Canvas Flashcards
Definition of a Business model
A business model describes the rationale of how an organization creates, delivers, and captures value
The 9 Building Blocks of a Business Model
1.Customer Segments 2.Value Propositions 3. Channels 4.Customers Relationship 5.Revenue Streams 6.Key Resources 7.Key Activities 8.Key Partners 9.Cost Structure
What is the definition of “The Customer Segments”?
different groups of people or organizations an enterprise aims to reach and serve
What should be considered as the heart of business model?
Customer
what may a company do in order to better satisfy customers?
a company may group them into distinct segments with common needs, common behaviors, or other attributes
The first thing needs to be decided after the segmentation of customers
An organization must make a conscious decision about which segments to serve and which segments to ignore
Customer groups represent separate segments if … (5 requirement)?
• Their needs require and justify a distinct offer • They are reached through different Distribution Channels • They require different types of relationships • They have substantially different profitabilities • They are willing to pay for different aspects of the offer
5 examples of different types of Customer Segments
Mass market Niche market Segmented Diversified Multi-sided platforms (or multi-sided markets)
how do business models focused on mass markets do the segmentation?
Business models focused on mass markets don’t distinguish between different Customer Segments. The Value Propositions, Distribution Channels, and Customer Relationships all focus on one large group of customers with broadly similar needs and problems
in which market sector mass market is found?
This type of business model is often found in the consumer electronics sector.
how do business models focused on niche markets do the segmentation?
Business models targeting niche markets cater to specific, specialized Customer Segments. The Value Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific requirements of a niche market.
in which niche sector mass market is found? +Example
Such business models are often found in supplier-buyer relationships. For example, many car part manufacturers depend heavily on purchases from major automobile manufacturers.
how do business models focused on segmented markets do the segmentation?
Some business models distinguish between market segments with slightly different needs and problems.
Some examples of segmented markets Name 2
The retail arm of a bank like Credit Suisse, for example, may distinguish between a large group of customers, each possessing assets of up to U.S. $100,000, and a smaller group of affluent clients, each of whose net worth exceeds U.S. $500,000. Both segments have similar but varying needs and problems Micro Precision Systems, which specializes in providing outsourced micro-mechanical design and manufacturing solutions. It serves three different Customer Segments—the watch industry, the medical industry, and the industrial automation sector
How does an organization with a diversified customer business model behave ?
An organization with a diversified customer business model serves two unrelated Customer Segments with very different needs and problems.
An example that indicates the way “diversified” segmentation works.
in 2006 Amazon.com decided to diversify its retail business by selling “cloud computing” services: online storage space and on-demand server usage. Thus it started catering to a totally diΩerent Customer Segment—Web companies—with a totally diΩerent Value Proposition. The strategic rationale behind this diversification can be found in Amazon.com’s powerful IT infrastructure, which can be shared by its retail sales operations and the new cloud computing service unit.
Multi-sided platforms (or multi-sided markets) Explanation
Some organizations serve two or more interdependent Customer Segments.
Multi-sided platforms (or multi-sided markets) Examples
A credit card company, for example, needs a large base of credit card holders and a large base of merchants who accept those credit cards. An enterprise offering a free newspaper needs a large reader base to attract advertisers. On the other hand, it also needs advertisers to finance production and distribution. Both segments are required to make the business model work .
What is the definition of “value proposition”?
The bundle of products and services that create value for a specific Customer Segment.
what are 2 different aspects of value proposition?
Some Value Propositions may be innovative and represent a new or disruptive offer. Others may be similar to existing market offers, but with added features and attributes.
A value may be …. or …..
Values may be Quantitative : Price, Speed of service or/Qualitative : Design, Customer experience.
Elements which can contribute to customer value creation Name 11
1.Newness 2.Performance 3.Customization 4.”Getting the job done” 5.Design 6.Brand/status 7.Price 8.Cost Reduction 9.Risk Reduction 10.Accessibility 11.Convenience/Usability
Newness as an value contributor element Which sector has the most relation to this element?
Some Value Propositions satisfy an entirely new set of needs that customers previously didn’t perceive because there was no similar offering. This is often, but not always, technology related.
2 examples of products using newness as an element of value contribution. (relation to tech)
Cell phones, for instance, created a whole new industry around mobile telecommunication. On the other hand, products such as ethical investment funds have little to do with new technology.
Performance as a value contributor element The sector that uses this element?
Improving product or service performance has traditionally been a common way to create value. The PC sector has traditionally relied on this factor by bringing more powerful machines to market.
Some limits of using enhancing performance in order to add or create value.
Improved performance has its limits. In recent years, for example, faster PCs, more disk storage space, and better graphics have failed to produce corresponding growth in customer demand.
Customization as a value contributor element. 2 related concepts
Tailoring products and services to the specific needs of individual customers or Customer Segments creates value. 1. Mass customization 2. Customer co-creation
What is the advantage of using customization as a value element?
This approach allows for customized products and services, while still taking advantage of economies of scale
“Getting the job done” An example to clarify the subject +pros for value producer and customer
Rolls-Royce : its airline customers rely entirely on Rolls-Royce to manufacture and service their jet engines This arrangement allows customers to focus on running their airlines. In return, the airlines pay Rolls-Royce a fee for every hour an engine runs.
Design as a value contributor element A point 2 sectors
Design is an important but difficult element to measure. In the fashion and consumer electronics industries, design can be a particularly important part of the Value Proposition.
