1. Business Model Canvas

2. What is a business model?
Business Model Definition
What is a business model?
A business model
describes the rationale of
how an organization creates, delivers, and captures value. 2

3. Canvas
Business Model
A shared language for describing, visualizing, assessing, and changing business models.

4. 9 Building Blocks

5. customer relationships
key activities
value propositions
customer relationships
key partners
customer segments
cost structure
revenue streams
key
resources
channels 5

6. 1 Customer Segments The Customer Segments Building Block defines
Customer groups represent separate segments if:
• Their needs require and justify a distinct oΩer
• They are reached through diΩerent Distribution Channels
• They require diΩerent types of relationships
• They have substantially diΩerent profi tabilities
• They are willing to pay for diΩerent aspects of the oΩer
The Customer Segments Building Block defines
the different groups of people or organizations
an enterprise aims to reach and serve 6

7. major types 1 Customer Segments Niche market Mass market Segmented2
Niche market
Firms cater to specific, specialized Customer Segments. The Value Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific requirements of a niche market. 1
Mass market
Firms focus on one large group of customers with broadly similar needs and problems.
Multi-sided markets
Some organizations serve two or more interdependent Customer Segments. Both segments are required to make the business model work. A credit card company, for example, needs a large base of credit card holders and a large base of merchants who accept those credit cards. 3
Segmented
Firms segment a market into a few segments with slightly different needs and problems. Firms offer each segment slightly different Value Propositions. 5
major types
Diversified
Firms serve two (or more) unrelated Customer Segments with very different needs and problems. Firms need to offer different segments with different Value Propositions. 4

8. 2 Value Propositions The Value Propositions Building Block describes
the bundle of benefits that a company offers customers
through its products and services 8

9. 2 Value Propositions
Satisfying a new set of needs that customers didn’t perceive
Newness
Performance
Improving product or service performance
Customization
Satisfying the specific needs of individual customers or segments
“Getting the job done”
Helping a customer get certain jobs done
Design
Offering simple and emotional design
Brand/Status
Signifying taste, wealth, and status
Price
Offering similar value at a lower price
Cost reduction
A value proposition describes why a customer should buy a product or service
It targets a well defined customer segment
It convinces prospective customers that a particular product or service will add more value or better solve a problem than competitive products or services
Helping customers reduce costs
Reducing the risks customers incur when purchasing or using
Risk reduction
Accessibility
Making products and services available to customers
Convenience
Making things more convenient or easier to use

10. 3 Channels The Channels Building Block describes
Channels serve several functions, including:
• Raising awareness among customers about a company’s products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support
The Channels Building Block describes
how a company communicates with and
reaches its Customer Segments
to deliver a Value Proposition 10

11. 3 Channels Channel Phases 1. Awareness
Raising awareness among customers about a company’s
products and services
2. Evaluation
Helping customers evaluate a company’s Value Proposition
3. Purchase
Allowing customers to purchase specific products and services
4. Delivery
Delivering a Value Proposition to customers
5. After sales
Providing post-purchase customer support
Channels are broken into direct and indirect forms, with a "direct" channel allowing the consumer to buy the good from the manufacturer and an "indirect" channel allowing the consumer to buy the good from a wholesaler. Direct channels are considered "shorter" than "indirect" ones. Read more: 
An organization can choose between reaching its customers through its own Channels, through partner Channels, or through a mix of both.

12. 4 Customer Relationships
The Customer Relationships Building Block describes
the types of relationships
a company establishes with specific Customer Segments 12

13. 4 Customer Relationships
Self-service
It provides the tools for customers to help themselves. 2 3
Dedicated personal assistance 1
Personal assistance
The customer can communicate with a real customer representative to get help during the sales process or after the purchase is complete.
This relationship involves dedicating a customer representative specifically to an individual client. It represents the deepest and most intimate type of relationship.
major types 4
Automated services
This type of relationship mixes a more sophisticated form of customer self-service with automated processes. Personal profiles give customers access to customized services. 6
Co-creation
More companies are going beyond the traditional customer-vendor relationship to co-create value with customers.
Communities
Companies can use communities to become more involved with customers and to facilitate connections between community members. 5

14. 5 Revenue Streams The Revenue Streams Building Block represents
A business model can involve two diΩerent types of Revenue Streams:
1. Transaction revenues resulting from one-time customer payments
2. Recurring revenues resulting from ongoing payments to either
deliver a Value Proposition to customers or provide post-purchase
customer support
The Revenue Streams Building Block represents
the cash a company generates
from each Customer Segment (costs must be subtracted from revenues to create earnings) 14

15. 5 Revenue Streams The most widely understood Revenue Stream derives1
Asset sale
The most widely understood Revenue Stream derives
from selling ownership rights to a physical product.

