Essay Example on A business model needs competitive Advantages

A business model needs competitive advantages to growth or to survive in the market According to Harvard Business Review 2008 Customer value proposition is one effective way for a company to achieve this target by word means to provide what customer needs in a case to solve their problem Comparing to 1900s when the companies created products by the efficacy of the product as product positioning industries have shifted to create a product that helps the customer getting the job done in recent years as customer positioning because of customers desires are fulfilled by solving their own problem People have different needs as CVP helps a company to target specific segment for example a good that solves a specific want for public or a tool that solves all purpose in a niche market and also differentiates the product than its substitutes including enhanced performance or better packaging as an extra value which creates competitive advantages than others resulting in a higher market share and loyalty consistently Company with CVP is not only a value deliver in the current market but also a value creator create needs for customers which creates a new market for example before Apple Inc announces iPhone the smartphone market did not exist One of the key concepts of customer value proposition is the firm shows the competitive advantage there are three types of CVP 

The first type is to list out all the advantages provided to the customers which requires the least effort but rely on the loyalty of the current customers and the customers should not have too much knowledge of the rival s product The second type is to show the differences between itself and the other substitutes which requires the firm to have more knowledge about the rival s product s features Because different people have a different perception people may have different choices For example Sainsbury s which has a lower price but lower quality and M S which has a higher price but with better quality The third one is to align the advantages with customer wants which requires the firm has the ability to determine the needs that customer wants most This type of CVP is to focus a niche more segmented market as it only serves the people who think this brand gives the most value Although CVP helps entrepreneur positioning the product feature and market segment thinking an effective CVP can be a problem I am going to explain it by what I have faced in the bootstrapping challenge The first challenge was it is ineffective to determine a CVP by just thinking In my group we have no special skills for example handcrafting something to sell so we start thinking what product is suitable for reselling but adding extra value We started thinking about what did our customer Lancaster University student desire needs in daily life But we found out that even if we had targeted a segment the segment is too board and they have so many wants it could be everything For example it could be a cheap sandwich at lunchtime or pens in the library It is hard to define what product is or the most profitable The second challenge is it is difficult to define the most effective CVP without putting another effort 

 They successfully sold all cards and made a profit that was forth time than ours Only guessing cannot determine a good CVP the above problems can be solved by putting effort on market research for example in Henna s case do advertising to test the reaction of the market But the challenge could still occur in small business which has budgetarily constant for example time workforce or other resources Also the status of the firm may affect if it is suitable to proceed the CVP or not it is because that differentiation needs more input a small business may not afford it In my case we could have chosen a better quality Christmas Card or added extra add ons like a gift tag to raise the profit But by the constraint we were not able to proceed In conclusion although CVP can help an entrepreneur to identify potential market and direct direction of production a certain amount of resources is needed and research needs to be done before the product goes into the market