Hello again and welcome back to How to Start Your Business. This is Module 2, the business model and in today's session we'll talk about the canvas method starting with the customer segment and value propositions. Let's begin. The first thing a business must do is define which customers to offer our value proposition to. To understand what defines the customer segment, we need to identify the different groups of people, businesses or organisations that make up our goal and offer them our value proposition. A customer segment must have a common series of attributes, needs and behaviours to whom we can offer our value proposition. It's very hard to find a customer segment that is completely general and to think that our product can serve everyone. So, it's important to first identify our customer segment. Following the methodology we began in the first session, we need to ask some questions related to our customer segment, such as: For whom are we creating value? Who are our most important customers? Careful because we often think that we have many customers and in the end within a group of customers it's always a small portion which make up our best customers and we need to identify them very clearly. We also need to ask ourselves which market we're targeting. Within markets, once we have identified our customer segment, we need to identify if it's a mass market, a niche market, a segmented market, whether it's a very diversified market or whether it's a multilateral market. What do these types of markets mean? Let's look at some examples. An example of mass market would be Apple, consumer electronics: Apple, Microsoft and any company reaching a massive, global market. An example of a niche market could be Original Cyclowood, wooden bicycles. Within a mass market such as the bicycle market, this company has identified a specific niche market for wooden bikes. A segmented market could be the banking market. Let's think about how the service we offer is different if it refers to business banking, which is more for professionals and business owners, than if it refers to private banking, located in offices and customer-facing. In business banking it's different. It's a much more professionalised service, much more specialised. Another example of market is the diversified market. There's Siemens, a very large company which targets a mass market, but within the mass market it diversifies into many sectors, such as industry, home, even telephony and others. Finally, there are multilateral markets. We could think of many examples of market places on the internet that have two sides. A traditional example would be Visa, which on one hand has to close deals which establishments, and on the other it has to target consumers for them to use Visa's services. So, it's a double role and a double segmentation and we need to target and offer value to both segments: establishments and consumers. Once we've defined various segments, and explained what they mean, and once we've targeted one segment, we focus on the value proposition. First we need to understand what a value proposition is and what it does is define why customers choose us instead of someone else. What is the differentiation that makes them come to us or hire our services? The first thing a value proposition does is solve a problemw for a customer or a market need. That's a given. Once we've done that, it's about how we differentiate ourselves in the market. So, some questions we might ask ourselves when defining our value proposition. What value are we offering our customers? What problem are we helping to solve? What need are we covering? And what packets of products or services are we offering each segment to better adjust our value proposition? Obviously, after asking ourselves these questions, what we need to ask ourselves also is what are we doing differently to what is already out there? It's not just about delivery value, identifying a segment and seeing what problem or need we're meeting, it's also about how we're improving on what is already being offered to our customers. I'll give you a very simple example so you understand the concept of value proposition. The famous case of IKEA, their proposition is very simple. They are products for the home that are very well designed, functional and affordable. Simple as that. Then we could talk about the brand, the prices, the stores..., but in the end the proposition is simple. As a furniture manufacturer I design good products, make them very functional and very adaptable to many types of spaces and I make them affordable so they can be obtained by a mass market. This is a very clear example of a value proposition and, from here, I invite you to define your own value proposition and what segments you wish to sell to. See you in the next one.