Business Model Canvas: The Strategy for Creating Success

What is Business Model Canvas? A Roadmap to Strategic Growth

In an era where new businesses emerge in great numbers, entrepreneurs face increasingly challenging competition. So, survival and growth in the industry require clear and efficient strategies. One essential tool to achieve the set business goals is the creation of a “Business Model Canvas” 

What is Business Model Canvas?

The BMC, or Business Model Canvas, is a business tool created by Alex Osterwalder, a Swiss business writer and consultant, in his book “Business Model Generation.” Its purpose is to assist entrepreneurs in easily and quickly creating and analyzing business models. Osterwalder developed the business model canvas to be used for designing, analyzing, and strategizing marketing plans. This concept has become widely popular among entrepreneurs for developing business ideas. It helps provide a comprehensive and clear overview of the market, leading to a better understanding of the key components and factors relevant to the business operation.

The 9 Key Components of the Business Model Canvas

1. Customer Segments

Target customer groups to whom the business aims to offer products and services, understanding their needs or problems they are facing.

2. Value Propositions

The value or benefits of the products and services the business intends to deliver to customers, explaining how they meet customers’ needs or differentiate themselves from competitors.

3. Channels

Determining channels to deliver value and reach customers, including communication channels, distribution channels, and customer service channels.

4. Customer Relationships

Establishing the types of relationships the business needs to create and maintain with each customer segment, such as personal service, self-service, community building, or special promotions.

5. Revenue Streams

Income generated from delivering value to customers, which may come from various sources such as product sales, services, subscriptions, fees, or royalties.

6. Key Resources

Identifying the essential resources needed to create value for the business, such as personnel, machinery, technology systems, databases, or capital.

7. Key Activities

Identifying key activities that enable the business to operate and create value, such as production, service delivery, problem-solving, research and development, etc.

8. Key Partnerships

Identifying key partner networks that play a crucial role in efficient business operations and lead the business to success, such as suppliers, business partners, strategic alliances, etc.

9. Cost Structure

Analyzing the main cost structure associated with the business operation, including fixed costs, variable costs, salaries and benefits, marketing expenses, rent, etc.

Why Do Businesses Need to Implement Business Model Canvas?

Helps Entrepreneurs Understand the Business Overview

The business model canvas is a tool that helps entrepreneurs and marketers understand the overall picture of a business clearly and comprehensively. It enables the analysis of the strengths, weaknesses, opportunities, and threats of a business accurately, leading to more accurate and efficient decision-making. Moreover, gaining an overview of the market also helps in strategizing and aligning the organization's direction appropriately.

Facilitates Fundraising for Businesses

Investors often seek information about the business model before making investment decisions. The Business Model Canvas helps communicate business concepts and formats clearly and understandably, allowing investors to assess the feasibility and potential of a business quickly. This benefits investment decision-making and increases fundraising opportunities.

Enhances Operational Efficiency

The business model canvas helps employees understand their roles, objectives, and organization's strategies more clearly. It provides clarity on how to develop the business plan and where improvements should be made. Consequently, it aligns various operations in the same direction, reduces confusion and risks, and significantly improves work efficiency.

Fosters Competitive Advantage

Creating a business model canvas enables organizations to identify their strengths, unique selling points, and distinctive values clearly. This allows them to develop competitive strategies and deliver experiences to customers that surpass those of their competitors. It increases the chances of becoming the customers' top choice.

Designing an Effective Business Model Canvas

Understanding the Market and Customers in Detail

Understanding the market and customers is crucial for businesses to define their target groups clearly, comprehend customer needs and behaviors, leading to defining value propositions that truly meet customers' needs, as well as identifying suitable channels to reach customers.

Specify the Value Propositions

Utilizing data from market and customer analysis obtained from the first point, clearly defining value propositions enables businesses to strategize and prioritize activities efficiently to create and deliver that value to the target audience.

Designing an Appropriate Marketing Strategy

The marketing strategy should align with the target customer segments and the value propositions to be offered consistently. This includes defining communication channels, methods for building relationships, as well as revenue-generating plans from customers. This ensures that various strategies effectively promote the ability of the business to attract and retain customers.

Analyzing the Feasibility of the Business Model

By assessing risks, costs, and expected returns, businesses can determine the main resources, key activities, as well as cost structure and necessary partnerships appropriately. Additionally, it is essential to analyze potential risks that may impact business operations in the future.

