be taken in a more holistic way.

Mihaly(1997) said that creativity is the ability to make or otherwise bring into existences something new, whether a new solution to a problem, a new method or device, or a new artistic object or form. Creativity is the act of seeing things that everyone around us sees while making connections that no one else has made.

Professor Kotler's book, Marketing Management, is the world's most widely used graduate level textbook in marketing.

C – Creating

C – Communicating

D – Delivering

V – Value

T – To a Target Market

P – for profit

Creating value is about product management;

this used to be done internally, secretly but now they have people all over the world developing products with them. This is called Open innovation.

Pringles wanted to make a range for kids and thought that printing funny images on the Pringles would be a good idea but they didn’t have the technology. They heard about a biscuit maker in Italy who was printing images on food. So they collaborated to create new products. This is open technology or open innovation. Design so you know it will respond to what people want instead of hoping they will like you product once it is already made.

Communicating value is about brand management.

This used to be a name, a logo packaging. Now it is everything you are about. It’s about the way you act, the way you approach customers. It is everything you do. It used it be about mind and ‘heart’ but now we are after people’s spirits. It is about showing you care and even nurturing your customer’s ego. If they care about the planet or the environment; you must show the way in which you care.

Delivering value is about customer management. Customer management used to be about a data base, but is this customer management or managing a data base? The brand needs to know the customer beyond the data base. Knowing a lot about the customer enables companies to somewhat make the customers design their own advertisement.

Insight comes from experience you are not born with it.

The market is changing fast and we spend money differently from the way we spent it 20 years ago. We are very wealthy. There is not much that we actually need. As a result, we have started buying goods and services based on emotional needs and impulse.

We want to be entertained by the shopping experience and by the novelty factor of new technology. We also want to learn and for learning to be fun. We want to engage with Creative and Cultural pursuits but in an easy way; not in some highbrow way. Understanding these changes can give us an insight into the motivators behind people’s spending, If we understand that, we can learn which are the most lucrative sectors to work in and how to get customers and businesses to part with their money.

Abraham Maslow, a psychologist who wanted to find out more about the things that motivate people to buy stuff studied human beings in as objective a fashion as he possibly could. He took years of research into animal behaviour and tried to apply it to humans to see if there were correlations. He found that, actually, our needs have not changed much in millennia right from being cave dwellers to becoming modern humans. He named it ‘A hierarchy of need’.

Ancient man’s prime need was to breathe, eat, drink, stay warm and dry and to procreate.

He needed to stay safe from bears and marauding tribes. He needed to sleep safe in his bed and know that his children could be raised before they were killed or stolen.

The needs of an ancient family group were to be collaborative, to engender mutual respect and to look out for each other. Rather like a pack of lions which develops strategies for hunting together or a mob of meercats which posts sentries for the benefit of the entire group.

In the animal world, many animals recognise hierarchies, establish and maintain relationships and live in supportive social groups. We also have similar ways of organising and supporting each other but we achieve these goals by different means. Organised family occasions help to bond family ties and give us opportunities to celebrate, to affirm achievements and to establish the family’s position in, and publicise its values to society.

Social groups almost naturally develop hierarchies of different sorts. We have a Queen at the top of our social and political hierarchy. Those who would abolish the monarchy realise that if it were to go; it would be replaced with some other kind of hierarchy. That is the way of all animal and social groups. The lions have their alpha male; meercats and wolves have their matriarch, companies have a chairman and republics have presidents. Even street gangs have a leader; an alpha male who determines policy and strategy of sorts. Human leaders must command respect or admiration from those they lead and they will do this be demonstrating higher levels of knowledge or learning or, simplistically, they will acquire status symbols to demonstrate greater wealth or success.

Maslow's Hierarchy of Need

Maslow put these needs into a hierarchy that demonstrates which are our greatest needs and how they build on each other. For instance, in the least developed countries, social structures quickly break down if there is not enough food to eat or security systems have been destroyed by invading forces. In these instances, the first needs to be addressed are those of food, shelter and restoring some kind of security for children and vulnerable members of society. People lose the urgency to acquire status symbols if they have no food or water as you might imagine.

Where is The Money?..

Greatest human needs = greatest market potential

Food industry

Housing

Utilities

Medicine

Transport

Construction

Insurances

Water

New Technologies

Reduced human needs = Lower market potential

Organic farming

Holiday cottages

Home insulation

Health spas

Luxury sports cars

Conservation

religion

Swimming pools

Alternative technology

This chart and Maslow's heirarchy don't exactly match however, the hierarchy does not account for transport and therefore isn't a solid system today. By

looking carefully at the human needs of your product, practice or service may be satisfying in order to understand the potential market. Herein, lies your potential for understanding the value proposition within your business. This is what can start to give real insight into what motivates people to buy thing.

What is a value proposition?

It is a crystal clear statement of how your product, service or practice benefits the customer or the public.

Steve Rankel - Former Senior Product Manager at Dictaphone says value propositions should be...

Short

Specific

Customer language

Make it short and concise – a value statement should take 6 seconds form start to finish.

Be specific about the benefits to people – try to see your service or product from their point of view. Ask your customers how your work will improve their lives / businesses

Use your customer’s language – don’t confuse them with big words

Make them sit up in their chairs and take notice – make them want to do business with you.

A Value Proposition

You aims should always be outward looking and should talk more specifically about the ways in which you are going to improve people’s lives by making things more beautiful, convenient, faster, more efficient, more deeply meaningful or by enhancing their experience of life.