3. 1. It ensures you have considered the fundamental components of your
business model in order to ensure you have addressed them all.
2. It allows you to align with other internal stakeholders in your project to
ensure you have a common view on your business model.
3. It gives you a baseline on which to consider future changes to your
business model.
4. It ensures that you have considered all critical details before putting
together a Marketing strategy
5. Validates that the business model is sustainable
BUSINESS MODEL CANVAS
4. Key Partners
Who are your key partners
Who are your key suppliers
Which key resources are your acquiring from partners
Which key activities do partners perform
Motivations for partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources or expertise
5. Key activities
What key activities does your value proposition require
Distribution channels
Customer relationship
Revenue streams
Categories
Production
Problem solving
Network
6. Value Proposition
What value do you deliver to the customer
What problems are you solving
What bundles of products or services are you
offering to each customer segment
What customer needs are you satisfying
Characteristics
Newness
Performance
Customization
Getting the job done
Design
Brand status
Price
Cost reduction
Risk reduction
Accessibility
Convenience usability
7. Customer Relationship
What type of relationship does each of your
customers segments expect you to establish and
maintain
Which ones have you established
How are they integrated with the rest of your
business model
How costly are they
Examples
Personal assistance
Dedicated personal assistance
Self service automated service
Communities
Co-creation
8.
9. Customer Segments
For who are your creating value
Who are your most important customers
Mass market
Niche market
Segmented
Diversified
10. Evaluate which market or markets you want to pursue.
How will you define your segments and which definitions best fit your
business model.
Geography pertains either to your location or the location of your target
customers, where your product or service will be used.
Demographics are the statistical characteristics of your target market, such
as age, gender, education level or household size.
Psychographics characterizes consumers by psychological or emotional
traits, based on belief systems or personality types such as risk-taker versus
risk-averse, or early adopters versus late-stage buyers.
Lifestyle is a behaviorally-based criterion, focusing on the activities your
target participates in, from work to hobbies pursued or vacations favored.
Life stage combines some of the demographic and psychographic
characteristics that groups have in common to delineate where or when your
targets are in their life cycle: college and career, young families, empty
nesters and the like.
11. Qualify your chosen market or markets.
Once you’ve evaluated criteria to define your market and selected possible
markets to pursue, assess the markets based on their potential for
profitability to your business.
Answer the following questions:
• How large is the segment now? Is it large enough to support my business?
• How easy or difficult will it be to reach the segment?
• Will the segment grow or expand in the future? How far into the future
may it grow?
• Does this segment really fit with our business model? Can we immediately
meet their needs or will it take a significant change in direction to meet
demand?
• How difficult will it be to get the data we need to fully understand this
segment, to answer these questions?
12. Gather and analyze data on your selected market.
As time and budget allow, use primary and secondary research sources.
• Review your own sales data. Who purchases how much of what products
or services? When do they buy? Where are they located? Who does the
actual purchasing and for whom are they purchasing?
• Cross-reference this sales data to industry-specific databases your trade
association may publish or your Chamber of Commerce Book of Lists to
get basic business demographic information, or US Census Bureau tables
for general population data in your area or near where your area is that
you are living
• Mine information from free or low-cost syndicated reports produced by
market research firms to dive more deeply into market segments and
glean insights on motivations driving buyer habits.
• Analyze the data you’ve gathered. Look for key similarities and
differences among the general customer base, your overall population.
Do certain groups bunch together or break apart from others based on
geography, demographic breaks or behavior? This cluster analysis gives
you more clearly delineated segments, helps you answer the qualification
questions and sparks ideas on how to communicate with the target
segments through your promotional efforts.
