CHAPTER 10

MBK00103

Intro to Business
Model Canvas

WAN MARJAN BINTI WAN ABDULLAH

 INTRODUCTION
 Business Model Canvas (BMC), introduced by Osterwalder (2008) is a method of analyzing,
designing, strategizing and testing a business model based on nine business areas. The
strategies are put up on a board so that the entire model can be seen at once.

This will allow the entrepreneur to understand each of the strategies and relate it easily to the
other strategies on display.

 The Business Model Canvas is a canvas or a chart which includes at least nine areas or
elements in a business model, including:
1. Customer segments 4. Customer relationships 7. Key resources
2. Firm's value propositions 5. Key partners 8. Cost structure
3. Marketing channels 6. Key activities 9. Revenue streams
1. CUSTOMER SEGMENTS
WHO DO YOU
HELP??

Customer segment

Customer segments refer to the target people and/or organizations you are offering value
proposition. they can be divided into groups of individuals or organizations that have similar
demographics, psychographics, behaviour, geographical characteristics or other
multidimensional combinations.
2. FIRM'S VALUE PROPOSITIONS WHO DO YOU do??

 A company’s value proposition is what distinguishes itself from its competitors. Value is Value proposition
provided through various elements such as newness, performance, customization,
reliability in getting the job done, design, brand, price, cost reduction, risk reduction,
accessibility, and convenience.
 The value propositions may be quantitative, e.g. price and efficiency; or qualitative, e.g.
overall customer experience and outcome me.
 The following are examples of value proposition concepts and techniques:
a) Unique Selling Proposition (USP)
b) Unique Value Proposition (UVP)
c) Feature-Advantage-Benefit (FAB)
d) Points of Parity-Points of Difference (POP-POD)
(a) Unique Selling Proposition (USP)
USP is often considered synonymous with value proposition (especially in relation to copywriting), but it
only focuses on what makes a product better than the competition.
(b) Unique Value Proposition (UVP)
UVP has a strong focus on uniqueness, which makes it less useful for the general market but it is useful to
specific target market due to its unique features. Besides that, some value propositions involve innovative
technology. Some simply deliver better service.
Others are a mix of better goods and services. Indeed, there are many different types, some of which are
quantifiable, e.g. price, speed of service; and some of which remain qualitative, e.g. design, status,
customer experience.
(C) Feature-Advantage-Benefit (FAB)
FAB is a process that helps an entrepreneur figure out what each
of the products features means to customers, which enables the
entrepreneur to address their concerns, desires, wants, and needs.
Start by listing the product's features, then consider the
advantages it creates (e.g. a knife that would not corrode).
Finally turn that into the practical benefit (e.g. there is no need to
buy a new knife every year).
(d) Points of Parity-Points of Difference (POP-POD)
POP-POD is a process used to find differentiating factors between businesses. Start by finding points of
parity-the factors in common with competitors, then find the points of difference-the business aspects that is
different to competitors.
3) MARKETING CHANNELS WHO DO YOU reach
them??
 A company can deliver its value proposition to its targeted customers through different channels.
Effective channels will distribute company's value proposition in ways that are fast, efficient
Distribution channels
and cost-effective.
 An organization can reach clients either through its own channels (store front), partner channels
(major distributors), or a combination of both.
 The first decision to be made when trying to sell products or services to the target market is whether to sell
directly to that target market, or to use intermediary services.
 Selling directly to the target market is known as direct marketing. This is done without any intermediary.
The most common methods of direct marketing include direct selling, internet marketing and catalogues.
 Although direct marketing involves a simple and straightforward process, it does not always move goods
from producers to consumers efficiently, due to the lack of expertise, experience and economies of scale.
In order to be more efficient, many companies rely on marketing intermediaries to market
their products.
Multi-channel
marketing means you’re
leveraging multiple
channels, particularly
the channels that your
customers use the most.

In practice, it’s about

meeting your audience
where they live whether
that’s on social media, a
mobile app, in their
email inboxes, over SMS,
or on the phone.
4. CUSTOMER RELATIONSHIPS
How do you interact??

Customer relationships
5 phases of customer relationship

1. Pull
2. Can
3. Service
4. Permanent
5. Develop
Customer relationships are the types of relationships a company establishes with specific customer
Segments. Customer relationships may be driven by one or more of these three motivations:

(a) Customer acquisition

Customer acquisition is the process of bringing new customers or clients to your business.
The goal of this process is to create a systematic, sustainable acquisition strategy that can
evolve with new trends and changes.

(b) Customer retention

The customer retention definition in marketing is the process of engaging existing customers to
continue buying products or services from your business.
 (c) Increased sales (upscaling)
Basic steps to increase sales volume and build brand value at the same time:
(a) Pile on the benefits
Offer customers an opportunity to save time and save money, and sales will increase. Offer them multiple
opportunities to do both and sales will soar dramatically. For example, structure the sales message to stress both the
time-saving and money-saving benefits of the product or service. Then, include a discount price offer if customers buy before
a certain deadline. Finally figure out how to deliver all or some of what has been bought immediately.

b) Make buying easy

Look for ways that can make the buying process easier and faster. For example, design the selling procedure so
that customers do not have to make unnecessary decisions. Every decision they have to make interrupts the buying process and
diverts their attention away from completing the sale. Follow up after the sale with a personalized "thank you“
message and include a brief request for the information.

