GE108

BUSINESS MODEL
CANVAS
 BUSINESS MODEL

It explains who your customer

Is simply a plan describing how a base is and how you deliver value
business intends to make money. to them and the related details of
financing.
 BUSINESS MODEL CANVAS

originally developed by Alex a visual framework for

Osterwalder and Yves Pigneur planning, developing and
and introduced in their book ‘ testing the business model(s)
Business Model Generation’ of an organization.
 BUSINESS MODEL CANVAS

Beats the traditional

It’s a one-page
Is a strategic business plan that spans
document containing
management tool that across several pages, by
nine boxes that
lets you visualize and offering a much easier
represent different
assess your business way to understand the
fundamental elements of
idea or concept. different core elements
a business.
of a business.
 BUSINESS MODEL CANVAS

The right side of the canvas the left side of the canvas the middle will give the
focuses on the customer or focuses on the business value propositions that
the market (external factors (internal factors that are represent the exchange of
that are not under your mostly under your control). value between your
control) business and your
customers.
 WHY YOU NEED A BUSINESS MODEL CANVAS

It provides a quick overview

of the business model and is Its visual nature makes it It’s easier to edit and it can
devoid of the unnecessary easier to refer to and be easily shared with
details compared to the understand by anyone. employees and stakeholders.
traditional business plan.

It can be used by large It can be used as a template

It clarifies how different
corporations as well as to guide a brainstorming
aspects of the business are
startups with just a few session on defining your
related to each other.
employees. business model effectively.
 HOW TO There are nine building blocks in the
business model canvas:
MAKE A
BUSINESS
MODEL they are customer value proposition,
customer segments, channels, customer
CANVAS relationships, revenue streams, key
resources, key partners, key activities, and
cost structure.
 HOW TO FILL OUT THE BMC

You will brainstorm and conduct research The data you collect can be placed in each
on each of these elements. relevant section of the canvas.
 • These are the groups of people or companies that
you are trying to target and sell your product or
service to.

• Segment your customers based on similarities so

that you can customize the solution to a specific
I. CUSTOMER problem/need:
SEGMENTS
• geographical area
• gender
• age
• behaviors
• interests
 • Mass market: A business model that focuses on mass markets
doesn’t group its customers into segments. Instead, it focuses on
the general population or a large group of people with similar
needs. For example, a product like a phone.
TYPES OF
CUSTOMER • Niche market: Here the focus is centered on a specific group of
people with unique needs and traits. Here the value propositions,
SEGMENTS distribution channels, and customer relationships should be
customized to meet their specific requirements. An example
would be buyers of sports shoes.
 • Segmented: Based on slightly different needs, there could be
different groups within the main customer segment. Accordingly,
you can create different value propositions, distribution channels,
etc. to meet the different needs of these segments.

TYPES OF • Diversified: A diversified market segment includes customers

CUSTOMER with very different needs.

SEGMENTS • Multi-sided markets: this includes interdependent customer

segments. For example, a credit card company caters to both
their credit card holders as well as merchants who accept those
cards.
CUSTOMER
SEGMENTS
 • You need to establish the type of relationship you
II. CUSTOMER will have with each of your customer segments or
RELATIONSHIPS how you will interact with them throughout their
journey with your company.
 • Personal assistance: you interact with the customer in person or
by email, through phone call or other means.

TYPES OF • Dedicated personal assistance: you assign a dedicated

CUSTOMER customer representative to an individual customer.
RELATIONSHIP
S • Self-service: here you maintain no relationship with the
customer but provides what the customer needs to help
themselves.
 • Automated services: this includes automated processes or
machinery that helps customers perform services themselves.

• Communities: these include online communities where

TYPES OF customers can help each other solve their own problems with
CUSTOMER regard to the product or service.
RELATIONSHIP
S • Co-creation: here the company allows the customer to get
involved in the designing or development of the product. For
example, YouTube has given its users the opportunity to create
content for its audience.
 CUSTOMER
RELATIONSHIP
S
 • They describe how your company will
communicate with and reach out to your customers.

• They are the touch points that let your customers

connect with your company.

III. CHANNELS • They play a role in raising awareness of your

product or service among customers and delivering
your value propositions to them.

• They can also be used to allow customers the

avenue to buy products or services and offer post-
purchase support.
 1. Owned channels

TWO TYPES company website, social media sites, in-house sales, etc.

OF 2. Partner channels
CHANNELS partner-owned websites, wholesale distribution, retail, etc.
CHANNELS
 • These are the sources from which a company
generates money by selling their product or service
IV. REVENUE to the customers.

STREAMS • In this block, you should describe how you will

earn revenue from your value propositions.
TWO TYPES 1. Transaction-based revenue: made from customers who make
a one-time payment
OF
REVENUE 2. Recurring revenue: made from ongoing payments for
continuing services or post-sale services
MODELS
 • Asset sales: by selling the rights of ownership for a product to a
buyer.
WAYS TO
GENERATE • Usage fee: by charging the customer for the use of its product or
service.
REVENUE
FROM • Subscription fee: by charging the customer for using its product
regularly and consistently
 • Lending/ leasing/ renting: the customer pays to get exclusive
rights to use an asset for a fixed period of time

WAYS TO • Licensing: customer pays to get permission to use the

company’s intellectual property.
GENERATE
REVENUE • Brokerage fees: revenue generated by acting as an intermediary
between two or more parties.
FROM
• Advertising: by charging the customer to advertise a product,
service or brand using company platforms
REVENUE
STREAMS
 • These are the activities/ tasks that need to be
completed to fulfill your business purpose.