Continuous Testing and Improvement

Once the initial business model canvas is obtained, it's essential to test it with real customers or the actual market to evaluate feedback and satisfaction. This process helps identify weaknesses that need to be improved, fostering continuous refinement to find the best business model.

Case Study: Successful Business Examples

1. Facebook

Customer Segments

• General users
• Business owners and marketers

Value Propositions

• Offers a free social media platform where users can create profiles, share content, communicate, and participate in various communities of interest.
• Provides advertising space for businesses, allowing brands to efficiently target specific audience groups.

Channels

• Website
• Application

Customer Relationships

• Offers various communication channels with customers such as websites, help centers, and emails.
• Collects and aggregates customer feedback for continuous platform enhancement.

Revenue Streams

• Revenue from advertising space purchases for display on the platform.
• Other revenues such as Oculus (VR glasses), Portal (smart screens for video calls).

Key Resources

• Robust technological infrastructure supporting billions of users.
• Large user data sets used for targeted advertising and new user experience development.
• Strong and reputable brand name.

Key Activities

• Continuous platform development with new features and services.
• Selling advertising space on the platform to brands seeking awareness and product promotion.
• Collecting, managing, and analyzing user data to improve user experiences.

Key Partnerships

• Business owners and advertisers on the platform.
• Software companies such as Microsoft and Adobe to develop new technologies and enhance user experiences on the platform.

Cost Structure

• High infrastructure costs to support a large global user base.
• Development expenses for the platform.

2. 7-Eleven

Customer Segments

• General individuals seeking convenience, quick access to products, and services.
• Office workers, students, and learners in need of purchasing food, beverages, and essential items.
• Travelers looking to purchase supplies or necessities while on the go.
• Local community residents.

Value Propositions

• Convenience with numerous branches nationwide and 24-hour service, facilitating easy access to products and services.
• Diverse range of products covering customers' needs.
• Cost-effective prices.

Channels

• Physical stores
• 7-Eleven mobile application
• Delivery service

Customer Relationships

• ALL member program allowing customers to subscribe for various privileges such as point accumulation and discount redemption.
• Additional services beyond product purchases, such as concert ticket booking and payment services.
• Constant promotional activities to attract more customers.

Revenue Streams

• Revenue from product sales.
• Revenue from various service fees such as payment processing fees.
• Revenue from renting space to various brands within the stores.

Key Resources

• Large number of branches nationwide.
• Diverse range of products.
• Modern IT systems supporting various operations.
• Well-trained employees.

Key Activities

• Sourcing quality products from suppliers.
• Comprehensive management of branches nationwide.
• Continuous development of new products and services, including expanding delivery channels for customer convenience.
• Marketing activities featuring popular artists to promote the brand.

Key Partnerships

• Suppliers such as consumer goods manufacturers and food producers.
• Logistics service providers managing inventory.
• Software development companies like True.
• Marketing partners such as advertising agencies.

Cost Structure

• Product costs for sourcing from suppliers.
• Operational costs including rent, employee salaries, and utilities.
• Marketing costs such as advertising and sales promotion.

3. Dutch Mill

Customer Segments

• Fitness enthusiasts
• Students
• Working individuals
• Health-conscious individuals
• Families

Value Propositions

• Delicious and easy-to-drink beverage options.
• Health benefits associated with consumption.
• Wide variety of flavors to choose from.

Channels

• Convenience stores
• Retail stores
• Supermarkets
• Vending machines
• Online retail stores
• Website

Customer Relationships

• Social support through various support projects in social, health, and educational aspects, reaching out to schools, hospitals, foundations, and communities consistently.
• Consumer-centric approach focused on developing products that are good, high-quality, clean, safe, and tasty.

Revenue Streams

• Revenue from sales to retail stores.
• Revenue from contracts with distributors.

Key Resources

• Unique beverage formulas.
• Production lines.
• Well-established brand reputation.
• Distribution channels.

Key Activities

• Research and development of beverage formulas.
• Support for environmental activities to raise awareness among Thai people.
• Continuous creation and support of various health promotion programs.

Key Partnerships

• Distributors
• Raw material suppliers
• Transportation companies

Cost Structure

• Raw material costs.
• Production costs.
• Marketing and sales costs.
• Distribution costs.
• Management costs.

It's evident that creating a business model canvas is a technique that helps organizations develop efficient business models, meet customer needs accurately, design suitable operational strategies, and sustainably compete in highly competitive industries. 

For entrepreneurs who aspire to build a recognized brand but are new to marketing or lack the time to do it yourselves, contacting Jenosize to meet our strategic consultants today is the next step!