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Business Model

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Preliminaries on Business Model
Customer segments
  • The different groupings of customers based on specific things e.g. age, gender, interests and spending habits
  • The customer segment are the people who we target
  • It is fruitful to start by understanding the persona for each customer segment
  • The value proposition may differ across these segments
Value proposition
  • This is the problem you are solving
  • This would be the specific pain point you are relieving
Customer relationships
  • This is concerned with how business interacts with customers
  • This is usually where the user journey comes in that clarifies the points of engagement between business and the customer, and the modes (touch points) used to relate to the customers
Channels
  • These are the avenues of customer interaction and becomes part of the sales cycle
  • You consider where the customers are located and how we are going to tell them about the value proposition
Key Activities
  • This is the consideration of what the business does and what the business does to provide value
  • What is area of expertise?
  • The business will also consider what sort of resources used
Key Resources
  • These are the practical resources required to achieve the key activities (actions) of the business
  • These are the key means the resources your business requires to do the business
Key Partners
  • These are the end-to-end business chain partners to achieve the key activities and deliver value to the customers
  • These are the various partners that the business needs to rely on if the business value cannot achieve the value proposition
  • The partners are those entities that are an essential part of the value chain
Cost Structures
  • These are the things the business spends money on to achieve the key business activities
  • These could be costs for key resources and key activities
  • This may also consider how much it costs to achieve the value proposition of the business
Revenue Streams
  • This focused on the way the business converts the value proposition or the solution to the customers problem into a financial gain
  • The business needs to ask itself about how it gains revenue
  • How exactly does the business gain revenue


Thoughts on the Business Model
The business model is premised around the value proposition. This value proposition is directed according to each customer segment. Each customer segment interacts with us using various channels that are useful in managing our customer relationship. Our key activities are enabled by our key resources that have a specific cost structure that is used to generate revenue. Finally, our business model is supported by various partners. All of these elements are discussed below.

The business model is a strategic tool. It has an external and internal focus merge around the value proposition. These areas of interest must be considered within the context of certain factors. These factors are industry forces, market forces and key trends. These factors can assist the business in anticipating certain trends and can even cause a change in the business model.

Below is a short overview of the things to consider in these factors.
  • Industry Forces
    • Who are the competitors
    • New entrants into the market
    • Any substitute products and services that can replace ours
    • Stakeholders involved
    • Suppliers and other Value Chain actors
  • Market Forces
    • The key issues in the market
    • The segments in the market
    • Needs and demand
    • Switching costs
    • Revenue attractiveness
  • Key Trends
    • Technology trends
    • Regulatory trends
    • Societal and cultural trends
    • Socio-economics trends

Skills Leant - Business Model

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