The Business Model Canvas

How a company communicates with and reaches its Customer Segments to deliver a Value Proposition Channels have several functions: create awareness about a product, deliver the value proposition to the customers, help customers evaluate the company's value proposition, allowing customers to purchase a specific product or service, provide post-purchase support to customers

Explain channels

Describes all costs incurred to operate a business model Describes the most important costs incurred while operating under a particular business mode

Explain cost structure

Describes the most important things a company must do to make its business model work Key activities are the most important actions a company must take to operate successfully.

Explain key activities

Describes the network of suppliers and partners that make the business model work

Explain key partners

Describes the most important assets required to make a business model work Every business model requires Key Resources. These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues.

Explain key resources

Represents the cash a company generates from each Customer Segment

Explain revenue streams

Channels are customer touchpoints that play an important role in the customer experience

How does channel relate to customer journey?

Communication: marketing message, raising awareness, customer evaluation Distribution: delivering value proposition Sales: places to purchase product or services

What does channel constitute?

Strategic alliances between non-competitors Coopetition: strategic partnerships between competitors Joint ventures to develop new businesses Buyer-supplier relationships to assure reliable supplies

What four types of partnership exist?

What the brand offers to its customers, and how these offerings create value to the customer segment. The VP solves a customer problem and satisfy a customer need

What is the value proposition?

Mass market: Don't distinguish between different customer segments, distribution channels, value proposition and customer relationship. All have broadly similar needs and problems. Niche market: specific and specialized customer segment. The value proposition, distribution channels and customer relationship are tailored to the specific requirements in the niche market. Segmented: Distinguish market segments with slightly different needs and problems. Customers in the segmented market have similar, but varying needs. - Influences the value proposition, distribution channels, customer relationship and revenue streams Diversified: Serves two unrelated customer segments with different customer needs and problems. - Influences value proposition as it is two different, as the diversified segments seek different things. Multi-sided platforms/markets: Serve two or more interdependent customer segments.

Which customer segments can be identified?

Product: Performance, quality, features, brand, easy to use, safe. Price: Fair, visible, consistent, reasonable. Access: Convenient location, found in reasonable time. Service: Ordering, delivery, return, check-out. Experience: Emotional, respect, ambiance, fun, intimacy.

Which elements can the VP consist of?

key activeties, key partners, key resources, cost structure (basically left from VP)

Which elements cost money for the company?

Right from VP: customer segments, customer relationship, channels, revenue streams

Which elements create revenue for the company?

Distribution channels, customer relationships and revenue streams. Key activities are (like key resources) required to create and offer a Value Proposition, reach markets (channel), maintain Customer Relationships, and earn revenues. And like Key Resources, Key Activities differ depending on business model type

Which elements do key activities include

Cost-driven: the business model focuses on minimizing costs wherever possible. --> Low price value proposition, maximum automation and extensive outsourcing. Value-driven: Less concerned with cost implications of a particular business model design, but focus on value-creation --> Characterized by premium value proposition and high level of personalized service

Which to cost structures exist?

Transaction revenues resulting from one-time customer payment Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

Which two types of revenue streams exist?

Types of relationships a company establishes with specific Customer Segments Can range from personal to automated

Explain customer relationship

The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve

Explain customer segments

Physical: Assets like building, vehicles, machines, systems. Financial: Financial resources and/or financial guarantees such as cash, lines of credit, stock option pool for hiring employees. Intellectual: Brands, proprietary knowledge, patents and copyrights, partnerships and customer databases. Human: Human resources = people, who often are crucial in knowledge-intensive and creative industries.

Which key resources can be identified?

key activities, key partners, key resources, value proposition, customer segment, customer relationship, channels, revenue streams and cost structure

List the 9 building blocks of the BMC

Without (profitable) customers a company cannot survive for long

Why is it important to identify a company's main customer segment?

Personal assistance: Relationship based on human interaction and customers can communicate with company representative during sales process or post-purchase. The personal assistance can occur onsite, call centers, email or through other means. Dedicated personal assistance: Deepest and most intimate customer relationship, as a representative is assigned to specifically help the individual customer. Self-service: No direct relationship with customers. The company provides all the necessary means for customers to help themselves. Automated services: Mixes more sophisticated self-service with automated processes. Automated services can recognize the individual customer and offer information related to their orders or transactions. Thereby, automated services can simulate a personal relationship. Communities: Companies that utilize user communities to become more involved read more on communities in 'brand community'. Communities can help companies understand their customers better and become more involved with customers to learn how to better manage customer expectations. Co-creation: Companies co-create value with customers - e.g. by inviting customers to write reviews about the company's product or service or letting customers assist in the design of a product.

How can a company maintain a customer relationship?

Costs are a result of/include maintaining customer relationships, key resources, key activities and key partnerships.

Which building blocks create costs for a company?