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Hello, I'm Ed Addison.
I'm with NC State University's
Department of Engineering.
Welcome to Session 2 of
Managing New Product Launches.
Thank you for coming back again.
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Today we're going to talk
about the business model.
The business model associated
with a product
answers the question,
how are you going to make money?
A business model is the method
in which you get paid and it's
not necessarily described by
the functions of
the product itself.
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Before determining what
your business model is,
there are three fundamental
questions that you
need to have very
clear answers to.
It might be surprising how
many students who write
business plans don't know the
answers to these questions.
These three questions
are very simple.
What are you going to sell?
To whom?
And why are they
going to buy it?
Let's start with
the first question.
What are they going to sell?
This is the product.
We talked about product
in the last session
and that product is the
answer to the question,
what are you going to sell?
To whom determines
who your customer is.
Who did you design
this product for?
Who had the pain or the need
that you solved
with this product?
You must have known
that when you
designed the product
because we talked in
the last session
about listening to
the voice of the customer and
addressing the customer's needs.
The last question, why
are they going to buy it?
This is the need that
your product satisfies.
The customer has a
need or a problem
and your product
solves that problem.
That's why they're
going to buy it.
Once you have answers
to these questions,
you can begin to think
about the business model.