(c) Follow up
Selling is not a one-step process. Most people do not buy something the first time they see or hear about it.
Salvage many of these potential customers with an effective follow-up system, which in turn builds a supportive
relationship that gains trust and eventually the sale. Make sure there is a way to get contact details (i.e. phone number/email
address, etc.) for the website visitors. For example, offer customers a complimentary special report or other useful
information delivered only by email.
5. REVENUE STREAMS HOW MUCH WILL
YOU MAKE??
Venue streams represent the cash a company generates from each customer/product
segment. An entrepreneur will have to strategize and modify his products and services to
create attractive values for target customers. An entrepreneur may explore additional REVENUE STREAM
revenue streams through export markets or online marketing, or for example, lease idle
assets to generate additional revenue.
6. KEY RESOURCES
What do you need??
 Key resources are the most important assets needed to make a business model work. Every
business model requires them, and it is only through them that companies generate value
Key resources
propositions and revenues.
 Key resources can be physical, financial, intellectual, or human. A microchip manufacturer
needs capital-intensive production facilities, whereas a microchip designer depends more on
human resources.
 Key resources can be owned or leased by the company, or acquired from key partners.
 They can be categorized as the following:
(a) Physical
Examples include manufacturing facilities, buildings, vehicles, machines,
systems, point-of sales systems, and distribution networks. Large retailers like
Tesco and Kamdar rely heavily on physical resources, which are often
capital-intensive.
7. KEY ACTIVITIES HOW DO YOU DO
 Key activities are any activities that your business is engaged in for the primary purpose IT??
of making a profit. Business activities include operations, marketing, production,
problem-solving, and administration. Key ACTIVITIES
 Key activities are activities that a company must do in order to make its business model
work.
 For example, at a computer software company, the key activities include software
development and marketing. A consultancy company will concentrate on problem
solving.
 Key activities are important in any business building block. These activities will depend
on the nature of the business as seen below:
8. KEY PARTNERS WHO WILL HELP
YOU??
Key partners are the network of suppliers and partners that make the business model work.
Companies forge partnerships to optimize business models, reduce risk, and acquire resources .
KEY PARTNERS
Partners' motivation factors:
(a) Optimization and economy of scale
A Smart partnership between partners may provide opportunities for optimization and economy of
scale in managing resources and activities.

(b) Reduction of risk and uncertainty

A strategic alliance and co-operative approach between partners may provide a platform to work out a
solution that can reduce costs, risk and uncertainty in a 'win-win manner.

(c) Extending company reach through alliance with strategic partners

Companies extend their own capabilities by relying on other firms to furnish particular resources or
perform certain activities. Resources may include knowledge, licenses, or access to customers. A
mobile phone manufacturer may license an operating system for its equipment rather than developing one in-
house. An insurer may find it better to rely on the competition of independent brokers to sell its
policies rather than develop its own sales force
 (b) Intellectual
Examples include brands, proprietary knowledge, patents and copyrights, partnerships, and customer
databases. All are increasingly important components of a strong business model. Intellectual
resources take time to engender and develop. Consumer goods companies, such as Nike and Sony, rely
heavily on their brands. Qualcomm, a supplier of chipsets for broadband mobile devices, built its
business model around patented microchip designs that now earn the company substantial licensing fees.

(c) Human
All enterprises need human resources, but those resources are particularly prominent in knowledge-
intensive and creative industries. A pharmaceutical company relies heavily on human resources-
skilled scientists and an aggressive sales force.

(d) Financial
Some business models depend heavily on financial resources and/or guarantees, such as cash, lines of
credit, or a stock option pool for hiring key employees. For example, Ericsson, the telecom equipment
manufacturer, will opt to borrow funds from banks and capital markets, and use the funds to provide
vendor financing that in turn ensures orders are placed with Ericsson rather than with competition.
9. COST STRUCTURE WHAT WILL IT
 The entrepreneur should strategize the best and appropriate cost structure to suit the COST??
project concept. The opted cost structured model will have to be aligned with the other
activities in the business model to match the total products and services concept offered to COST STRUCTURE
customers. For example, the AirAsia model is a low-cost model where customers are
charged for products and service items that they choose when they purchase their ticket.
Customers can choose to have food in-flight, or select their seats, and will pay
accordingly.
 The cost structure for an online business model will be different from traditional sales
outlets. An entrepreneur may also opt for outsourcing strategies where products are
outsourced totally or only a certain component is outsourced to local or international
suppliers. This strategy may provide cost and quality advantages and reduce operational
and financial risks. Many international fashion brands outsource production to
manufacturers like Indonesia, Vietnam and China, where labour costs are c
onsiderably lower.
THANK YOU