• In this section, you should list down all the key

activities you need to do to make your business
V. KEY model work.
ACTIVITIES
• These should focus on fulfilling its value
proposition, reaching customer segments and
maintaining customer relationships, and generating
revenue.
 1. Production: designing, manufacturing and delivering a
product in significant quantities and/ or of superior quality.

THREE 2. Problem-solving: finding new solutions to individual

CATEGORIES problems faced by customers.

OF KEY
3. Platform/ network: Creating and maintaining platforms. For
ACTIVITIES example, Microsoft provides a reliable operating system to
support third-party software products.
 KEY
ACTIVITIES
 VI. KEY • This is where you list down the main inputs you
need to carry out your key activities in order to
RESOURCES create your value proposition.
 • Human (employees)

TYPES OF • Financial (cash, lines of credit, etc.)

KEY • Intellectual (brand, patents, IP, copyright)

RESOURCES
• Physical (equipment, inventory, buildings)
 KEY
RESOURCES
 • Are the external companies or suppliers that will
help you carry out your key activities.
VII. KEY
PARTNERS • These partnerships are forged in order to reduce
risks and acquire resources.
 • Strategic alliance: partnership between non-competitors.

• Coopetition: strategic partnership between competing

TYPES OF companies or businesses.

PARTNERSHI
• Joint ventures: partners developing a new business
P
• Buyer-supplier relationships: ensure reliable supplies
 KEY
PARTNERS
 • In this block, you identify all the costs associated
with operating your business model.

• Need to focus on evaluating the cost of creating and

VIII. COST delivering your value propositions, creating revenue
streams, and maintaining customer relationships.
STRUCTURE
• This will be easier to do once you have defined
your key resources, activities, and partners.
 TYPES OF
BUSINESS • cost-driven (focuses on minimizing costs whenever possible)

IN TERMS • value-driven (focuses on providing maximum value to the

OF COST customer).

STRUCTURE
 TYPES OF
BUSINESS
IN TERMS
OF COST
STRUCTURE
 • This is the building block that is at the heart of the
business model canvas.

• It represents your unique solution (product or

service) for a problem faced by a customer
segment, or that creates value for the customer
IX VALUE segment.

PROPOSITIONS • This should be unique or should be different from

that of your competitors. If you are offering a new
product, it should be innovative and disruptive. And
if you are offering a product that already exists in
the market, it should stand out with new features
and attributes.
TWO TYPES OF • Quantitative (price and speed of service)
VALUE
PROPOSITIONS • Qualitative (customer experience or design).
 VALUE
PROPOSITIONS
 VALUE
PROPOSITIONS
 • Traditionally, the introduction to the canvas starts with the right
part responsible for the customer profile.
VALUE
PROPOSITIONS: • The circle is cut into three pieces where you have to define tasks
and expectations the customers are going to fulfill, as well as
THE CIRCLE positive and negative experiences associated therewith.

• You do not deal with the product now but only with the end
user’s challenges.
 Jobs

• Value proposition canvas customer jobs include different tasks,

VALUE problems or wish the customers are intended to deal with, solve
PROPOSITIONS: or satisfy.
THE CIRCLE
• By doing so, you refine the customer segment from the
emotional (preferences, popularity), social (reputation, sense of
duty), and functional (practicability) perspective.
 Pains

• Based on the above, you can identify what negative/frustrating

VALUE outcomes/experiences might be associated with the described
PROPOSITIONS: jobs.
THE CIRCLE
• Since the perception of negative experience differs by versatile
categories of users, it is better to cover as many pains as
possible.
 Gains

VALUE • It’s the same with positive experiences the customers have.

PROPOSITIONS:
• It should be noted that pains and gains are not polar notions. I.e.,
THE CIRCLE gains should include the things that make customers satisfied or
even happy rather than simply being a converse of the pains.
 Gains

• In the value proposition canvas customer profile, you attempt to

VALUE read your clients’ thoughts.

PROPOSITIONS:
• It’s not about telepathy but understanding why they want to
THE CIRCLE complete certain tasks, what causes the negative experience and
how to exceed their expectations.
 • Now, let’s move leftwards to fill in the square where the value
proposition map is introduced.

• Similar to the circle, the product-related section is divided into

three parts.

VALUE • They correspond to the relevant customer profile section.

PROPOSITIONS:
THE SQUARE • Here, we are going to deal with the product.

• The focus is made on features, functionality, and benefits it can

offer to not only attract customers but also meet their
requirements from the right part.
 Products & Services

• Here you can mention not only the product itself but also its
VALUE versions like premium, standard or anything like that.
PROPOSITIONS:
THE SQUARE • This field should not be filled with a list of features your product
will possess.

• Focus on what you can offer to get the customer jobs done.
 Pain relievers

• This section of the value proposition model is responsible for the

ability of your product to solve the defined pains.
VALUE
PROPOSITIONS: • It is not necessary to describe how the pain is relieved in details.
THE SQUARE
• A simple statement of the fact that eliminates the current
frustration with the job to be done will be enough to put here.
 Gain creators

VALUE • This field is like a mirror image of the one above.

PROPOSITIONS:
THE SQUARE • The value proposition canvas gain creators should explain your
product’s extra value, which it is going to provide to customers.
END OF THE
DISCUSSION