 Once you've identified customer problems and needs, you have to understand that there is never one kind of customer. There are many kinds of customers, be that individual persons or be that companies. So essentially there are two kinds of businesses, one where you are selling to individual persons and that's called business to consumer business. And another type where you are selling to companies and they're called business to business. Let's start with business to consumer customers. So if you are a B2C company, your customers are individuals who are purchasing a product or service for their own use, for the family use, their community use, the club use, etc. But the buyer is a person and who can some of these persons be? Men, women like you or me. It could be students, it could be workers, farmers, businessmen but businessmen buying for their own needs. So men and women are always buying products and services for their homes, for their child. Farmers are buying seeds and fertilizers and pipes for their fields. Businessmen as individuals are also buying, going to a restaurant, going to a mall, watching movies, buying phones, televisions, whatever. Workers are also buying for their own families and friends, etc. So if you are meeting their needs, you will be a B2C business and you will be selling to B2C customers. But apart from what I mentioned earlier, you also have to be aware of different kinds of segments because the needs will be slightly different. So if you look at the screen, the first differentiation is income levels, rich, middle class, poor. So if you're selling cars, the person who wants to buy let's say a Maruti hatchback is not the customer for a Mercedes or a BMW car. And conversely, someone who is willing to buy a Mercedes or a BMW car will probably not buy a motorcycle. So if you look at the income levels and then you have to look at other kinds of segments, these are called segments. For example, demographic, old and young. So I am an old customer. Those of you watching are probably much younger than me. Your needs are very different from mine. Same with geography. North India, South India, East India, West India, India, Africa, Africa, Europe, they have all very different needs. Even food habits, for example, the kind of food which will be popular in North India may not be popular in South India and vice versa. And therefore you have to be able to look at the geography of your customers. Psychography is how they behave and they buy. For example, you will probably do all your purchases online and you're very comfortable using the smartphone. And you'll probably buy based on what the social influencers published or what you read on Facebook or Instagram. I as an older consumer may want to go to a shop, look at it and buy on my own versus look at what's there on social media. So psychographic may be different. Products and services I've already talked about. There are expensive products, dresses, restaurants, phones, etc. And there are cheaper versions of phones and restaurants and apparel, clothing, shoes, etc. So you have to keep segmenting your customers so that you can better fulfill the needs of the customers. The need of every human being may still be addressed. But as I said, depending on whether they're rich or poor, depending on your cultural habits, depending on which geography you are from, your dressing habits may be different. And you have to be able as a business person to understand the nuances and the differences of customers. Similarly, if you look at business customers, which means that if you are a business and you're selling to other business, or you're a startup selling to other businesses, you have to be able to understand and define and discover different kinds of business. And what are some of these kinds of businesses? People who are buying raw material, every company is buying raw material. A company which is making a soap or a detergent is probably buying 100 kinds of raw materials. Surfactants, perfumes, the bottles, the labels, the caps, and many other chemicals. A company which is making a car will probably buy 1,000 to 1,500 components. So businesses buy raw materials, components, they buy packaging materials, they buy machinery. But they also buy services, logistic service, trucking service, shipping service to move their goods. Warehousing services. Businesses also buy financial services from banks. They take a loan. They have a current account. They collect money through the bank accounts. So businesses are buying financial services. They're buying IT services. So every business will have an IT network, information technology networks, computers, and servers, and routers, and cloud services. And they'll be buying HR services. So you may be a provider of any of that list that I put on the screen. Any of customers then will be another business. So that's called B2B. And like in B2C, you have to understand the nuances and the differences within your business that you're targeting. So obviously there's large businesses. They'll join corporations like Tata's, Villa's, Godrej, or IBM, or Samsung, or LG. Those are large businesses that you're targeting. And they're medium businesses. They'll be small businesses. A small business that you're targeting may have a turnover of 10 crores or $1 million. A large business that you're targeting may have 100 billion or 1 lakh crores. And you have to be able to understand those other segments. And within that you have to look at the industry. For example, if you're targeting Tata Motors. Tata Motors is a very large business, a very large company. And for any of their vehicles, they're probably buying 1,000 to 2,000 components that go into that car or the truck. And they're buying IT services and consulting services, maybe from some big consultants. So for any of those businesses, you have to differentiate between Tata Motors and maybe a much smaller producer of vehicles, a motorcycle manufacturer or a cycle manufacturer. Similarly, you have to look at the geography because businesses operate in different geographies. You have to look at what is the technology