CHAPTER 4

BUILDING
BUSINESS MODELS
What is Business Model?
“How does it plan to generate money”

Who your What value you How you can do

customer is can create/add that at
for the customer reasonable cost
 Traditional Business Models
Manufacturer Distributor Retailer
Ajinomoto Philippines, Auto dealers Best Buy, Walmart and
Alaska Milk and Century Target
Pacific Foods

Franchise Brick-and-Mortar
Jollibee, McDonald’s Grocery Stores,
and Pizza Hut Dentists, Gas Stations,
Local Grocery and Walk-
in Banks

Bricks-and-Clicks
Business Selling Apparel
and Shoes Items in
Divisoria
Traditional Business Models
Direct Sales High Touch
Avon, Boardwalk, Dakki, Hair Salons, and Auto
Fern, and Forever Living Dealers

Family-Owned
National Bookstore,
ShoeMart, Jollibee, and
Robinsons
Modern Business Models
Nickel-and-dime Freemium E-Commerce
Cebu Pacific Zoom, Spotify, and Amazon, Flipkart,
Dropbox Shopify, Myntra, Ebay,
Quikr, Olx, and Alibaba

Subscription Aggregator Online Marketplace

Netflix, Linkedln, Airbnb, Zillow and Oyo Amazon and Alibaba
Amazon Prime, Dollar for Hotels; Uber for taxi
Shave Club service; and Yodlee for
financial service

Hidden Revenue Data Licensing/ Data

Google, Facebook, Selling
Instagram and Twitter Twitter sells real-time data
to third party users
 Modern Business Models
Agency-Based Affiliate Marketing Dropshipping
Leo Burnett Company is NerdWallet, Capterra, Doba, Oberlo, Dropship
an agency that services MoneySavingExpert.comm Direct, and Wholesale
United Airlines, and and the Wirecutter 2B
McDonald’s and Kellog’s

Crowdsourcing Blockchain
Network Marketing Wikipedia, YouTube, Bitcoin, Ethereum, and
Avon, H and Mary Kay Kickstarter, LEGO ideas, Litecoin
Unilever, Coca Cola

Low Touch Razor and Blade

Ikea and SurveyMonkey Razor
Modern Business Models
Low Touch
Ikea and SurveyMonkey
Consulting Social Enterprise
Deloitte, Mckinsey, Bayani Brew, Coffee for
BCG, Software Peace, First Harvest and
Liter of LIght
Business Model Canvas
“Business Model Ontology”
Alexander Osterwalder, the
Business model

business focus on every a block When one

model segment or describes the block
can be blocks of the modify each is change, the
business factor that a other blocks
written model are
startup block as the
in a one- systematically business need arises required to be
page until the gaps needs to revisited and
canvas close changed
study
 Business Model Canvas
KEY PARTNERS

Key partners are the

network of suppliers and
partners
Partner with other
Partnerships Partnering can be
business, could be a for optimizing the
use of resources,
governmental, or tool to forming new
non- consumer
entities a business resource streams
or lessening risks
success
 Business Model Canvas
Types of
Partnerships

Strategic
Joint-
Coopetition ventures Buyer-supplier
alliances
• between relationship
non- • two
• agreement
competitors businesses • the most
between
to help each because of usual type
other do an competitors
their of
equally to help
mutual partnerships
advantageous share the • dependable
interest
task risk spring of
• but retaining • for a
• to gain supplies
their completely
new users coming in
independence different
company
Business Model Canvas
Categories of key activities

Marketing Sales Design Development

Customer
Operations Distribution
Experience
 Key Sources
Key resources describes the most important assets required to
make a business model work

resources that resources to resources that can

allow an reach target maintain good
enterprise to markets relationships with
create and customer
offer a value segments, and gain
proposition revenues
 Key Sources
Four categories of resources

Physical- Intellectual – Human – Financial – All

tangible These are Employees are businesses
resources that nonphysical, the biggest and have key
a company intangible most vital resources in
make use of to resources resources finance
form its value
proposition
Key Sources
CUSTOMER VALUE PROPOSITION

