Pt. 1 - Module 4: Building Business Model

Peter Ducker

Who said that “A business model is supposed to answer, who your customer is, what value you can create/add for the customer and how you can do that at reasonable cost?

Business model

A *_________* is supposed to answer

* who your customer is.
* what *value you can create/add for the customer?*
* *and* ***how you can do that at a reasonable cost.***

Business model

*In a simple definition,* it is the *foundation of the company’s*

* *core value proposition*
* *targeting customers*
* *key resources, and*
* *assumed revenue streams, it offers a framework for success and overcoming success*

*Alexander Osterwalder*

In his early book “Business Model Ontology” the *Business Model Canvas* consisting of __nine segments__ for its building blocks.

one-page canvas

This *business model* *can be written in a* ______________

1. Manufacturer
2. Distributor
3. Retailer
4. Franchise
5. Brick and mortar
6. Brick and click
7. Direct sales
8. high touch
9. family owned

9 Types of Business Models

Manufacturer

Under the ^^**TYPES OF BUSINESS MODEL:**^^

– a ***person or registered company*** which makes finished products from raw materials in an effort to make a profit.

Distributor

Under the ^^**TYPES OF BUSINESS MODEL:**^^

an ***entity or company*** that purchases __noncompeting products or product lines__, stores them in warehouses and *r**esells them to retailers* *or directly to the customers*

Retailer

Under the ^^**TYPES OF BUSINESS MODEL:**^^

– a ***person or business*** that __purchase goods__ from the ***wholesaler*** *or* *directly from the manufacture*r.

Franchise

Under the ^^**TYPES OF BUSINESS MODEL:**^^

– can be a ***manufacturer, distributor, or retailer***\*.\*

Brick-and-mortar

Under the ^^**TYPES OF BUSINESS MODEL**^^:

this model refers to the ***old-fashioned street-side*** **business** that __sells products and services__ to *its* @@*customers face-to-face in an office* or *stores*@@ that the business owns a rents.

Bricks-and-clicks

Under the ^^**TYPES OF BUSINESS MODEL:**^^

– *combining* __**online**__ **and** __**physical presence**__**.**

Direct Sales



 

Under the ^^**TYPES OF**^^ ^^**BUSINESS MODEL:**^^

– In this model, the ***products*** are @@__directly sold to customers__.@@

High Touch

Under the ^^**TYPES OF BUSINESS MODE**^^L:

this model ***uses a lot*** **of** __human interaction and involvement__ in order to the experience highly personalized.  They operate on %%trust and credibility%% to __earn revenues__.

Family owned

Under the ^^**TYPES OF BUSINESS MODEL:**^^

– ***owned and operated*** by family.  Decision making are controlled by family members.

Franchise

1) This ***Basic Types of the Modern Business Model*** *is* **buying**

**an existing business** to license to operate

High touch

2) This ***Basic Types of the Modern Business Model*** *is the* Service

industry. Consumer interacts more w/ service

Nickel & Dime

\

3) This ***Basic Types of the Modern Business Model*** *is* **Offering**

**at lowest price**

Freemium

4) This ***Basic Types of the Modern Business Model*** *is* Availing

products at free but if you want premium you will pay

Subscription

5) This ***Basic Types of the Modern Business Model*** *is* You have to pay a fixed amount to the service being delivered

Aggregator

6) This ***Basic Types of the Modern Business Model*** *is*

Middle man (ex.food panda, grab, Airbnb)



 

One service provider

Online Market Place

7) This ***Basic Types of the Modern Business Model*** *is* @@availing products at online shop@@

Hidden Revenue

8) This ***Basic Types of the Modern Business Model*** *is*

When we though it’s free but companies/other business earn revenue (ex. Youtube)

Data licensing/Data Selling

9) This ***Basic Types of the Modern Business Model*** *is*



\-selling data of specific group or anything



 

-Task to search a characteristic

Agency based

10) This ***Basic Types of the Modern Business Model*** *is an* Agency

that provide people you need

\

Affiliate marketing

11) This ***Basic Types of the Modern Business Model*** *is*



No one sells commission



 

If earning money through the link you gave

Dropshipping

12. This ***Basic Types of the Modern Business Model*** *is to* Receive payment, no shipment

\
* a business model that ***allows you to sell products online*** ==__**without having to own or operate the physical location**__== where those products are stored and processed

Network marketing

\
This ***Basic Types of the Modern Business Model*** *is*

* One of the most misunderstood
* When there is no product involve/value exchange, there is no business (scam)
* Your %%***product is available in different market***%%

Crowdsourcing

14. This @@***Basic Types of the Modern Business Model***@@ *is* Searching

__how much people are willing__ ***to buy your product***

Blockchain

15. This @@***Basic Types of the Modern Business Model***@@ *is having* __**No**__

__**actual ownership**__ but *your investing online*

low touch

16. This @@***Basic Types of the Modern Business Model***@@ *is* Doing

self service- customers do all the service themselves

Razor & blade

17. This @@***Basic Types of the Modern Business Model***@@ *is*

No product can function without the other (complementary product)

