Lecture 4 Business 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 0 Dynamic pricing 0 Negotiation (bargaining) 0 Yield Management 0 Real-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) 0 Sample cost characteristics: 0 Fixed Costs (salaries, rents, utilities) 0 Variable costs 0 Economies of scale 0 Economies of scope