What is changed in our Canvas?

1)Value Proposition

Our MVP is an application that provides users to upload their closet to their applications and make combinations. Then, if they want they can share on their Facebook to get 'like's or comments. Besides they can share their closet with some of their friends by changing their privacy settings.

By considering our survey results, next step we should follow is adding 'professional advices' to this application.

2)Customer Segments

Basic Product is “Making virtually combinations with an app”

What do customers expect in terms of functions:

·      Girls from 16-24 (87% of this group would use app; 57% of the yes-users would pay ext. wardrobe; 29% of this yes-users would use prof. advice)

·      Girls from 25-34 (87% of this group would use app; 81% of the yes-users would pay ext. wardrobe; 57% of the yes-users would use prof. advice)

·      Boys from 16-24 (61% of this group would use app; 29% of the yes-users of theses would pay ext. wardrobe; 21% of the yes-users would use prof. advice)

·      Boys from 25-34 (64% of this group would use app; 81% of the yes-users would pay ext. wardrobe; 33% of the yes-users would use prof. advice) 

By considering survey results, we have three customer segments regarding sex, age, preference of functions etc.

1.     16-24 female: Like’ing (28%), Commenting (12%), Sharing Closet (24%)

2.     25-34 female: Getting professional advice (40%), Sharing Closet (40%)

3.     16-34 male: Like’ing (19%), Commenting (19%), Getting professional advice (24%)

Depending which strategy we want to focus on we have two different main target groups:

1.     Getting Followers: 16-24 female

2.     Getting money: 25-34 female (see table below which is not focusing on functions but instead on spending money for our service)

3)Customer Relationship

We have 3 main steps:

            1)GET

Earned demand creation activities: blogging, social media

Paid demand creation activities: publication in fashion magazines( Vogue, VanityFair..)

-Acquire: awareness cooperating with local designer blogs and fashion magazines.

·      Coco: promotion on social media, app. Store and school party

·      Marilyn: advertisement on fashion magazines and app.store

·      Hugo: social media, app. Store

-Activate: take the trial application and then simply paying with your phone bill

            2)KEEP

-Product updates/extended features:  new features as magazines/blogs links, follow models wardrobe(like Twitter), professional advises

            3)GROW

-Up-selling: fremium modelà basic plus experts advices

-Referrals: send the link for inviting new friends and you get further free combinations

-Cooperation with companies (Zara, Mango, H&M virtual wardrobe..)

4)Channels

Arteixo is a virtual product that is delivered through mobile application and web browser. Between two, the mobile application has more importance than its counterpart, as the customer segments find the value of Arteixo in on-the-go feature. The application will be connected to the account of social medias such as Facebook, to remove repeated registration process and to access existing customer data from the social medias.

Furthermore, using social networks as an intermediary channel to acquire customers brings additional advantage to Arteixo. According to the interviews with potential customers, about 93% of young population aged between 16 and 34 were using one or more social networks such as Facebook, Twitter or Instagram. In terms of frequency, Facebook accounted for the most in all age groups, especially females aged from 16 to 24. Twitter was the second most used platform to communicate, followed by Instagram.

The abovementioned services are important for Arteixo to determine key channels to deliver the value, which is a virtual closet with social function. Frequent exposure to social media means that people are accustomed to share, comment and “like” day-to-day activities of others, which is directly related to the expected customer behavior of Arteixo. Based on the survey, a considerable number of people are willing to share their closet, which is likely to be linked to their current behavior.

5)Revenue Streams

To define the Revenue Streams strategy we have considerate our customer segment defined and also the business sector, comparing similar business models that provides customers’ different features. The strategy was defined based on the subscription fee pricing.

·      First 19k users Free – For the first 19k users we will provide the APP for free, we believe that these users will be able to experience our service and influence and recommend others to use it. We defined these amount of people considering the total market in our segment and the percentage of people representing the innovators (2,5%).

·      User 19001 and others 0.99 Euros fee – The other users (early adopters and early majority) will pay the regular fee, 0.99 Euros. This fee was defined considering the usual application cost and also the results of our survey, where we can see that 52,43% of people interviewed are interested in buying the application for this cost.

·      Free for a user that invites three friends to use the App – To better promote our APP we also defined that first 18K users (who need to pay the fee) that invites 3 friends can download the APP for free.

6)Key Partners

We have chosen our key partners in order to provide us with the resources and needs to make our business work. We have designed a close relationship in order to promote a win to win situation for both parts.

·      Traffic partners; for the first stage we have choose to follow traffic partners in order to reach the wished members for our actual business model:

o   Bloggers: Small growing bloggers. They will benefit for be users of our app for free we will benefit to increase our Acquire in the phase of getting customers.

o   Fashion staff: Models and designers. They will benefit for getting our free app in case of models and in case of designers they will benefit of time saving to dress models in shorter time and ahead allowing them to make changes. We will benefit from new users and to keep and grow costumers, as we will be a referee for fashion.

·      Close look to future partners.

o   Strategic alliance: Companies for the fashion industry such as Inditex, Mango, H&M and Gap, will be able to add their collections to the virtual clothes of members, giving them the chance to buy clothes from there.

o   Business Development: SME in fashion will be able to upload their collection into clothes and create a buyers profile.

7)Key Activities

·      Digitalizing  your wardrobe : we re-adapt your simple images in the right format to allow you to match upper-part, lower-part and shoes in order to make combinations.

·      Providing a "fashion social community": we allow you to upload your combinations, write comments, “liking” friends’ pictures, get advices, sharing your closet  within the same cloud community.

