A Strategic Framework for Value-Driven Product Positioning. At the heart of any successful business is creating value for others. The Value Creation Plane is a product planning tool that illustrates the spectrum of value creation that you may want to consider when designing your product and positioning it within the market.

1. SmarterStartup.org
VALUE CREATION
PLANE

2. Howard Schultz
CEO, Starbucks
VALUE CREATION
Creating Value
If I went to a group of consumers and
asked them if I should sell a $4 cup of
coffee, what would they have told me?
Why would someone pay $4 for a cup of coffee from Starbucks when they can
brew it at home for $0.50 per cup? Clearly there’s more to this story…

3. VALUE CREATION
Selling a Commodity
If you sell the same commodity at two different prices, which one will the
customer choose? So why would you “waste money” going to Starbucks?
Cup of
Coffee
Cup of
Coffee
Maxwell House Starbucks
Cost: $4.00Cost: $0.50

4. VALUE CREATION
Sell the Benefits Not the Commodity
Starbucks has successfully created a complex of value around a simple commodity.
Comparing the coffee out of context misses the core of their value proposition.
Cup of
Coffee
Maxwell House
Starbucks
Premium
Coffee
Value $1.00
Ease &
Convenience
Entertainment
(desert/break)
Productivity
(lounge, wifi)
Value $5.00
Value $1.00 Value $5.00
Benefits Complex
Value!
$0.50!
!
Value!
$12.00!
!

5. Take a systematic approach to
identifying all the possible
opportunities. You will identify a
startup idea for every business model
archetype, for each business vertical
you are considering
The Value
Creation Plane
VALUE CREATION
Entertainment
(emotional desire)
Productivity
(logical need)
Innovation
(createnewvalue)
Monetization
(captureexistingvalue)
primary function
perceivedvalue

6. Starbucks repositioned their offering
by creating a value complex around
the coffee commodity. We’re paying
$4 for the entire experience, and the
commodity is only a component of it.
They innovated the value and made it
a more fulfilling experience.
Shift the
Business Function
VALUE CREATION
Entertainment
(emotional desire)
Productivity
(logical need)
Innovation
(createnewvalue)
Monetization
(captureexistingvalue)
primary function
perceivedvalue
X"cheap
caffiene"
Starbucks
Starbucks
Lounge
(free Wifi, etc)

7. Apple took a commoditizing
technology and added an emotional
connection through design and
inspiration. LinkedIn found a
productive application for social
networking. They differentiated their
products in a way that added value.
Shift the
Perceived Value
VALUE CREATION
Entertainment
(emotional desire)
Productivity
(logical need)
Innovation
(createnewvalue)
Monetization
(captureexistingvalue)
primary function
perceivedvalue
X
Apple
X
LinkedIn

8. Netflix has shifted from monetization of
products to innovating their own
content. Google has done the same by
integrating enhanced content into their
search results (maps, flight search, etc).
They stay ahead of competition through
continued innovation.
Shift the
Business Function
VALUE CREATION
Entertainment
(emotional desire)
Productivity
(logical need)
Innovation
(createnewvalue)
Monetization
(captureexistingvalue)
primary function
perceivedvalue
X Google
X Netflix

9. THE SMARTER STARTUP
STRATEGY FOR STARTUPS
The Smarter Startup looks at why some
startups succeed while others fail. By taking a
more strategic approach to entrepreneurship,
founders can improve their own outcomes.
Written by Neal Cabage and Sonya Zhang,
PhD, and published by Pearsons/NewRiders.
SMARTER STARTUP
The Book

10. SMARTER STARTUP
Created By
NEAL CABAGE
Digital Product Architect
• Product manager and entrepreneur.
• Founded ProductCamp.LA and PMA.LA.
• Built and sold two startups.
• Co-author, The Smarter Startup.
neal@smarterstartup.org@NealCabage

11. SMARTER STARTUP
SmarterStartup.org
The framework, including the part
described here, are posted on the
website, along with downloadable
worksheets and reference material.
Everything is free to use, so enjoy!.
www.SmarterStartup.org