Learning Objectives

8-1: Define the business model.

The business model is the framework for creating and delivering consumer value, while extracting value for the entrepreneur as well.

8-2: Identify the four core areas of a business model.

Broken into four parts, each business model includes an offering, customers, infrastructure, and financial viability.

8-3: Explore the importance of the Customer Value Proposition in further detail.

The CVP outlines exactly how the firm will generate value, how it will generate it in excess of its competition, and how it will continue to do so in the future. As the true measure of any business is creating value, the true measure of a business model is its customer value proposition.

8-4: Describe the different types of Customer Value Propositions and learn how to identify your target customers.

Businesses tend to have different CVPs for each customer segment. This is to ensure they are meeting the needs of the customers within each segment. Examples of different customer segments targeted by different types of businesses include mass market, niche market, segmented market, diversified market, and multisided markets. Types of CVPs include all-benefits, points of difference, and resonating focus.

8-5: Identify the nine components of the business model canvas.

The four core elements of a business model can be expanded to nine business model components. Separating core elements into their respective components makes them easier to define and integrate with one another. The offering constitutes the (1) value proposition. Customers relate to (2) customer segments, (3) channels, and (4) customer relationships. Infrastructure includes (5) key activities, (6) key resources, and (7) key partners. Financial viability includes (8) cost structure and (9) revenue streams.