How getting selling points wrong can spell doom for your business

You should enable your potential customers to evaluate your product’s value proposition. FILE

By Scott Bellows


IN SUMMARY
Identify the right channels where your consumers can get your product and service.



Upon graduating with his MBA, Mwanzu promptly decided to quit his job at a Nairobi-based bank and move back home to start a new business.

His family held 10 acres in Kwale for cassava and sweet potato farming. He agreed with his family to repurpose the land and focus on growing tomatoes, chili peppers, and special new herbs in coast-modified greenhouses.

In order to control a large span of the value chain, Mwanzu endeavoured to then process the new farm produce into a special Mexican-styled sauce.

Thrilled with the feeling of working for himself, building his own company, and supporting his community, Mwanzu finally entered the high-end sauce market in Kenya.

He decided to sell his products through supermarkets in Naivasha as his first point-of-sale. However, following six months of disappointing sales and no real growth experienced, Mwanzu turned to some of his former business school professor for assistance.

Those reading Business Talk in today’s Business Daily might clearly realise Mwanzu’s mistake. He implemented the wrong channel for his business. Channels describe how a company communicates with and reaches its customer segments to deliver a value proposition.

Please review last week’s Business Talk in the Business Daily or USIU website to understand how to derive value propositions for your start-up business. Then, once you garnish your proposed value, determine your appropriate channel.

In order to contemplate your appropriate channel, authors Osterwalder and Pigneur encourage entrepreneurs to ask themselves through which channels do your customer segments want to be reached?

How do you already reach your customers now? How are your customer segments integrated? Which channel works best? Which channels produce the most cost-efficient results? How do you integrate your channel with customers’ routines?

Mwanzu failed to identify his appropriate channel on several fronts. First, wealthier consumers who buy specialty foods tend to concentrate in Nyali at the Coast, select neighbourhoods in Nairobi, and Milimani in Kisumu.

What high-end purchaser drives to Naivasha to buy their groceries? Next, Mwanzu neglected to choose the appropriate grocery store chain to feature his product. A higher end food item should sell through a grocery store that wealthier customer segments desire to be reached.

As an entrepreneur, choose a channel that assists your consumers to imagine your value proposition. A high-end product, for example, should sell through a niche sales force or high-end shops in order to boost the desired value proposition.

So, determine which of the five channel types to utilise. First, does your customer segment require you to operate your own dedicated sales force? Such consumers want direct interaction with you, the producer, directly without dealing with intermediaries.

Second, would your customers instead value Internet-based sales like OLX? Web sales attract consumers who need little to no hand holding in the purchasing process and instead value convenience and privacy.

Alternatively, do your customers rather desire to purchase your product directly from a physical store? If so, which type of store best suits your consumers? You must choose from maintaining your own stores or selecting to sell through partner stores.