Assignment about Venture Value Proposition

VENTURE VALUE PROPOSITION

Table of Contents
1.0 Introduction.............................................................................................................3
2.0 Venture Concept Overview.....................................................................................3
3.0 Value Proposition Canvas......................................................................................5
3.1 Customer Profile..................................................................................................6
3.1.1. Customers’ Jobs..........................................................................................6
3.1.2 Pains.............................................................................................................6
3.1.3 Gains.............................................................................................................6
3.2 Value Proposition................................................................................................7
3.2.1 Products and Services..................................................................................7
3.2.2 Pain Relievers...............................................................................................7
3.2.3 Gain Creators................................................................................................7
4.0 Recommendation and Conclusion.........................................................................8
References...................................................................................................................9
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1.0 Introduction
Starting a new business venture may require conceptualization of an efficient and
competitive business idea and therefore a value proposition becomes an essential
element in an efficient business plan. The entrepreneur may need to visualise the
business clearly before it even starts, through its unique value proposition and what
value it may offer to the customers and thereby attain the competitive advantage in
the industry in the long run. The concept of value proposition canvas conceives
these ideas in brief and exhibit what additional and unique value the business may
provide to its targeted customers for the long-run. As a result, the value proposition
canvas may be considered to be one of the most critical aspects in the study of
business as well as for a new entrepreneur in practical and real-life scenario
(Osterwalder, Pigneur, Bernarda and Smith, 2014).
The instant paper deals with a novel business concept of a coffee shop to be opened
in the city of New South Wales, Australia. The business which serves coffee, tea and
other beverages in their number of varieties (such as Latte, Black, Green, Milk etc.)
at a less than average coffee price in the country. In addition, the coffee shop will
also serve a complimentary Indian snacks item (such as Potato Chips, French Fries,
Onion Fries, Hot Chips and likewise homemade snacks) along with the hot
beverage. The additional and separate order for those snacks may also be delivered
at a discounted price.
2.0 Venture Concept Overview
As stated earlier, the business will be of a coffee shop to be situated in in the city of
NSW at a rented place with a sitting capacity of 25 persons. The customers will be
served coffee and other hot beverages and along with the same, a plate of
complimentary Indian snacks items will be provided for free. If a customer enjoys the
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same and wants to order more such snacks, the same will be provided at a
discounted price, around a dollar for 1 packet such snacks.
It has been observed that Australia is one of the major coffee beans producing
countries across the world and therefore coffee beans may be available there at a
cheaper rate than other countries. The annual domestic coffee consumption in the
country may be estimated to be less than 2 million KG bags in the year 2017 and the
revenue of coffee shops may be forecasted to reach around 5 billion Australian
dollars by the end of 2020 (Topic: A coffee market in Australia, 2020). Also, it has
been estimated that in 2019 the average price for or coffee cup may stand at around
4 Australian dollars (Australia - the average price for coffee beverage by type 2019 |
Statista, 2020).
Considering the same, the price has been kept almost 75% of the average standard
price, which is 3 Australian dollar per cup of coffee. Besides, the homemade snacks
like French Fries, Potato Chips, Onion Fries and other hot chips food items are being
served as a complimentary dish, that reduces the price per coffee to a certain extent.
Since the local area is largely populated with the Indian population, there will be a
special focus on Indian snacks food items. It may be stated that the Indian
population has been exponentially growing in the country for the past several years
and presently Indian occupy almost 2% of the national population (Acharya, 2017).
It has been researched that there is no such coffee ship or restaurant offering Indian
snacks items as a complimentary dish along with coffee within 5 KMs of near area.
As a result, it is expected that the customer footfall will increase consistently due to
the value offering and lower price and the business is expected to achieve break-
even within 3 months of operations. The business will be carried out by the
researcher and one of his friends on a partnership basis and they will draw a salary
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of 5,000 AUD each monthly. The necessary snacks item will be cooked at home and
therefore that cost will be marginal. The overhead will include rent, electricity and
other utility expenses and an initial investment of around 10,000 AUD will be
required which will be invested by were the partners equally.
3.0 Value Proposition Canvas
The venture concept is unique in terms of its offering in the given market. The
product bucket is value-adding for the customers at a competitive price. The section
below analyses the venture idea against the theoretical backdrop of value
proposition canvas as shown herein.
Figure: Value Proposition Canvas
(Source: AG, 2020)
In this context, it may be noted that the value proposition canvas is a model that
provides an insight into the value offering of business for the customer. The model
acts as a tool to analyse the fit between the customers’ needs and products and
service’s fit in meeting such needs (Pokorná, Pilař, Balcarová and Sergeeva, 2015).
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In short, the model evaluates the offering of the business in terms of its value
proposition (Value Proposition Canvas, 2020).
The model has two parts which may need to be bridged through an efficient value
proposition by the business. The first is customer profile that details what the
customer wants and the second part deals with what the business is providing to
meet such wants of the customers. The model has been discussed below, for the
intended business idea (Snow, 2017).
3.1 Customer Profile
As stated earlier the business will target primary local Indian population and they will
be the primary target segment. On the other hand, the local Australian people and
tourists from other countries will be the secondary target segment for the business
3.1.1. Customers’ Jobs
It has been researched that the customers will want coffee or other hot beverages on
their way to schools, colleges, offices or places of work. They will order, want to have
it within a few minutes, consume it, pay the bill instantly and leave.
3.1.2 Pains
Based on the secondary research, it has been observed that the customers
generally feel the pain to stand in a long queue, especially in the form of big coffee
shops where footfall is large, especially on weekends.