Ex: Printer & ink

Consulting

18. This @@**Basic Types of the Modern Business Model**@@ *is*

Paying for consultation service

Social enterprise

19. @@**This Basic Types of the Modern Business Model**@@ *is* Helping

those who doesn’t have enough in the community

1. Infrastructure
2. Offering
3. Customer
4. Finance

*4 Major Parts of Business Model Canvas*

1. key partners
2. key activities
3. key resources

There are 3 parts include in __infrastructure__- in %%4 MAJOR PARTS OF BUSINESS MODEL CANVAS%%

Value proposition

What does the BMC offer?

1. Customer Relationships
2. Customer Segments
3. Channels

There are 3 parts of customers in %%**4 MAJOR PARTS OF BUSINESS MODEL CANVAS**%%

1.Cost structure


2. Revenue Streams

There are 2 parts of finance in %%**4 MAJOR PARTS OF BUSINESS MODEL CANVAS**%%

KEY PARTNERS

In the ^^***parts of Business Model***^^, they are described as ***the network of suppliers and partners*** that may %%provide the business model **more effective**%%

1. Strategic alliances


2. Coopetition
3. Joint ventures
4. Buyer-supplier relationship

4 Types of partnership UNDER KEY PARTNERS

Strategic alliances

   This partnership is an arrangement bet***ween*** non-competitors __to help each other__.

         Coopetition  

This is an arrangement between competitors __to help share the risk__ that these companies may take.

*Joint-ventures*

This partnership is an arrangement bet***ween*** @@**two or more businesses**@@ ***pooling their resources and expertise*** to %%__achieve a particular goal.__%%

*Buyer-supplier relationships*

The __most usual__ type of partnerships

KEY ACTIVITIES

In the ^^**parts of the Business Model**^^, they are described

The @@***most essential activities***@@ %%***in achieving a company’s value proposition***%% and operating successfully.

1. Marketing
2. Sales
3. Design
4. Operations
5. Distribution
6. Customer experience

6 Categories of Key activities

Marketing

This %%Category of Key activities%% is described to be

__adding value__ by ==***promoting the products***==

Sales

This %%Category of Key activities%% concerns ==***selling a product***==

Design

This %%Category of Key activities%% is about ==***forming designs of various items***==

Operations

This %%Category of Key activities%% is about

==**manufacturing of** __**goods**__ **and delivery** of __services__==

Distribution

This %%Category of Key activities%% is about

__**reaching out**__ to ==***customers to sell and deliver***==

Customer Experience

This %%Category of Key activities%% is about

***customer service, consulting and customer support***

KEY RESOURCES

In the ^^***parts of Business Model***^^, they are described as

the ==***most important assets required***== __to make a business model work.__ 

1. Physical
2. Intellectual
3. Human
4. Financial

4 Categories of KEY RESOURCES

Physical

This %%Category of ***KEY RESOURCES***%% are __**physical assets**__ ==which are __considered tangible resources__== that a company make use to form its __***value proposition***__

 *Intellectual*

This %%Category of ***KEY RESOURCES***%% are ==__**non-physical, intangible resources**__== such as

* *brand*
* *patents*
* *proprietary knowledge*
* *copy rights and partnerships*.

Human

This %%Category of ***KEY RESOURCES***%% is the ==__**biggest and most vital resources**__== of any company but are __often overlooked__.

Financial

This %%Category of ***KEY RESOURCES***%% *r*epresents __money management__ and the ==***process of acquiring needed funds***==

CUSTOMER VALUE PROPOSITION

In the ^^**parts of the Business Model**^^, It is ==***a businesses’ way of generating value***== in their *product or service* when targeting potential customers.

value proposition

A *_____________* is a statement consisting of the reason/s some should do business with the company.

1. Functional Value
2. Emotional Value
3. Economic Value
4. Symbolic Value

4 Factors in Value Proposition

*Functional Value*

***4 Factors in Value Proposition***:

– the %%***product offers the solution***%% to a *particular problem*.

Emotional Value

***4 Factors in Value Proposition***:



*–* %%***the product is pleasant to look at***%% or %%***attractive.***%%

Economic value

***4 Factors in Value Proposition***:

*-*  the %%***product offers a financial advantage***%%, ***promotes energy conservation, saves time or is innovative***

Symbolic Value

***4 Factors in Value Proposition***:



*–* for customers __***the product*** ==**is valuable**==__ ==because of a certain type of status== given to the customer.  

CUSTOMER RELATIONSHIPS

In the ^^**parts of the Business Model**^^, ==***these are types of relationship a company forms***== with its __***particular customer segments*****.**__

1. Personal assistance
2. Dedicated personal assistance
3. Self-service
4. Automated services
5. Communities
6. Co-creation

6 Types of Customer Relationships

*Personal assistance*

6 Types of Customer Relationships

\-founded on ==***human collaboration***==, the ***customer*** can __communicate with a__ %%***real sales person***%%

Dedicated personal assistance

6 Types of Customer Relationships

*–* the ==**deepest and most intimate relationship**== that ***involves assigning a salesperson*** to an __individual customer__.

