Pt. 1 - Module 4: Building Business Model

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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?

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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.

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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

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Alexander Osterwalder

In his early book “Business Model Ontology” the Business Model Canvas consisting of nine segments for its building blocks.

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one-page canvas

This business model can be written in a ______________

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  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

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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.

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Distributor

Under the TYPES OF BUSINESS MODEL:

an entity or company that purchases noncompeting products or product lines, stores them in warehouses and resells them to retailers or directly to the customers

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Retailer

Under the TYPES OF BUSINESS MODEL:

– a person or business that purchase goods from the wholesaler or directly from the manufacturer.

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Franchise

Under the TYPES OF BUSINESS MODEL:

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

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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.

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Bricks-and-clicks

Under the TYPES OF BUSINESS MODEL:

combining online and physical presence.

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Direct Sales

Under the TYPES OF BUSINESS MODEL:

– In this model, the products are directly sold to customers.

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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.

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Family owned

Under the TYPES OF BUSINESS MODEL:

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

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Franchise

  1. This Basic Types of the Modern Business Model is buying

an existing business to license to operate

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High touch

  1. This Basic Types of the Modern Business Model is the Service

industry. Consumer interacts more w/ service

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Nickel & Dime

  1. This Basic Types of the Modern Business Model is Offering

at lowest price

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Freemium

  1. This Basic Types of the Modern Business Model is Availing

products at free but if you want premium you will pay

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Subscription

  1. This Basic Types of the Modern Business Model is You have to pay a fixed amount to the service being delivered

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Aggregator

  1. This Basic Types of the Modern Business Model is

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

One service provider

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Online Market Place

  1. This Basic Types of the Modern Business Model is availing products at online shop

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Hidden Revenue

  1. This Basic Types of the Modern Business Model is

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

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Data licensing/Data Selling

  1. This Basic Types of the Modern Business Model is

-selling data of specific group or anything

-Task to search a characteristic

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Agency based

  1. This Basic Types of the Modern Business Model is an Agency

that provide people you need

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Affiliate marketing

  1. This Basic Types of the Modern Business Model is

No one sells commission

If earning money through the link you gave

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Dropshipping

  1. 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

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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

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Crowdsourcing

  1. This Basic Types of the Modern Business Model is Searching

how much people are willing to buy your product

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Blockchain

  1. This Basic Types of the Modern Business Model is having No

actual ownership but your investing online

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low touch

  1. This Basic Types of the Modern Business Model is Doing

self service- customers do all the service themselves

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Razor & blade

  1. This Basic Types of the Modern Business Model is

No product can function without the other (complementary product)

Ex: Printer & ink

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Consulting

  1. This Basic Types of the Modern Business Model is

Paying for consultation service

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Social enterprise

  1. This Basic Types of the Modern Business Model is Helping

those who doesn’t have enough in the community

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  1. Infrastructure

  2. Offering

  3. Customer

  4. Finance

4 Major Parts of Business Model Canvas

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  1. key partners

  2. key activities

  3. key resources

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

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Value proposition

What does the BMC offer?

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  1. Customer Relationships

  2. Customer Segments

  3. Channels

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

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1.Cost structure

  1. Revenue Streams

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

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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

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  1. Strategic alliances

  2. Coopetition

  3. Joint ventures

  4. Buyer-supplier relationship

4 Types of partnership UNDER KEY PARTNERS

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Strategic alliances

This partnership is an arrangement between non-competitors to help each other.

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Coopetition

This is an arrangement between competitors to help share the risk that these companies may take.

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Joint-ventures

This partnership is an arrangement between two or more businesses pooling their resources and expertise to achieve a particular goal.

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Buyer-supplier relationships

The most usual type of partnerships

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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.