Brand/status as a value contributor element +2 Examples
Customers may find value in the simple act of using and displaying a specific brand. Wearing a Rolex watch signifies wealth, for example. On the other end of the spectrum, skateboarders may wear the latest “underground” brands to show that they are “in.”
Price as a value contributor element In which customer segments it may work?
OΩering similar value at a lower price is a common way to satisfy the needs of price-sensitive Customer Segments
2 Examples of price as a value proposition?
No frills airlines, such as Southwest, easyJet, and Ryanair have designed entire business models specifically to enable low cost air travel Nano, a new car designed and manufactured by the Indian conglomerate Tata. Its surprisingly low price makes the automobile Increasingly, free offers are starting to permeate various industries. Free offers range from free newspapers to free e-mail, free mobile phone services, and more
Cost reduction as a value contributor element +An example
Helping customers reduce costs is an important way to create value. Salesforce.com, for example, sells a hosted Customer Relationship management (CRM) application. This relieves buyers from the expense and trouble of having to buy, install, and manage CRM software themselves.
Risk reduction as a value contributor element +An example
Customers value reducing the risks they incur when purchasing products or services. For a used car buyer, a one-year service guarantee reduces the risk of post-purchase breakdowns and repairs
Accessibility as a value contributor element +What accessibility may result from?
Making products and services available to customers who previously lacked access to them is another way to create value. business model innovation, new technologies, or a combination of both
Accessibility as a value contributor element Example
NetJets, for instance, popularized the concept of fractional private jet ownership Using an innovative business model, NetJets offers individuals and corporations access to private jets, a service previously unaffordable to most customers. Mutual funds provide another example of value creation through increased accessibility.
Convenience/usability as a value contributor element Example
Making things more convenient or easier to use can create substantial value. With iPod and iTunes, Apple offered customers unprecedented convenience searching, buying, downloading, and listening to digital music. It now dominates the market.
What is the definition of “Channels”?
How a company communicates with and reaches its Customer Segments to deliver a Value Proposition
Channels are customer ….. that play an important role in the…..
Channels are customer touch points that play an important role in the customer experience
Channels functions in a business (name 5) (5 phases of channels)
• Raising awareness among customers about a company’s products and services. • Helping customers evaluate a company’s Value Proposition • Allowing customers to purchase specific products and services • Delivering a Value Proposition to customers • Providing post-purchase customer support
2 different way of dividing channels
Direct Channels and indirect ones Owned Channels and partner Channels
Two types of owned channels and examples for each type
Owned Channels can be direct, such as an in-house sales force or a Web site, or they can be indirect, such as retail stores owned or operated by the organization
partner channels what do they provide name three options
Partner Channels are indirect and span a whole range of options, such as wholesale distribution, retail, or partner-owned Web sites.
Pros and cons of using partner channels
Partner Channels lead to lower margins, but they allow an organization to expand its reach and benefit from partner strengths.
pros and cons of using owned channels
Owned Channels and particularly direct ones have higher margins, but can be costly to put in place and to operate
Definition of customer relationship
the types of relationships a company establishes with specific Customer Segments
Three motivations for customer relationships
• Customer acquisition • Customer retention • Boosting sales (upselling)
The customer relationship method used by mobile network operator at first….How that changed?
In the early days, for example, mobile network operator Customer Relationships were driven by aggressive acquisition strategies involving free mobile phones. When the market became saturated, operators switched to focusing on customer retention and increasing average revenue per customer.
The customer relationship called for by the company’s business model deeply influences —–
The Customer Relationships called for by a company’s business model deeply influence the overall customer experience.
Name six types of customer relationships
Personal assistance Dedicated personal assistance Self-service Automated services Communities Co-creation
Personal assistance what is this based on explain this type of customer relationship
This relationship is based on human interaction. The customer can communicate with a real customer representative to get help during the sales process or after the purchase is complete
by which means the personal assistance will happen
This may happen onsite at the point of sale, through call centers, by e-mail, or through other means.
dedicated personal assistance how does this work
This relationship involves dedicating a customer representative specifically to an individual client
what are the benefits of doing dedicated personal assistance?
It represents the deepest and most intimate type of relationship and normally develops over a long period of time.
Name an example Dedicated personal assistance
In private banking services, for example, dedicated bankers serve high net worth individuals
what is self service
In this type of relationship, a company maintains no direct relationship with customers. It provides all the necessary means for customers to help themselves.
Name an example for how automated service works +An example
This type of relationship mixes a more sophisticated form of customer self-service with automated processes.For example, personal online profiles give customers access to customized services. Automated services can recognize individual customers and their characteristics, and offer information related to orders or transactions
what can automated service do at its best?
At their best, automated services can simulate a personal relationship (e.g. offering book or movie recommendations).
communities what are the points of using Communities by a company
Increasingly, companies are utilizing user communities to become more involved with customers/prospects and to facilitate connections between community members
Name an example of a pharmaceutical giant which has used community
Pharmaceutical giant GlaxoSmithKline launched a private online community when it introduced alli, a new prescription-free weight-loss product.
what do communities allow users and business owners to do?
communities that allow users to exchange knowledge and solve each other’s problems. Communities can also help companies better understand their customers.
CO-creation what is the position of this type of customer relationships and nowadays market
More companies are going beyond the traditional customer-vendor relationship to co-create value with customers
