- Develop a business model for an instructor specified “innovation”, with emphasis on the go-to-market plan and the profit formula.
- Need to be minimum 4 pages.
Customer Value Proposition
What unmet needs will the venture address? In creating customer value, will the venture emphasize differentiation or cost savings? Which customer segments will it target? What will be the key features of the venture’s product? Will customers require complements and ancillary services from third parties? If so, who will provide them, and under what terms? How will the product be priced? Can the venture leverage network effects? What switching costs will confront customers? How will customers’ willingness to pay for the venture’s product compare to their total cost of ownership?
Technology and Operations Management
What activities are required to develop and produce the venture’s core offering? Which of these activities will be performed in-house? Who will perform outsourced activities, and under what terms? Should the venture race to secure preemptive access to production inputs that are likely to be scarce in the future? Will it create valuable intellectual property? If so, how will that IP be kept proprietary? Over time, will the venture seek to exploit scale economies in operations by substituting fixed for variable costs? Given capacity and hiring constraints, will it be feasible to scale operations rapidly?
Through what mix of direct channels (e.g., in-house sales force; website) and indirect channels (e.g., wholesalers; franchisees) will the venture educate prospects, configure and deliver its product, provide after-sale service, etc.? What margin will channel partners require? Given the expected lifetime value (LTV) of a customer, what average customer acquisition cost (CAC) will the venture target? What mix of free and paid demand generation methods (e.g., mass advertising, public relations) will it employ to achieve this target? If the venture sells a fundamentally new product, is it likely to confront a “chasm” between early adopter and mainstream customer segments? If so, what is the plan for crossing the chasm? Will the venture have strong incentives to invest aggressively in customer acquisition due to network effects and/or high switching costs?
What contribution margin will the venture earn per unit of product sold? What fixed costs will the venture incur, and what breakeven sales volume does this imply? What share of the total addressable market does the breakeven sales volume represent? How much investment in working capital and property, plant & equipment will be required per dollar of revenue? How will the venture’s contribution margin, fixed costs, and investment/revenue ratio change as the business scales? Given projected growth, what is the profile of the venture’s cash flow curve? In particular, how deep is the curve’s trough, and when will it be reached?