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  1. Marketing

  2. Sales

  3. Design

  4. Operations

  5. Distribution

  6. Customer experience

6 Categories of Key activities

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Marketing

This Category of Key activities is described to be

adding value by promoting the products

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Sales

This Category of Key activities concerns selling a product

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Design

This Category of Key activities is about forming designs of various items

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Operations

This Category of Key activities is about

manufacturing of goods and delivery of services

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Distribution

This Category of Key activities is about

reaching out to customers to sell and deliver

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Customer Experience

This Category of Key activities is about

customer service, consulting and customer support

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KEY RESOURCES

In the parts of Business Model, they are described as

the most important assets required to make a business model work.

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  1. Physical

  2. Intellectual

  3. Human

  4. Financial

4 Categories of KEY RESOURCES

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Physical

This Category of KEY RESOURCES are physical assets which are considered tangible resources that a company make use to form its value proposition

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Intellectual

This Category of KEY RESOURCES are non-physical, intangible resources such as

  • brand

  • patents

  • proprietary knowledge

  • copy rights and partnerships.

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Human

This Category of KEY RESOURCES is the biggest and most vital resources of any company but are often overlooked.

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Financial

This Category of KEY RESOURCES represents money management and the process of acquiring needed funds

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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.

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value proposition

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

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  1. Functional Value

  2. Emotional Value

  3. Economic Value

  4. Symbolic Value

4 Factors in Value Proposition

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Functional Value

4 Factors in Value Proposition:

– the product offers the solution to a particular problem.

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Emotional Value

4 Factors in Value Proposition:

the product is pleasant to look at or attractive.

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Economic value

4 Factors in Value Proposition:

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

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Symbolic Value

4 Factors in Value Proposition:

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

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CUSTOMER RELATIONSHIPS

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

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  1. Personal assistance

  2. Dedicated personal assistance

  3. Self-service

  4. Automated services

  5. Communities

  6. Co-creation

6 Types of Customer Relationships

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Personal assistance

6 Types of Customer Relationships

-founded on human collaboration, the customer can communicate with a real sales person

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Dedicated personal assistance

6 Types of Customer Relationships

the deepest and most intimate relationship that involves assigning a salesperson to an individual customer.

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Self-service

6 Types of Customer Relationships

there is no direct relationship , although the essential things to assist customers help themselves are given

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Automated services

6 Types of Customer Relationships

combination of customer self-service and automated processes.

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Communities

6 Types of Customer Relationships

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

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Co-creation

6 Types of Customer Relationships

-  extension of the traditional customer-vendor relationships

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Customer Segments

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

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  1. Mass

  2. Niche

  3. Segmented

  4. Diversified

  5. Multi-sided platforms

5 types of customer segments

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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

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Niche

5 types of customer segments:

this market speaks for a customer segment with very distinct characteristics and extremely specific needs____.

Ex. Automobile parts

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Niche

5 types of customer segments

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

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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

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Diversified

these customer segments have very diverse needs and wants.  One of the diversified companies in the Philippines is San Miguel Corporation.

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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.

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CHANNELS

In the parts of Business Model,

ü  These are touchpoints through which a company communicates with its target customers____.

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  1. Awareness

  2. Evaluation

  3. Purchase

  4. Delivery

  5. After sales

5 phases that a channel is appropriate

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Awareness

5 phases that a channel is appropriate:

– the marketing and advertising phase

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Evaluation

5 phases that a channel is appropriate

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

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Purchase

5 phases that a channel is appropriate

the phase of actual sales process.

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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.

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After Sales

5 phases that a channel is appropriate

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

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  1. Direct channels

  2. Indirect channels

2 Different channels

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Direct channels

2 Different channels

are those that the entrepreneurs owns or has control over.

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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.

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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.

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COST STRUCTURE

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

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REVENUE STREAMS

In the parts of Business Model, represent the ways your company generates cash from each Customer Segment.

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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.

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customer segments and value propositions

2 parts of the Osterwalder’s broader Business Model Canvas

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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.

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THE VALUE PROPOSITION CANVAS

It is a geometrical collage formed by the customer segment canvas and the value proposition template.

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  1. The Circle-Customer profile

  2. The Square- Value proposition

2 types of VALUE PROPOSITION CANVAS

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