13. Key resources
What key resources does your value proposition require
Distribution channels
Customer relationships
Revenue streams
Types of resources
Physical
Intellectual
Human
Financial
14. Channels
Through which channels do your customers want to be reached
How are you reaching them now
Which ones work best
Which ones are most cost efficient
How are you integrating them with customer routines
Phases
1. Awareness: How can your raise awareness about your products/services
2. Evaluation: How do you help customers evaluate your company/value Proposition
3. Purchase: How do you allow customers to purchase your product and services
4. Delivery: How do you deliver the value proposition to customers
5. After-sales: how do you provide post purchase customer support
16. Marketing budget
1. Available resources
• Consist of whatever you can afford
2. Align with your competitors
• Do whatever you competitor(s) does
3. Percentage of sales
• Dedicate a percentage of your revenue to marketing
4. Based on objectives
• Make plan with real objectives and assign a budget
17. Cost structure
What are the most important costs inherent to your
business model
Which key resources are most expensive
Which key activities are most expensive
Is your business more:
Cost driven: Lean cost structure, low price value
proposition, max automation, max outsourcing
Value driven: Focused on value creation, premium value
proposition
Sample characteristics
Fixed costs
Variable costs
Economies of scale
Economies of scope
18. Startup costs
Legal costs
Web site design
Stationery
Business cards
Furniture
Licencising
Marketing
Include things that you currently have/own
and will be using for your business (cell phone,
computer,vehicle, etc)
Other = 10%
19. Cost of Goods Sold
COGS is the cost of those goods associated with product
sales. The cost of goods sold includes the costs of all
items that are directly or indirectly associated with the
production or purchase of goods that have been sold.
The main categories of costs included in COGS are:
Direct materials
Direct labor
Factory overhead
Production supplies
Or if reselling
Beginning Inventory + Purchases – Ending Inventory
20. Revenue streams
For what value are your customers really willing to
pay
For what do they currently pay
How are they currently paying
How would they prefer to pay
How much does each revenue stream contribute to
total revenue
Types
Asset sales
Usage fees
Subscription fees
Renting/leasing
Licensing
Brokerage
advertisng
Fixed pricing
List price
Product feature
dependant
Segment dependant
Volume dependant
Dynamic pricing
Negotiation bargaining
Yield management
Real time market
21. Pricing
Price setting limits
Upper limit = What the consumer is willing to pay
Lower limit = production cost
• Your product or service’s distinctiveness and subsequent demand
help set the upper limit.
• Costs help you set the lower limit
22. Pricing strategy
Skimming Price
Set your price high at launch to
address early adopters. Price is
lowered later to expand market.
Penetration Price
Set your price low at launch to gain
the largest market share possible as
quickly as possible.
23. Pricing strategy
Odd Price
Set prices slightly lower than
rounded 4.95$ instead of 5.00$
There is a definitive psychological
effect. A perception that the odd
price is significantly lowere than the
rounded price.
24. Break even point
Price x quantity Fixed costs + (variable costs x quantity)
The point where you neither generate a profit or a loss.
You simply cover your costs.
equals
25. Sales Forecast for a new business
• Understand and manage your fixed and variable expenses
• Marketing will likely be more than you think
• Legal, insurance licensing as well
• Keep track of thing you do as labor expenses so you can plan for it later.
• Forecast sales using both a conservative case and aggressive case
• Conservative: low price, two channels, no sales staff, …
• Aggressive: higher price, 4 channels, two sales staff, …
• Keep track of your key performance indicators
• Number of contacts
• Conversion rates
• Sales cycle
• Profit margin
26. LOCATION BASED
BUSINESS
• 600 people come by your store every day
• 1 out 10 will enter our shop (60 people per day)
• 1 out 5 will buy something (12 sales per day)
• Average purchase is 30$ (360$ per day)
• Store is open 30 days per month (10,800$ per month)
27. BASED ON YOUR COMPETITION
Company Co. 1 Co.2 Co.3 You
Sales 750k 500k 1,500k 400k
Avg Price 25k 15k 30k 20k
Est. Volume sold 30 33 50 20
Nb. Employees 10 7 12 5
Volume/employee 3 5 4 4
28. LEAD BASED
• 2 sales representatives generating 250 calls /month
• 1 out of 5 calls leads to a meeting (50 meetings / month)
• 1 out of 10 meetings leads to a sale (5 sales / month)
• Average price of sale x 5 = ?????
29. ONLINE BUSINESS
• Advertising budget 5,000$ / month
• Cost per click is 1.25$ = 4000 clicks
• Conversion rate is 4% = 160 sales
• Average shopping cart is 45$ = 7200$
30. Forecast second and subsequent years
All the factors we discussed previously but now you
have company data to help you better understand the
sales cycle, purchasing trends, consumer behaviour,
etc.