by Courtney Klein
Imagine receiving a notice in the mail that you’ve inherited your distant uncle’s semi-secret magic potion business, Elephant Water, LLC.
The company set the goal of going public with the formula, but couldn’t figure out how to bring the product to the market. The problem with the potion had nothing to do with its effectiveness; the juice is very powerful.
The potions were so powerful, in fact, that he had to keep the inventory in an abandoned Cold War-era bunker in rural Poland lest it fall into the wrong hands!
So, you travel overseas to claim your inheritance. As you exit the plane in Krakow, an older, provincial-looking gentleman, greets you at the airport with a name card in his hands and a warm glimmer of hope in his eyes. He says his name is Paul–he’s your uncle’s old business partner.
You shake hands. He gives you a brief once-over and escorts you into a black sedan with a licence plate that reads:
You and Paul make small talk as you travel the Polish countryside toward the potion storage facility.
From your window, you can see farmers of different stripes moving heavy-looking bales of what appear to be wheat onto truck, into barns, and into silos. Some use large machines. Some team up to move bails with their bare hands. You are impressed by their resolve.
Paul breaks your focus to explain how “innovative”–nay, “revolutionary”–this secret potion is. He says it has the power to solve all whole host of problems people face across the world. He revels in the formula’s profit-potential.
You finally ask him, “but what does it do?”
His eyes light up as a wide smile breaks across his face.
“It turns you into an elephant,” he says.
You ask if he means to say it improves your memory; elephants remember everything, etc..
He says it “literally turns you into an elephant.”
As the two of you descend into darkness of the bunker, you can almost feel the daunting vastness of the warehouse. When the incandescent lights flicker on, you are presented with a seemingly endless library of tiny, neatly arranged glass beakers on clean steel racks that appear to extend into infinity.
Paul removes one cylindrical beaker from the nearest rack.
He drinks down the red fluid and, as promised, he turns into an elephant, holding the now empty beaker in his trunk. Thirty minutes, and change of clothes later, you interrogate Paul.
You ask him why the whole world isn’t raving about Elephant Water, LLC.
“Well,” Paul says, “our surveys and market research revealed very little consumer demand in the way of our product.” He sighs, “consumers overwhelmingly responded saying they had ‘little-to-no desire’ to be an elephant. So, as it stands, we’re stranded as a business.”
Back to reality.
Now, what’s wrong with Paul’s reasoning? What hasn’t he figured out?
It’s easy to forget to draw a line between what your product is and the value your product offers.
What do we mean by this?
Consider Elephant Water’s product. It’s a red liquid turns you into a pachyderm for a half-hour.
Exchange value of Elephant Water (even if it tastes good) = approx. the value of 30 mins. entertainment = nearly the value of 30 mins. on YouTube or Netflix= between free and $7.99/month.
But, that’s only if the explicit benefit consumers gain from your product, (your value proposition) is the fun of being an elephant for 30 minutes.
Paul’s problem is that he’s focusing on the features of the product instead of the problems his potential customers want to solve in their lives.
If you could convince Paul to target one or another customer segment, or category of potential buyers in a given population of consumers, you may be able to get Elephant Water on to the shelves of every Whole Foods in the country.
Back to the Soviet-era Polish bunker, we go…
Impressed by what you’ve seen so far, you ask Paul who exactly was contacted in the survey.
He responds saying they reached out to wheat farmers in the area.
You propose another survey to be presented to the farmers:
“How much would you pay to move bales of hay 3-times faster?”
Your survey assumes the ability to move hay faster is a valuable to farmers. The big question is exactly how valuable.
The results of your survey return to indicate a strong demand among farmers to increase the speed at which bales of wheat could be moved without having to buy complex, difficult to maintain, and expensive equipment.
Can you guess who will become Elephant Water’s initial target market, come harvest season?
What will their value proposition be?
Check out this article by Mike Rudinsky, for more information on tuning into your target market.
We highly encourage social entrepreneurs with early-stage businesses and concepts to apply for SEED SPOT’s Spring venture incubation programs this year before January 24th, 2014.