BUSINESS MODEL

CANVAS
 Business Model Canvas (BMC)
The Business Model Canvas (BMC) is a strategic management tool to quickly and easily define
and communicate a business idea or concept.

1.Customer Segments: Who are the customers? What do they think? See? Feel? Do?
2.Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
3.Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
4.Customer Relationships: How do you interact with the customer through their ‘journey’?
5.Revenue Streams: How does the business earn revenue from the value propositions?
6.Key Activities: What uniquely strategic things does the business do to deliver its proposition?
7.Key Resources: What unique strategic assets must the business have to compete?
8.Key Partnerships: What can the company not do so it can focus on its Key Activities?
9.Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?
Why You Need a Business Model Canvas?

• The BMC provides a quick overview of the business model and is devoid
of the unnecessary details compared to the traditional business plan.
• The visual nature of the business model canvas makes it easier to refer to
and understand by anyone.
• It’s easier to edit and it can be easily shared with employees and
stakeholders.
• The business model canvas can be used by large corporations as well as
startups with just a few employees.
• It clarifies how different aspects of the business are related to each other.
 Customer segments

• Segmenting your customers

based on similarities such as
geographical area, gender,
age, behaviors, interests, etc.
gives you the opportunity to
better serve their needs,
specifically by customizing the
solution you are providing
them.
• After a thorough analysis of
your customer segments, you
can determine who you should
serve and ignore.
• Then create customer
personas for each of the
selected customer segments.
 There are different customer segments a business model can target and they are;
• 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.
• Niche market:
• Here the focus is centered on a specific group of people with unique needs and traits. Here the
value propositions, 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.
• Diversified:
• A diversified market segment includes customers with very different needs.
• 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.

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 Customer relationships
In this section, you need to establish the type of relationship you will have with each of
your customer segments or how you will interact with them throughout their journey with
your company.
There are several types of customer relationships
• Personal assistance: you interact with the customer in person or by email, through phone
call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an
individual customer.
• 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 customers can help each other solve
their own problems with regard to the product or service.
• 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.
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 Channels

• This block is to describe how your company will communicate with and reach
out to your customers. Channels are the touchpoints that let your customers
connect with your company.
• Channels play a role in raising awareness of your product or service among
customers and delivering your value propositions to them.
• Channels can also be used to allow customers the avenue to buy products or
services and offer post-purchase support.
There are two types of channels
• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

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 Key Activities

• What 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 model work.
• These key activities should focus on fulfilling its value proposition, reaching
customer segments and maintaining customer relationships, and generating revenue.
• There are 3 categories of key activities;
• Production: designing, manufacturing and delivering a product in significant
quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft
provides a reliable operating system to support third-party software products.

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 Key Resources

This is where you list down which key resources or the main inputs you
need to carry out your key activities in order to create your value
proposition.
There are several types of key resources and they are
• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

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 Key Partners

• Key partners are the external companies or suppliers that will help you
carry out your key activities. These partnerships are forged in oder to
reduce risks and acquire resources.
• Types of partnerships are
• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

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 Cost structure

• In this block, you identify all the costs associated with operating your
business model.
• You’ll need to focus on evaluating the cost of creating and delivering
your value propositions, creating revenue streams, and maintaining
customer relationships. And this will be easier to do so once you have
defined your key resources, activities, and partners.
• Businesses can either be cost-driven (focuses on minimizing costs
whenever possible) and value-driven (focuses on providing maximum
value to the customer).

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 Value propositions

• This is the building block that is at the heart of the business model
canvas. And it represents your unique solution (product or service) for
a problem faced by a customer segment, or that creates value for the
customer segment.
• A value proposition 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.

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 Value propositions can be
either quantitative (price and
speed of service) or qualitative
(customer experience or
design).

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