The common definition of MVP is the Minimal Viable Product. The other MVP you should start thinking about – if you are serious about ringing the cash register – is Maximally Valued Product. All that validated learning is useless if you cannot find whether customers are willing to pay for the value your product creates or if you cannot ring the cash register.
I introduced this new MVP in my last article.
A Maximally Valued Product for a given customer segment is the product version that adds most value to the customers while enabling marketer to extract their share of the value as price premium.
It is a very specific definition and it is customer centric. It does not leave the market wide open. It focuses on value created by filling a need (the need can be anywhere on this consumption spectrum). It closes with your share of the value created. After all charging for value created remains the simplest of all business models.
Here is a very easy way to remember MVP – Your $499 iPad that did not include ear-phones!
The next logical questions are
- How can we find the different segments?
- How can we find their different value perceptions?
- How can we map that value to a price they are willing to pay?
You business may be new. The technology may be most innovative. Likely nothing like your product existed before. But the methods to answer these questions are old –
- Find segmentation from cluster analysis
- Find value distribution with conjoint analysis
- Find price perception by adding price as component in conjoint analysis
See this brief introduction on how it is done in this Slideshare presentation –
But but …
Who has access to these kinds of resources to do elaborate customer segmentation or complex analytics to find value and price perception. Especially startups.
Here is a teaser on a lean startup’s method for answering these questions. You will have to wait for the next article on how to analyze the results from this method.
Let me give you a very simple tool to answer two of these questions – segmentation and value perception. For finding pricing you can talk to me.
Think of your customer’s value perception as a resource allocation problem. Say you give your customers 100 coins. You present them an assortment of benefits or a need fulfilled. Their job is to allocate those 100 coins such that they give more coins to the benefit they value more and vice versa.
Before you rush into this you need to know the following
- What are the key benefits do you want to measure vs. a long list of features? You find that from initial customer discovery.
- Of those what can you deliver through your product and do it better than competition?
- How do you account for non-interest? That is how do you weed out those that are simply not interested in any of these benefits but did the coin allocation simply because you asked them to.
When you collect data from reasonably large sample (100-300) of target customers you will end up with a distribution of value perception. The data have the segmentation dimensions and the value perception of benefits.
Let me tell you more on how to analyze this distribution to find segments and value perception in my next article.