This document discusses business modeling and its key components: customer segments, value propositions, channels, customer relationships, and revenue streams. It provides examples and questions to consider for each component, such as identifying key customer groups, understanding their problems and needs, how value is delivered through different communication and distribution channels, what types of relationships are expected or established, and how revenue is generated from value propositions. The goal is to design a complete business model around these interrelated elements.

1. Module 15.1
Business Modeling
Jim Beach & Chris Hanks

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10. © School For Startups. All Rights Reserved. An organization serves one or
more customer segments.
Customer groups are separate if:
• Their needs require and justify a
distinct offer.
• They are reached through
different channels.
• They require different types of
relationships.
• They have different profitabilities.
• They are willing to pay for
different aspects of the offer.
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11. © School For Startups. All Rights Reserved. Types of customer segments.
Mass Market
large group, similar needs,
consumer electronics market
Niche Market
specific needs, seen in supplier-
buyer relationships (car parts)
Segmented
similar needs but varying
problems, ie. Micro Precision
makes watches, medical
supplies, automation
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12. © School For Startups. All Rights Reserved. Types of customer segments.
Diversified
unrelated segments, ie. Amazon
sells cloud services, online
storage, on demand server
usage, books all using their IT
infrastructure
Multi-Sided
need two sides to work, credit
card holders and acceptors
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Business seeks to solve customer
problems and needs with a VP.
VP why you choose one company
over another.
Bundle of benefits offered to
customers.
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What value is delivered to the
customer?
Which problem are we solving?
Which needs are we satisfying?
What bundles of products for
what segment?
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Non-exclusive list of contributors
to VP
Newness
Performance
Customization
Price
“Getting the job done”
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Design
Brand/Status
Cost Reduction
Accessibility
Convenience
Usability
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VP are delivered to
customers through
communications,
distribution, and
sales Channels.
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Channel Functions:
• Raising awareness of products.
• Helping customers evaluate the
VP.
• Allowing customers to purchase
products.
• Delivering a VP to customers.
• Providing post purchase support.
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Through which channel do our
customers want to be reached?
How are we reaching them now?
How are channels integrated?
Which ones are most cost-
efficient?
How do you integrate them with
customer routines?
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Customer
Relationships are
established and
maintained with each
Customer Segment.
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What type of relationship does each
segment expect?
What is established now?
How costly are they?
How are they integrated with the rest
of the model?
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Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation
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Revenue Streams
result from value
propositions
successfully offered
to customers.
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What will your customers really pay?
What do they pay?
How do they pay now?
How would they like to pay?
How much does each stream
contribute?
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30. Transaction & Recurring revenue
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Asset sale
Usage fees
Subscription
Lending/Renting/Leasing
Licensing
Brokerage fees
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Key Resources are
the assets required
to deliver the
products.
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What key resources do our value
propositions require?
Our distribution channels?
Our customer relationships?
Revenue streams?
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Physical
Intellectual
Human
Financial
Brand
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Products delivered
by performing Key
Activities.
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What key activities do our value
propositions require?
Our distribution channels?
Our customer relationships?
Revenue streams?
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Production
Problem solving
Platform/Network
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Some activities are
outsourced and
some resources
come from outside
your business.
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Who are your partners?
Key suppliers?
What do we require from them?
What do they do for us?
Can we live without them?
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Optimization and economies of
scale
Reduction of risk and uncertainty
Acquisition of particular resources
and activities
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The Model results in
the cost structure.
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What are the most important costs
inherent in the model?
Which key resources are the most
expensive?
Which key activities are most
expensive?
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Cost driven and Value driven
Fixed costs
Variable costs
Economies of scale
Economies of scope
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Efficiency
Logic
Emotion
Value
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THANKS!
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Next: Lesson 2
Patterns
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