Self-service

6 Types of Customer Relationships

*–* there is ==__no direct relationship__== , although the essential things to assist customers help themselves are given

Automated services

6 Types of Customer Relationships



*–* **combination of** ==*customer self-service*== and ==*automated processes*==*.*

 Communities

6 Types of Customer Relationships

*–* can be **used by the companies** to be ==***more close and connected***== with their %%current and potential customers%%

Co-creation

6 Types of Customer Relationships

*-*  extension of *the* %%***traditional customer-vendor relationships***%%

Customer Segments

In the ^^*parts of Business Model*^^, they are referred to ==__***demographics*** **such as** ***age, ethnicity, profession and/or gender*****; or** ***psychog***__==**raphi**c factors which include ***spending behavior, interests, and motivations***.

1. Mass
2. Niche
3. Segmented
4. Diversified
5. Multi-sided platforms

5 types of customer segments

Mass

5 types of customer segments

*–* an ==unsegmented market== in which ***products*** __with mass appeal products__ are __offered to every customers__.

\
\-The ***customer value proposition*** for this segment must be for a bi number of people %%__who has similar problem or need requirements__.%%

\
Ex: Soft drinks

Niche

5 types of customer segments:

this market ==**speaks for a customer segment**== with __*very distinct characteristics*__ *and* __*extremely specific needs*________.__



            Ex. Automobile parts

Niche

5 types of customer segments

This segment needs a ==**highly customized products,**== custom made to fit their needs.

*Segmented*

5 types of customer segments



%%this customer segments%% have ***very small differences*** in their need requirements.

\
In this segment, ***the company forms*** ==**various customer value propositions**== based on these small differences in the customer segments

Diversified

– *these* %%*customer segments*%% have __very diverse needs and wants__.  One of the diversified companies in the Philippines is San Miguel Corporation.

*Multi-sided platforms*

5 types of customer segments



this *type of customer segment* is ==**used when customer segments are** __**reliant with each other**__**,**== which makes it necessity to serve both sides of balances.



            - Example, credit cards.

CHANNELS

In the ^^*parts of Business Model*^^,

ü  These are __**touchpoints**__ through which ^^***a company communicates with its***^^ ==__*target customers*____.__==

1. Awareness
2. Evaluation
3. Purchase
4. Delivery
5. After sales

5 phases that a channel is appropriate

*Awareness*

***5 phases that a channel is appropriate:***

– the ==***marketing and advertising phase***==

*Evaluation*

5 phases that a channel is appropriate

\
**in this phase,** ==t*he customer evaluates*==, rad about or uses the product in order to formulate an honest opinion about it.

Purchase

5 phases that a channel is appropriate



*–* **the phase of** ==*actual sales process*.==

Delivery

5 phases that a channel is appropriate



also known as %%__***the fulfillment stage of the process*****,**__%% this is ==the phase==

==when the __***promised value proposition***__== __has reached the customers__.

After Sales

5 phases that a channel is appropriate

– this ***phase centers*** in ==***giving customer care and support***== after purchase

1. Direct channels
2. Indirect channels

2 Different channels

Direct channels

2 Different channels

are those that the __entrepreneurs__ ==__owns or has control over__.==

Indirect channel

2 Different channels

\-also known as ***partner channels***, the company make ==**use of intermediary and places its products or makes the service**== obtainable at the partner store. 

\-***Wholesalers*** are considered %%partner channels%%.

COST STRUCTURE

In the ^^*parts of Business Model*^^,

is ==**one of the building blocks of a business model**==.

It represents how companies spend most of their resources to keep generating demand for their products and services.

COST STRUCTURE

The ___________ together with revenue streams, help assess the ==__**operational scalability of an organization.**__==

REVENUE STREAMS

In the ^^*parts of Business Model*^^, represent the ways your company ==__**generates cash from each**__== %%Customer Segment.%%

*THE VALUE PROPOSITION CANVAS*

was initially developed by Dr. Alexander Osterwalder as a framework to __***ensure that there is a fit*** __%%*between the product and market*.%%

customer segments and value propositions

2 parts of the Osterwalder’s broader Business Model Canvas

THE VALUE PROPOSITION CANVAS

__________ can be used when there is %%***need to refine an existing product or service offering***%% *or where a* __*new offering*__ *is being* ==*developed from scratch*==*.*

THE VALUE PROPOSITION CANVAS

It is a %%geometrical collag%%e *formed by the* __*customer segment canvas*__ __and the__ __*value proposition template*__*.*

\
\

1. The Circle-Customer profile
2. The Square- Value proposition

2 types of VALUE PROPOSITION CANVAS