that they're using. And continuing on the Tata Motors example, they may be doing very well in a certain trucking segment. But they may want to increase their profit, sales and market share in some other version of trucks. And if you are a provider, you have to understand what Tata Motors is trying to do as an example. And you have to help them achieve that. And therefore you have to start looking at what is the technology? Is it traditional combustion engine or is it an electric vehicle? Is it a big truck technology or a small truck technology? You have to look at the ecosystem of your customers. Because you may not be able or your product or service may not be directly applicable to the end business. But your product and service may be applicable for the previous supplies, previous step supplies to the big company. And this is some way that you have to look at your customer segments for B2B businesses. So what's the difference between B2B and B2C businesses and customers? B2B customers, A, are companies and organizations. They are fewer in number. They'll probably be in thousands or hundreds. But they have a very complex requirement. So selling to them is very complex. And it may take a long time. You cannot walk into a Vajaj auto or a Godrej factory or a Mahindra tractor plant or a TCS office and sell in a day or hours or minutes. It may take you one year or several months to get that business. And it's a very complex decision making versus consumer B2C customers, consumers, individual persons who are buying. There will be many of them. They will be in millions and crores because they're individuals. They have less complex requirements. They'll want to buy a soap or detergent or a shampoo or a perfume or a shirt or a pant. And they'll decide very quickly. They will walk into a store and probably walk out after 30 minutes, 20 minutes, 15 minutes or an hour with the purchase cycle, with the purchase done. They may walk into a restaurant, choose what to eat and walk out in an hour's time. It's a very quicker, faster decision making. So these are some of the differences which you need to be aware of. Let's look at some examples of B2B and B2C customers around just so that you understand and can recognize the difference. Let's look at B2B business. Let's look at a small grocery store. Remember this grocery store is a customer to all the products that you see there. Those products are probably being supplied by very large customers. It could be a Unilever, Hindustan, Lever, it could be Procter & Gamble, it could be Nestle, it could be Colgate, it could be Dabur, etc. Those are large companies. You'll see those products on the shelves. It could also be farmers, etc. But the grocery store is a B2B customer for the big manufacturers or the suppliers, the farmers and the wholesalers. A company, this is probably a factory of a large company. And this company is buying that machinery and buying some HR services for the person, the workers that you see there. And buying some packaging material and some raw material. It's a B2B customer. Banks. Banks employ thousands of people. So definitely they're buying IT services. You can see the computer in front of the printer or the keyboard. They also rent a lot of office space. So they're large real estate customers. And they have a lot of people. So they manage those people and buy probably HR services. Hospitals. They're large customers for medicines and medical services. Airlines. Obviously they're buying the aircrafts, which are very, very expensive. But they're also buying a lot of food, which you will eat if you're traveling on the airline. They're buying food. They're buying a lot of services, technology services, HR services, etc. So airlines are large customers. The government itself is typically the largest customer of all. Because governments, the government of India, government of any of the European countries, US, or the government of Africa, any government anywhere in the world buys huge amount of services. And it's the largest vendor in the country. They buy defense services. They buy construction services. They buy IT services. They buy HR services. Remember that the government is a very big customer as well. But it will be a B2B customer. Let's look at some consumer, B2C customers around us. Farmers. As I said earlier, they're buying seeds, fertilizers, pipes, that basket, blue basket that you see in the picture. They're buying all of that. But each farmer is probably buying for his own field or her own field. Students. They're also buying a lot of stuff. They're buying textbooks and computers and phones. So you may be targeting the students for your startup or for your business if it's an edtech business. Community. A housing society like this will also buy cleaning services, security services. And there will be people living in that community who are buying products and servicing. And the service could be provided by a security person, by a maid, by a driver and so on. So these are B2C customers, which is the people living in that community. So again, now let's reflect. And I would encourage you for the next three minutes to think of potential customers for some of these industries. FMCG products, which will probably be a B2C business, but also some B2B because some of the FMCG manufacturers will be selling to a DMART or a Star Bazaar. So FMCG companies will have B2C and some B2B. Medicines can be B2C, but also B2B when they sell to hospitals. Smartphones mostly B2C. Smartphone apps almost always B2C. Robots almost always B2B, but maybe some toy robots may be bought by some individuals, some B2C. Aeroplanes almost always B2B except a few which are sold to very rich people, private jets which very few rich people buy. Courier services, it could be B2C or B2B. Essentially over the next three minutes try to identify the customers, customer segments for different categories and industries and names of businesses that you can think of. And as I said before, write down your thoughts on the journal so at the end of the course you can look back and reflect on what you have learned in this