BU121 Study Guide - Midterm Guide: Business Model Canvas, Value Proposition, Candy Crush Saga

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30 Jul 2016
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Multi-sided platform – value is created by facilitating interactions between 2 or more distinct
but interdependent groups of customers
- Of value to one group only is the other group of customers is present
-Network effect – grows in value as more people use it
- e.g. visa, eBay, Facebook
Long tail – selling ‘less of more’
- focusing on offering a large number of niche products
- e.g. Netflix, eBay, youtube
Free – at least one substantial customer segment is able to continuously benefit from a free-of-
charge offer, financed by another part of the business model or by another customer segment
- different patters make the free offer possible:
oAdvertising – advertisements in the product
oFreemium – you give a core part of the product away but charge for premium
products
E.g. Skype, free cals to skype users but you must pay to call landlines
oBait & Hook – you give the product out for free, which is the bait, but than you
keep selling things to the user, which is the hook.
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E.g. Candy Crush, you play the game for free but to refill your lives and
get boosts you must pay, that’s the bait.
Membership models – subscription box, member community, flash sales
Crowdsourcing models – crowdsourcing, crowdfunding, peer-to-peer sharing
Building the business model process
1. Understand the context and the resulting implications for your business model.
oFocus on the so what?
2. Prototype your business model canvas – think and create visually
oThink and create visually
Words
Drawings/images
Demonstrate relationships
3. Gain customer insights and build on them to improve your business model canvas
oTalk to them – customers should drive your building blocks
oBuild on the customer insights
4. Tell the story
Value proposition design
- The set of value proposition benefits you design to attract customers must fit with the
set of customer segment characteristics that you assume, observe and verify in the
market.
Gains – the outcomes customers want to achieve or the concrete benefits that they are seeking
Pains – Potential bad outcomes, risks, and obstacles related to customer jobs
Customer jobs – What customers are trying to get done in their lives, expressed in their own
words
Customer jobs
-Functional jobs – when they try to perform or complete a specific task or solve a specific
problem
-Social jobs – when they want to look good or gain power/status; how they want to be
perceived by others
-Personal/emotional jobs – when they seek a specific emotional state
-Supporting jobs – performed in the context of purchasing and consuming value, and
arise from 3 different roles
oBuying, Co-creating or transferring value
Job context – the context in which the job is performed may impose constraints or limitations –
important to consider
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Job importance – on a scale from important to insignificant – determine how much does it
matter to the customer
Customer Pains
-Undesired outcomes, problems and characteristics – pains are functional, social, or
emotional, or may involve undesired characteristics
-Obstacles – things that prevent customers from even getting started with a job or
something that slows them down
-Risks (undesired potential outcomes) – what could go wrong and have important
negative consequences
Pain severity – on a scale from extreme to moderate – determine how much does it annoy or
affect the customer
Customer gains
-Required gains – without which a solution wouldn’t work – the most basic expectation
-Expected gains – relatively basic gains that customers expect from a solution, even if it
could work without them
-Desired gains – that go beyond what customers expect from a solution but would love
to have if they could
-Unexpected gains – that go beyond customer’s expectations and desires; they wouldn’t
even come up if you asked them
Gain relevance – on a scale from essential to nice to have – determine how relevant is the gain
to the customer
Gain creators – products that create customer gains
Pain relievers –products and services that ease customer pains
You need:
Problem-solution fit – on paper
Product-market fit – in the market
Business model fit – in the bank
Emotional intelligence – the ability to perceive emotions, to access and generate emotions so
as to assist thought
-Reuven Bar-On’s EQi
Happiness – an indicator of emotional health and well being, satisfaction, contentment and the
ability to enjoy life
- Not included in total EQI but impacts EI
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