Customer value proposition (CVP) is a business’s way of

generating value in their product or service when targeting
potential customers

value value CVP is a

proposition proposition description of
is a statement computed the user’s
consisting of through adding experiences
the reason/s all the benefits
someone that the
should do product
business with
the company
 Key Sources
factors considered in the development of the customer
value proposition

Functional value-product Emotional value-

and or service offers the
solution to a particular
problem (phone
competence offered by
an iPhone)
sentimental reasons
(purchasing locally
produced or organic
brands)

Economic value-offers a Symbolic value-a certain

financial advantage type of status given to the
customer (Italian Ducati
motorcycle /a cup of
Starbucks coffee)
Key Sources
Key Sources
CUSTOMER RELATIONSHIPS

Customer relationships are the types of relationship a company forms with

its particular customer segments

To gain customers To keep them To grow sales with

them
 Key Sources
Types of customer relationships

Personal assistance Dedicated personal Self-service-no direct

communicate with a assistance-assigning a relationship
real salesperson salesperson to an
individual customer

Automated services- Communities- Co-creation-

a combination of online communities to customers have the
customer self-service exchange information chance to concrete
and automated value with the
processes company such as in
designing and
innovating products
Customer Segments
CUSTOMER SEGMENTS

*Customer Segment refers to demographics such as age, ethnicity, profession and gender
*Shared needs, behaviors, and other traits can be the bases for customer segmentation

Types of Customer Segments

Mass- an unsegmented market
Niche- a customer segment with very distinct characteristics and extremely specific needs
Segmented- customer segments that have very small differences in their need requirements
Diversified- differentiated customer segments
Multi-sided platforms- customer segments are reliant with each other
Customer Segments
CHANNELS

*Channels are the touch points through which a company communicates with its
target customers
*Play a big role in defining the customer experience and providing value

Five phases that a channel may pass through

Awareness- marketing and advertising phase
Evaluation- customer evaluates, read about or uses the product or avail of the
service
Purchase- the actual sales process
Delivery- when the promised value proposition has reached the customers
After sales- giving customer care and support after purchase
 Customer Segments
Channel Types
Direct Channels
The entrepreneur owns or has control over
Could mean added costs
Provide a direct and strong relationship

Indirect Channel
Use of intermediary
Wholesalers are considered
Partner channels
Quick to reach the market and less investment in infrastructure

VALUE PROPOSITION CANVAS

Value proposition canvas aims is to guarantee proper fit of the product and the market- Alexander Osterwalder
Takes into consideration the values and needs of the customers
A detailed relationship of the customer segments and value propositions
Tool also to upgrade a product and or service offering
Two Building Blocks
Two building blocks-value proposition canvas
•The customer profile points to Value proposition is a statement
the •The customersegment
customer profile points
thatto consisting of the reason/s
the customer Value proposition is a
the company shall servesegment someone should do business
that the company shall statement consisting of the
serve with reason/s
someone the company
should do
• created for each customer
• created segment,
for each customer
as each segment • business
reflect onwith
the gain creators,
segment, asdistinct
has each segment hasand
gains, pains pain relievers and the products
distinct gains,
jobs pains and jobs the company
and/ or services to offer them
• before • making a customer
before making a customer
profile,
profile, the the various
various archetypes • reflect on the gain
customers archetypes
typically fall into creators, pain relievers
must becustomers
evaluatedtypically fall into and the products and/ or
must be evaluated
services to offer them
 Two Building Blocks
Types of Jobs-to-be-done
Functional jobs- regular and Personal/ Emotional jobs- how
particular jobs that a customer a customer works towards
is trying to do and is working feeling a certain way
towards

Social jobs- the manners a Supporting jobs- customers also

customer desires to reflect his purchase value, hence doing a
image in a social environment supporting task
 Three Roles of Customers
Three roles of customers that may assist in supporting jobs

Buyer of Value Co-creator of Value

From evaluating choices Has a direct hand in the
at hand up to paying for manufacture of the
the product product with the
company

Transferor of Value
The end of the product
use such as disposal of
product trash or giving
the ownership of the
product to another
person.
THANK YOU!!

~GROUP 1