module. So far talked about customers, their needs and different segments of customers. Now let's talk about a very important aspect for the business or for your startup. Which is how do you create a value for your customer? How do you create a value for your customers that customer will pay you for? And that's called a value proposition, a customer value proposition. And typically you should be able to express it in two or three or four lines which everybody can understand and which differentiate your value proposition for everybody else in the market. And in the value proposition, you should be able to explain in a very simple way, what is a brand and what are you offering? What job can the customer use for your brand? Whether you are an electric vehicle or you are a sports shoe or you are a smartphone or you are a television or you are a hospital or a new restaurant. What can the customer expect from you and what is the benefit for the customer? And how are you different from some of the other choices that's already there in the market? How are you better than others? In a later module, we'll talk about how do you craft value proposition. I'll show you a lot of examples. But let's look at the basics of what is a superior, a better customer value proposition. In essence, for you to grow your business to have a successful startup, you have to be either better than what exists in the market or you have to be cheaper than other options or you should be able to do things faster. So you should be better, faster, cheaper as far as the customer's job that he's trying to do is concerned. You should be able to do the customer's job or fulfill his needs better, faster, cheaper and more satisfyingly. So if you can do that, you've got a superior value proposition. And a good example of this is in early 20th century, Mr. Henry Ford, who in many ways built the automotive industry, the passenger car industry. He said this, remember before motor cars, people were riding horses or horse drawn carriages. And he said, if I went to all the horsemen because people are used to riding horses and asked them, what do you want? Chances are they would have said, we want a faster horse or a stronger horse or a horse which goes further than others and so on. Nobody, none of the horse riding people, men or women would have said we want a motor car. But the brilliance of people like Mr. Henry Ford or Mr. Steve Jobs or Mr. Mukesh Ambani or anybody else is that they can create a value proposition which is unlike anything that exists and is better, faster, cheaper. And a great example in the early 19th century or the 20th century is a motor car versus horses. And then you look around and you see what's happening in our own country, in the telecom sectors, et cetera, et cetera. Again, it sounds simple, but if you look at the failure rates of existing businesses and startups, it's simple but not common. So how do you create and write your value proposition? And here's a simple template and you can write it down by saying for customers and you can define your customers there. For customers who are rich, poor, living in North India, South India, living in India, outside India, old, young, men, women, urban. So you define your customers. So customers X, Y, Z who need to get certain things done, who need to travel, who need to eat, who need to entertain themselves, who need to communicate, who need to do whatever they want to do. Our product and then you define your product. Our restaurant, our smart phone, our airline, our hospital, our shirt, our pant, our television set, our car helps by doing this. How does your product help? And the last part of it is which is better than what exists and you have to describe it there. So for example, again going back to Tata Motors example and the electric vehicles, you could write a value proposition by saying for customers who are environmentally concerned, who are concerned about the environment and pollution, etc. Who need to travel without polluting the environment. Our product which is let's say Tata Motors electric vehicle helps by transporting the customer comfortably, efficiently but with less pollution and therefore it is better than all other vehicles which are combustion engines and are polluting the environment. And that could be the value proposition, a superior value proposition of Tata Motors for the electric vehicles. And I'm just giving an example here. And therefore to end this module and to put it all together, again think of a brand or a product that you use regularly. What customer problem does it solve for you? Why are you using it? What need? It could be a sports drink. So what is your need that you cannot get from other drinks? Maybe you're a sportsman, maybe you need hydration, maybe you need the salts, whatever. And how does it solve? So if it's a sports drink, maybe it solves by giving you those sodium, potassium and all those other electrolytes without too much of sugar and therefore it is healthy. And how is it better than competitors? How is it better than a cola drink or a milk product or a coffee? So think about a sports drink which helps you as a sportsman but is better than a sugary cola drink or a sugary aerated drink or a high caffeine, high sugar coffee. And if you're using some of those existing products, why are you moving over from your existing products into this new sports drink? And are you happy with the price? You may still be happy with the product but you may be very unhappy with the price. So if it's a good product but too expensive then the value proposition doesn't work. And therefore the essence of value is the benefit to the customer but also to the price. And in the future modules we'll talk about getting the balance right. How do you create a great value product but give it at an affordable price so that the customer buys more and more of your product and service. And we'll talk in a later module about how to capture some of the value to build your business, your profits, your market share and your stock price can go up. So with that we come to the end of this module. Thank you. Namaskar.