3.1.3 Gains
Since Australian people consume the coffee substantially, they will need innovative
teste in the hot beverage segment and traditional offering may not excite them to
purchase. Also, the scope for online payment may be another gain for them if can be
maintained throughout.
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3.2 Value Proposition
From a business perspective, the corresponding value proposition may include the
following in terms of what the business may offer to satisfy the needs, preferences
and choices of the prospective consumer bases.
3.2.1 Products and Services
The product offering and service will be expected to meet the customers expectation
by serving them instant coffee without waiting. Also, the payment process is simpler
with a dedicated person for payment handling. Hence, it may be stated that the
business is able to create an efficient value proposition within its operational model.
3.2.2 Pain Relievers
In order to be a pain reliever, the business should make the payment system online
so that customers can pay instantly. Also, there will be a person (the partner of the
researcher) dedicated for the payment handling. Researcher will be involved in
serving the coffee and food on the table. Also, the customers do not want to wait for
coffee and it may be assumed that since the business is new without any brand and
reputation, the people footfall may be less in the initial period. As a result, the
standing issue in a long queue will not happen for the business which will be kind of
pain reliever for customers as well.
3.2.3 Gain Creators
In terms of gain creators, the business will provide additional snacks item which is
not found anywhere within the 5 kilometre of nearby surrounding area and therefore
this will be a unique value proposition for the business towards the customers. In
addition, the homemade snacks may be ordered at a discounted price and
customers can take it away which will also be a kind of gain creation for the
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business. Since the snacks will be homemade without any chemical or
preservatives, the health issue of the consumers will also be taken care of.
4.0 Recommendation and Conclusion
Based on the aforesaid analysis and assessment of value proposition canvas, it may
be stated that the business idea is innovative, competitive and consisting of an
efficient value proposition for its targeted customer base. Since the market is full of
number of coffee shops and restaurants with large companies playing in the market
like Starbucks etc, it will be difficult for a new entrant to compete and sustain in the
long run. The initial business strategy of targeting customers through unique product
offering and value adding service may be beneficial for the company in the short run.
However, the management may need to understand that the value proposition
canvas is a part of business model canvas which consists of several other critical
success factors (CSF) of a business (for example, cost structure, revenue streams,
product differentiation etc). These are some of the key areas which management
may need to consider while strategizing operation for the long term (Joyce and
Paquin, 2016).
It is needles to mention that the instant value proposition canvas provides an efficient
value offering which may further be corroborated from the fact that the same is well
researched and supported by market data. However, finally it may be concluded that
the management may need to focus on a well-planned corporate strategy with a
focus on unique selling point of the business (Stenn, 2017). Besides, the
management should also consider market-disruptive and innovative offering for the
consumers (Toro-Jarrín, Ponce-Jaramillo and Güemes-Castorena, 2016). In doing
so, the firms will be able to stand out in the competitive market, create a competitive
advantage on their own and thereby attain the long-term goal of sustainability in
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most cost and time-efficient manner (Osterwalder, Pigneur, Bernarda and Smith,
2015).
References
Acharya, M., (2017). Census Shows Indian Population And Languages Have
Exponentially Grown In Australia. [online] SBS Your Language. Available at:
<https://www.sbs.com.au/language/english/census-shows-indian-population-and-
languages-have-exponentially-grown-in-australia> [Accessed 17 April 2020].
AG, S., (2020). Value Proposition Canvas – Download The Official Template. [online]
Strategyzer.com. Available at: <https://www.strategyzer.com/canvas/value-
proposition-canvas> [Accessed 17 April 2020].
Business Models Inc. (2020). Value Proposition Canvas. [online] Available at:
<https://www.businessmodelsinc.com/about-bmi/tools/value-proposition-canvas/>
[Accessed 17 April 2020].
Joyce, A. and Paquin, R.L., (2016). The triple layered business model canvas: A tool
to design more sustainable business models. Journal of cleaner production, 135,
pp.1474-1486.
Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., (2014). Value proposition
design: How to create products and services customers want. John Wiley & Sons.
Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., (2015). Value proposition
design. Campus Verlag.
Pokorná, J., Pilař, L., Balcarová, T. and Sergeeva, I., (2015). Value Proposition
Canvas: Identification of Pains, Gains and Customer Jobs at Farmers'
Markets. AGRIS on-line Papers in Economics and Informatics, 7(665-2016-45080),
pp.123-130.
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Snow, D., (2017). Value Proposition Canvas. [online] Medium. Available at:
<https://productcoalition.com/value-proposition-canvas-6d5edec84bca> [Accessed
17 April 2020].
Statista. 2020). Australia - Average Price For Coffee Beverage By Type 2019 |
Statista. [online] Available at: <https://www.statista.com/statistics/865324/australia-
average-price-for-coffee-beverage-by-type/> [Accessed 17 April 2020].
Stenn, T.L., (2017). Focus on the business model canvas. In Social
entrepreneurship as sustainable development (pp. 55-89). Palgrave Macmillan,
Cham.
Toro-Jarrín, M.A., Ponce-Jaramillo, I.E. and Güemes-Castorena, D., (2016).
Methodology for the of building process integration of Business Model Canvas and
Technological Roadmap. Technological Forecasting and Social Change, 110,
pp.213-225.
www.statista.com. (2020). Topic: Coffee Market In Australia. [online] Available at:
<https://www.statista.com/topics/4615/coffee-market-in-australia/> [Accessed 17
April 2020].
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