Business Model Basics & Customer Segments4:03 with Pasan Premaratne
A prerequisite to creating a business plan is understanding your business model. In this video we're going to use a book called Business Model Generation as a starting point to explore our business model starting with our customer segments.
[Pasan Premaratne] To run through this exercise, we're going to borrow a model created by a wonderful group of people 0:00 and put together in a book called Business Model Generation. 0:05 Now, I'm a big fan of this process and I've used it in a few other videos because it's a relatively easy way 0:08 for you to get acquainted with your business model. 0:14 We're going to use it as a starting point to create all the business plans we want. 0:16 All of business, big or small, old or new, can be broken down into a set of 9 distinct sections. 0:21 Customer segments, value propositions, channels, customer relationships, revenue systems, 0:29 key resources, key activities, key partnerships, and the cost structure. 0:38 Exploring each section for your business or idea 0:44 will help you generate all the information you need to know to create your business plans. 0:47 Let's start with customer segments--In this section, we're going to think about 0:51 who our potential customers are based on a certain set of characteristics. 0:57 And then, note them down in as much detail as possible. 1:01 Your customer segments are the different groups of people or organizations that you are going to reach out to and business with. 1:06 We call this section customer segments because we can usually identify our customers in separate distinct groups 1:13 that necessitate different strategies in terms of customer relationships, channels, and revenue streams. 1:21 Grouping customers into segments involves looking on their relationships with other parts of our business model. 1:27 For example, if you reach a certain group of customers through a different channel than normal, 1:33 you should group them into a separate customer segment. 1:39 Here are a few different ways we can group customers. 1:41 If you modify your value proposition for some customers, there are different segment. 1:45 Don't worry, we'll get into what a value proposition is in a bit. 1:50 If you get to these customers through different channel than your usual customers different segment. 1:53 If the revenue stream is different, different segment. 1:59 Finally, if the customer relationship is different, we're going to put them in a different segment. 2:02 When trying to define customer segments, start at a high level. 2:07 You could have a mass market segment. In this situation, you don't really have a distinct customer segments with one large market. 2:11 You only offer one flavor of your product or service and don't differentiate it much in terms of pricing, relationships, or channels. 2:19 A good example of this is a Playstation or Xbox. 2:26 They have a single marketing message, price point, and a channel for the entire customer base. 2:30 You could have a niche market where you focus your business on a very specific customer segment. 2:35 Everything is tailored to that specific segment including your distribution channels, revenue streams, and so on. 2:41 Consultants are the best example of a niche market. 2:48 They usually work in a specific section with an industry and with a small group of clients. 2:52 You can have segmented markets where you have different customer segments 2:59 with slightly different variations of the same problem. 3:02 Apple has a large customer base of people who want to listen to music on the go. 3:05 This market is then segmented into people who want a small form factor with the iPod Nano and Shuffle, 3:10 large storage base with the iPod Classic and a touch screen device capable of running apps with the iPod Touch. 3:17 Finally, you can have diversified markets. This is where a company serves 2 customer segments that are completely unrelated. 3:24 Amazon has its retail store where you can buy almost anything. 3:32 Then, they also have a completely separate cloud computing service that targets an entirely different market. 3:36 Those are just few examples of the different types of customer segments you can have. 3:42 Once you have figured out the high levels of who your customer segments are, you can dig deeper and start to define them properly. 3:47 Understanding your market will allow you to better estimate the size of your target audience 3:54 and figure out who your competitors are. 3:59
You need to sign up for Treehouse in order to download course files.Sign up