16. 5 Revenue Streams This Revenue Stream is generated by the use of a2
Usage fee 1
Asset sale
This Revenue Stream is generated by the use of a
particular service. The more a service is used, the
more the customer pays.

17. 5 Revenue Streams 3
Subscription fees 2
Usage fee 1
Asset sale
This Revenue Stream is generated by selling continuous access to a service.

18. 5 Revenue Streams This Revenue Stream is created by temporarily4
Renting/Leasing 3
Subscription fees 2
Usage fee 1
Asset sale
This Revenue Stream is created by temporarily
granting someone the exclusive right to use a
particular asset for a fixed period in return for a fee.

19. 5 Revenue Streams This Revenue Stream is generated by giving customers4
Renting/Leasing 3 5
Subscription fees
Licensing 2
Usage fee 1
Asset sale
This Revenue Stream is generated by giving customers
permission to use protected intellectual property in
exchange for licensing fees.

20. 5 Revenue Streams This Revenue Stream derives from intermediation4
Renting/Leasing 3 5
Subscription fees
Licensing 2 6
Usage fee
Brokerage fees 1
Asset sale
This Revenue Stream derives from intermediation
services performed on behalf of two or more parties.

21. 5 Revenue Streams 4
Renting/Leasing 3 5
Subscription fees
Licensing 2 6
Usage fee
Brokerage fees 1 7
Asset sale
Advertising
This Revenue Stream results from fees for advertising
a particular product, service, or brand.

22. 6 Key Resources The Key Resources Building Block describes
the most important assets
required to make a business model work 22

23. 6 Key Resources major types Intellectual Physical Human Financial
Intellectual resources include brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases.
Physical
This category includes physical assets such as machines, buildings, vehicles, systems, and distribution networks.
major types
Human
Every enterprise requires human resources, but people are particularly prominent in certain business models. For example, human resources are crucial in knowledge- intensive and creative industries.
Financial
Some business models call for financial resources and/or financial guarantees, such as cash, lines of credit, or a stock option pool for hiring key employees.

24. 7 Key Activities The Key Activities Building Block describes
the most important things a company must do
to make its business model work 24

25. 7 Key Activities major types Problem solving Production
These activities relate to designing, making, and delivering a product in substantial quantities and/or of superior quality.
major types
Platform/network
Problem solving
Key Activities of this type relate to coming up with
new solutions to individual customer problems.
Business models designed with a platform as a Key Resource are dominated by platform or network related Key Activities.

26. 8 Key Partnerships The Key Partnerships Building Block describes
the network of suppliers and partners
that make the business model work 26

27. 8 Key Partnerships motive Risk Reduction Economies of Scale
Resource Acquisition
Partnerships can help reduce risk in a competitive
environment characterized by uncertainty.
Economies of scale partnerships are
usually formed to reduce costs, and often involve
outsourcing or sharing infrastructure.
Such partnerships can be
motivated by needs to acquire knowledge, licenses, or
access to customers.

28. 9 Cost Structure The Cost Structure describes
all costs incurred to operate a business model 28

29. 9 Cost Structure major types Cost-driven Value-driven
Cost-driven business models focus on minimizing
costs wherever possible. This approach aims at
creating and maintaining the leanest possible
Cost Structure.
major
types
Some companies focus on value creation. Premium Value Propositions and a high degree of personalized service
usually characterize value-driven business models.

30. The Business Model Canvas
The nine business model Building Blocks form the basis for a handy tool, which we call the Business Model Canvas.

31. craigslist’s Business Model
case study
craigslist’s Business Model

33. Craigslist offers classified advertising to help people find jobs and housing, connect with community members, and buy, sell, or barter services and merchandise.

34. Customers
Most craigslist Customers pay nothing for the service. Craigslist charges listing fees to employers and landlords in some cities. These paying customers subsidize non-paying Customers.

35. Value Provided
It facilitates offline connections between community members.
It offers free classified advertising.
It offers effective, low-cost advertisements for employers and landlords.

36. Channels
The service is promoted and delivered exclusively through the Internet.

37. Customer Relationships
Users create, edit, and post listings on the craigslist site using an automated process that eliminates the need for intervention by craigslist staff. Staff rely primarily on users to moderate forums and identify fraudulent activity. Craigslist concentrates on optimizing the user experience for current Customers rather than innovating to attract new Customers.

38. Revenue
Only employers and landlords generate Revenue for craigslist.

39. Key Resources
Craigslist’s number one resource is its “platform.” A platform is an automated mechanism or “engine” that enables interactions between Customers.

40. Key Activities
Craigslist’s most important activity is developing and maintaining its platform. Aside from platform development and maintenance, staff spend time dealing with hackers, spammers, and other illegitimate users.

41. Key Partners
Non-paying Customers are craigslist’s most important Partners, because they strive to maintain honesty and civility among users.

42. Costs
Key recurring expenses include salaries, server and telecommunications infrastructure fees, and office rent.

43.
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