Lecture 4Business Model Canvas

THE BUSINESS MODEL CANVAS

Customer Segments

• Who will be your customers?

• Group customers in segments or target markets

• Each group should share a common need, behavior, or attribute

Segment Types• Mass Market• Niche Market• Segmented• Diversified• Multi-sided Platform

Value Propositions

• What benefits do you provide to your customers?

• What features provide those benefits?

• What makes you different than your competitors?

Characteristics of Value Propositions

• Newness• Performance• Customization• “Getting the Job Done”• Design• Brand/Status• Price• Cost Reduction• Risk Reduction• Accessibility• Convenience/Usability

Channels

• How will you create “touch points” with your customers?

• Touch points serve multiple purposes:

– Raising awareness

– Selling to a customer

– Delivering to a customer

– Post-sale customer support

Channel phases:• 1. Awareness

– How do we raise awareness about our company’s products and services?

• 2. Evaluation– How do we help customers evaluate our

organization’s Value Proposition?• 3. Purchase

– How do we allow customers to purchase specific products and services?

• 4. Delivery– How do we deliver a Value Proposition to

customers?• 5. After sales

– How do we provide post-purchase customer support?

Customer Relationships

• What will your relationship with your customer look like?– Personal or

automated?– Transactional or

long-term?

• Depends on the product and what it takes for customer to buy.

Examples of Customer Relationships

• Personal assistance• Dedicated Personal Assistance• Self-Service• Automated Services• Communities• Co-creation

Revenue Streams

• The good stuff!– How do you make

money?

• Sale, usage fee, subscription fee, rent/lease, or licensing fee.

• Is pricing fixed or will you bargain?

Revenue Streams

• Types:• Asset sale• Usage fee• Subscription Fees• Lending/Renting/• Leasing• Licensing• Brokerage fees• Advertising

• Fixed pricing• List Price• Product

feature dependent

• Customer segment dependent

• Volume dependent

0Dynamic pricing

0Negotiation

(bargaining)0Yield

Management0Real-time-

Market

Key Resources

• What assets do you need to provide your product or service?

• These can be physical, financial, intellectual, or human resources.

Types of resources• Physical• Intellectual (brand patents, copyrights, data)• Human• Financial

Key Activities

• What most important things you need to do to provide your product or service?

• Example include sales, R&D, production, and customer support

Categories of Activities • Production• Problem Solving• Platform/Network

Key Partnerships

• From what companies or individuals will you buy? To what companies will you outsource resources?

• Use partnerships so that you can focus on what you do best as well as save money.

Motivations for partnerships:• Optimization and economy• Reduction of risk and uncertainty• Acquisition of particular resources and activities

Cost Structure

• What are your main expenses?

• Include costs of key resources and key activities

• Don’t forget about costs that come from any key partnerships

Costs

• Is your business more:• Cost Driven (leanest

cost structure, low price value proposition, maximum automation, extensive outsourcing)

• Value Driven ( focused on value creation, premium value proposition)

0Sample cost characteristics:

0Fixed Costs (salaries, rents, utilities)

0Variable costs0Economies of scale0Economies of scope