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What Does "Value Skew" Mean?

Discussion in 'General Entrepreneur Discussion' started by Blaise84, Sep 12, 2017.

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  1. Blaise84
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    Blaise84 Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    As you understand it, what does the term "value skew" mean when applied to business and product/service production?

    As I search Google, what I'm finding are concepts related to data analytics. Based on this, I'm assuming the term refers to something in the lines of taking an existing system or product, and focusing on one or two specific aspects of that product in a new way. For example, Nike and Brooks both focus on athletic shoes, but Nike skews value toward the area of style, while Brooks skews value toward the area of function. Am I on the right track?
     
  2. The-J
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    The-J Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Precisely, although choosing the value attributes that you 'skew' will depend on your market.

    It's explained in better detail in the book.

    In the purchase decision making process, we all (either consciously or unconsciously) have different factors that influence our purchase of a given product.

    These factors are different for everything we purchase.

    Take the example of taxis vs. Uber (or similar service).

    What influences our decision to choose a 'get me from point A to point B' service? Well, lots of things. Price, speed, availability, riding experience, ease of getting the taxi, etc. You get the idea.

    Getting a taxi sucks. You don't know the price, you don't know the speed, availability can be low (on their schedule), the riding experience sucks, you have to hail the damn thing and pray there's no one already in there... it's all around terrible. At the end, you still somehow pay more than you planned on paying even though you didn't know the cost in the first place. Fucking terrible experience all around!

    Uber is different. You know what you're paying, you know exactly when it's gonna get there, availability is guaranteed within a timeframe, it's super easy to get one. The experience can vary from excellent to 'I'm gonna get murdered', though; but you can check ratings on a particular driver to determine with some reason whether or not that's the case.

    Uber wins hands down, even though the company is terrible and they tend to operate on the line of legality.

    ---

    To apply this to your business, you gotta first know (1) why people choose the product that you sell and (2) what attribute your product can/does skew. Let's say you wanna start a soap business. Soap is cheap (you can get it for a dollar) but there's lots of soap out there that sells for way the fuck more. Why?

    Well, people choose based on smell, on ingredients, on source of ingredients, handmade vs. factory made, what the soap looks like in the dish and plenty more. If you're demonstrably superior on one of these, you can sell soap for much more than a dollar.

    Then there comes the competitive aspect of value skews. I explained the taxi/Uber thing, but it's not a great comparison in the real world because an Uber/taxi situation is quite rare and completely disruptive for an industry. In the real world, you have products and services that have hundreds of competitors, all with different value attribute skews.

    Price is the most basic value skew there is. If you're the cheapest, you WILL get a segment of the market no matter what. For that to be the case, you need to win on the supply chain side. (Microecon 201). There are people who will always, and only, buy the $1 soap. I'm one of those people (except in the case of a gift).

    With the hundreds of soap companies out there, where would my soap fit in? Well, maybe I could make the soap that smells the best + demonstrate that it's the case. Or, maybe my soap comes in the prettiest packaging and it can be given as a gift without needing to be wrapped. Maybe my soap is made from a rare ingredient only found in the Zambezi River, made right there by African pygmies (sustainably and without slave labor). Maybe it's infused with pheromones that will make you irresistible to BOTH sexes! Who knows; the possibilities are endless.

    But you don't know the possibilities until you can estimate the attributes where value can be skewed. The communication of said skew may or may not justify the price point, and all you can do is try it out.
     
  3. Blaise84
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    Blaise84 Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Great stuff-- thank you! This is a thorough explanation and helps out quite a bit (by the way, when it come to soap, I'll sometimes spring a few extra bucks for 100% natural stuff that also has the quality of smelling good).

    So, to me, it seems like a value skew is all about getting into the mindset or "shoes" of individuals or groups who would potentially be interested in a specific product or service, and then making alterations, or "skews," from their viewpoint.

    I was reading The E Myth earlier today, and it seems most new entrepreneurs consider what they want to offer the market and how they want to offer it. The book discusses the ass-backwardness of this approach, saying that the way to develop a business is through considering what the people of the market want. So, when it comes to skewing value of an already existing product or service, it's a matter of asking how to alter it in such a away that would appeal to a portion of the market.
     
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  4. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I don't get it -- you say you read Unscripted and you don't know? I explain it in great detail in the book.
     
  5. Blaise84
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    Blaise84 Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    MJ-- I bought the audiobook on Audible, along with TMF. So, saying I "read" the book isn't quite accurate, as I listened to it rather than read it. Given that Audible doesn't label the chapters with their actual titles (e.g. "Chapter 4", but no indication as to the topic of the chapter is provided), I thought that asking on the forum would be a better option, since it is closely associated with the book. In addition, I thought it would be interesting to hear how other members conceptualize their understanding of skewing value (and it was). I do remember the topic being in the book, but unfortunately I can't say I remember all the details of the book. 13 hours is a long audiobook. Only the main concepts right now, which are creating value and developing a system that runs by itself. At least those were the main concepts from my perspective. I'm still integrating the details. That's where I was coming from.
     
  6. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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  7. Blaise84
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    Blaise84 Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Nope, did not get the PDF along with the audiobook. Thank you.