8)Key Resources

The most important assets required to make our business model work are the following:

·      Virtual: application, cloud services

·      Intellectual: copyright on our software

·      Human: IT developers, team of qualified employees

·      Financial: friends, family, friends of friends(FFF)+ our savings

9)Cost

To define the Costs to operate our business model we estimated fixed and variable cost based in our needs.

·      Software development/ APP/ Cloud – 20k Euros/ year

·      Administrative – 58,8k Euros/ year

·      Advertisement – 10k Euros/ year

Executive summary of customer interview

·      Research objective

The interviews were conducted to understand the unforeseen customer need in order to improve the business model of Arteixo.

·      Data collection

Face-to-face interview (n= 106) and self-administrative online survey (n=49) were carried out from Nov 7, 2013 to Nov 10, 2013 at different locations in Madrid (i.e., university, main square, shopping mall) by seven interviewers. In total, 155 people provided their opinion.

While analyzing the input data, the main customer segments became clear that were worth to pay more attention compared to other groups. Therefore a detailed analysis will be presented regarding the main segments in the second section of findings, to capture the key insights of the primary target market.

·      Findings

o   General information

Among the participants, female represents the majority (74%) as well as the initial target of Arteixo. Young people aged from 16 to 24 were the most common in terms of age groups followed by the people aged between 25 and 34, 67% and 25% respectively. As the application aims to start in Madrid (Spain), Spanish respondents accounted for more than half.

When the interviewees were asked, around 80% of respondents were willing to have a virtual closet provided by Arteixo. The answer further provides an interesting figure in the following, which illustrates the main customer age segments of Arteixo. Age group 16-24 and 25-34 show the most positive response to the product with having slightly different behaviors.

o   Customer segments

§  Coco (Female 16 – 24, n=81)

The first main customer segment was internally named as Coco, which is a young group of female aged between 16 and 24. Around 85% of girls showed interest in the virtual closet. Most of the people were university students who like to use the virtual closet to save time (58%) when choosing outfit while have fun (46%). The most usage for this group was making combinations (82%).

In terms of social media usage, Coco uses Facebook the most, followed by Twitter and Instagram. This group showed the highest interest in social function such as “liking” or commenting. In addition, 55% of the respondents were willing to pay for extending the closet and 28% of people positively reacted to additional cost to receive the professional advices.

§  Marilin (Female 25 – 34, n=24)

The second group is called Marilin, female group aged from 25 to 34. Just below 95% people said they would like to have their own virtual closet. When it comes to the most interesting feature of Arteixo, time saving was in the first place (53%). This group showed a particular interest in receiving professional advises compared to other customer segments, which could be used for up-selling to generate more profit.

Facebook accounted for the majority of social media usage followed by Instagram and Twitter. A big part of this group (40%) wishes to use the “sharing” function of Arteixo to interact within their social circle. Marilin showed the highest profitability considering their willingness to pay for extra feature, such as extending the closet or advises from professionals, 76% and 57% respectively.

§  Hugo (Male 16 – 34, n=38)

The third customer segment is named as Hugo, which represents a male group aged between 16 and 34. Three out of every five people showed an interest in the application. Timesaving and receiving professional advises were equally ranked for the most interesting feature for them (43% each). This group focused on the practical use of the application such as making combinations rather than social function including “liking” or commenting on other’s outfits.

Around 60% of the group uses Facebook for main online social interaction channel, followed by Twitter (36%). Instagram accounted for the third most used social media (31%), but the usage was considerably lower than other segments. When it comes to the extra cost, this group showed the least interest. Around one-third of people are willing to pay to extend their closet and 26% of the respondents consider paying for advises from fashion experts.

o Concerns of potential customers

During the face-to-face and online surveys, the people’s main concerns after learning the idea were almost the same. General answer can be grouped in five categories:

1)Privacy

2)My combinations might be copied

3)It may cause problems between people

4)User-friendliness

Moreover, most of the people answered that they don't have any concerns as they thought it will have the similar privacy options of Facebook. The one’s who answered that their main concern is privacy also added they would like to have privacy options and would like to choose who can see their combinations, who can see their closet etc. In this point of view, as our products’ privacy will be optional. First two concerns such as ‘Privacy’ and ‘My combinations might be copied’  are going to be solved for all users

By considering the ‘It may cause problems between people’ is an important issue, but in this point, users should arrange their privacy options and block people who could cause problems.

Last concerns is one of the most important for us, because application must be easy to learn and use in order to take the attention of our potential customers. Who would like to use an extremely difficult application for their daily life? What do they suggest to us? What do they want us to consider?

When we asked what more would you like to have in our application, we got interesting answers such as:

1)Follow famous people's combinations, their outfits or weekly advises

2)Link to fashion magazines and blogs

3)Automatic suggestions from application of our clothes that users can save if they like

4)Seeing some brands creations such as zara, mango etc.

5)It would be good if we can ask others 'where did you buy this t-shirt, shirt etc.’

When we asked what should we consider while defining the application, they gave us important points to think such as:

1)Wearing and combination is not the same thing

2)Photo quality is important if it is bad, application is meaningless.

3)It should be easy to upload photo or use the app, if not it would be time consuming.

4)Doing same combinations with other people might be a problem.

·      Conclusion

The interview revealed many interesting customer insights that were unforeseen before going out of the building. It developed three customer segments (Coco, Marilin and Hugo) and differentiated them to target in an effective manner. The understanding of target customers acquired through the interviews will bring a significant benefit to improve business model canvas by providing the best interest for customers, that will ultimately benefit Arteixo.