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Let's recap everything we've learned about using the business model to expand on our business idea.
Now that we've walked through the business
model and
0:00
all its minute details, let's recap on
what we have learned so far.
0:02
There are nine sections in the traditional
business model canvas,
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plus the one that we inserted in there.
0:10
First up is our value proposition.
0:13
A business's value proposition is our
product or
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service through which we offer value to
our customers.
0:18
We create this value by solving a problem
for
0:22
the customer, or by satisfying a need or
want.
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This is very important.
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Our value proposition can be a mix of
different elements.
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Including newness, performance,
convenience, design, and so on.
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A customer segment is a group of people or
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organizations that you aim to reach and
serve with your value proposition.
0:43
There are different types of customer
segments.
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The main ones we talked about are mass
market,
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niche, segmented, diversified, and
multi-sided markets.
0:53
The goal of this section of the business
model canvass is to get you exploring your
0:58
customer segments, and defining who your
hypothetical customers are.
1:03
Once you have identified the type of
segment, develop your customer
1:08
archetypes to get a better sense of how
you can gear your business model to them.
1:11
Next, we have channels.
1:18
Channels cover three very important
aspects of our business.
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Communication, distribution, and sales.
1:24
There are two types of channels, owned or
partner channels.
1:27
Owned channels have higher margins, but
are harder to manage.
1:31
Partner channels have lower margins, but
allow easy distribution and greater reach.
1:35
In addition, owned channels can be broken
down into direct and indirect.
1:41
However, all partner channels are by their
nature, indirect.
1:46
Regardless of the type of channel you
choose,
1:51
all channels have five main stages.
1:54
It is crucial that you think through your
approach for each stage.
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There's awareness, evaluation, purchase,
delivery, and post purchase.
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Keep in mind that starting out, your aim
should be to pick one channel that
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you think will maximize your return, and
focus on that channel.
2:10
Don't waste you resources by trying to
simultaneously deliver through
2:15
multiple channels.
2:19
Customer relationships cover any
communication we
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have with our customers throughout our
business model.
2:24
These relationships can be broken into
three main groupings: acquisition,
2:28
retention, and up selling.
2:33
When starting out, we're going to focus on
our customer acquisiton and
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activation strategies, and how we can
maximize our revenue stream.
2:39
Remember that your customer relationships
are closely tied to your channels, so
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develop them in parallel.
2:48
Next we have key activities, resources,
and partnerships.
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To execute our business model,
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we have a certain set of activities we
need to complete.
2:57
Some of these activities are crucial to
our business model.
3:00
These are our key activities.
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Most of our efforts should be dedicated in
making these key activities a reality.
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And our key resources are the
intellectual, human, financial and
3:10
physical capital that we harness to
execute on it.
3:15
For the activities outside of our key
activities list,
3:18
we don't necessarily need to handle all
the activities ourselves.
3:23
We can work with key partners who would
help reduce the risk, uncertainty and
3:27
costs of executing our business model.
3:32
Allowing us to focus on our core product.
3:34
Next we have revenue.
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There are two main types of revenue
streams, transaction revenues,
3:39
resulting from the one time sale of your
value proposition, and recurring revenue
3:43
streams, obtained by continuously
delivering your value proposition.
3:47
Your chosen revenue model is closely tied
to the pricing structure you implement.
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There are two main pricing categories,
fixed and dynamic pricing.
3:57
Fixed pricing is a pricing methodology
based on static predefined variables.
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Fixed pricing can be further broken down
into different types: list pricing,
4:07
product future dependent, customer segment
dependent, and volume dependent pricing.
4:12
The second main type of pricing is dynamic
pricing.
4:18
Under dynamic pricing,
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your price constantly changes based on
certain market variables.
4:23
Dynamic pricing is seen in instances of
negotiation, yield management,
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real time markets, and options.
4:32
Remember that the price you implement must
not only take into account your
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value proposition and customer segments,
but also accommodate the cost of doing
4:39
business, highlight the value that your
product delivers, respect the practices
4:43
and expectations of your market, and keep
an eye on competitive prices.
4:48
Your revenue model is very closely linked
to your customer segments and
4:53
channels, so explore those sections before
you start on this one.
4:56
Then there is costs, a company's cost
structure building block
5:02
describes the major costs incurred to make
the business model a success.
5:05
In a cost driven business model,
5:10
the focus is on minimizing costs as much
as possible.
5:11
This is reflected in the value
proposition,
5:15
where low cost is heavily emphasized.
5:17
In a value driven model, the main focus is
on value creation, rather than cost.
5:20
This type of business model is accompanied
by personalized customer relationships and
5:25
premium value propositions.
5:30
In this section of the business model,
don't worry about the nitty gritty.
5:32
Instead, focus on the large cost drivers.
5:36
The last section of our business model, is
the industry analysis.
5:40
The industry analysis should focus on two
things.
5:44
The type of market we're entering and how
that drives our marketing and
5:47
sales spending.
5:51
As well as the speed of product
development and customer expectations.
5:52
The second thing you should focus on is
your competitors.
5:56
What are they doing well, what aren't they
doing for customers.
5:59
How do they earn revenue and how are we
competing with them.
6:03
We've covered quite a bit of information
in this section, so
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watch it as many times as you need to,
until you get a good grasp of things.
6:09
Above all, what I want you to take away is
that at this stage in your company,
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we still don't have a business model.
6:18
We're still looking for one, and
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we're using this canvas to come up with a
set of hypotheses for our undertaking.
6:22
In the next stage, we're going to look at
how we can test these hypotheses.
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And use a method of iteration and
6:31
experimentation to validate our business
model until we find something that works.
6:33
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