If you are an entrepreneur, an entrepreneur who is looking to start your own business, finding out canvas model is a very important thing. So what is the Canvas model? Tips for creating a business plan What is a Canvas model?? Let's dig deeper in this article.
What is a Canvas Model?
Canvas Model English name is Business Model Canvas, this is a business model created by Alexander OstrerWalder and Yves Pigneur. This model is really easy to understand and useful, so it is adopted by entrepreneurs, especially young startups.
The purpose of the Canvas model is to help business people understand potential business criteria, then merge them into a perfect business plan. That purpose is expressed in turn through the criteria that we will state below.
Business Model Canvas Simple and easy to understand should be preferred by many businesses. Besides, the "big guys" in the market in many different fields have also applied this model and achieved positive results such as: Canvas model of Vinamilk, Canvas model of Tiki, ...
11 elements of the business model Canvas
Here, we will share with you 11 factors, or 11 pillars to Build a Canvas model include:
- Customer Segments
- Value Propositions
- Distribution channel (Channels)
- Customer Relationships
- Revenue Stream (Revenue Stream)
- Key Resources
- Key Activities
- Key Partnerships
- Cost Structure
- Social and environmental benefits
- Social and environmental costs
Customer Segments
Customer segmentation is your classification of customers based on what your product or service can provide. That's a very important part of doing business, because it ensures that the product you bring addresses the needs and wants of your customers.
Customer segmentation is different from prospecting, it is broader than prospecting. Finding potential customers is drawing a portrait of customers, who are they? What kind of people are they? personality characteristics, psychology, habits, ... like? From profiling potential customers, you determine their common needs and show what type of customer this customer belongs to. From there, it can be more optimized in the construction of the canvas model.
Thus, customer segmentation is to find the business market that we are targeting based on customer needs, thereby providing a guideline for all strategic and marketing plans.
There are 5 types of markets including:
- Mass Market: this is a market where their products meet the needs of almost everyone, their products are often essential items for daily living. For example, shampoo.
- Niche Market: The niche market will have a specific and smaller customer base than the mass market, based on the special needs of the customer. For example, electric car Tesla specializes in producing luxury cars for the upper class.
- Segmented Market: This market is mainly based on small differences in customer demographics.
- Diversified market: To talk about diversity is to talk about change and not having anything in common. That is, when a business does business in a diverse market, their products need to constantly change to meet the different needs of customers. A good example is the telephone market.
- Multi-sided Platform/Market: Multidimensional market serving customers with needs and relationships with each other. For example, if a blog wants to attract many advertisers, it needs many active bloggers. Further analysis, advertisers make money for blogs, blog sites pay bloggers, or advertisers can also hire bloggers to advertise, ... all have a close relationship with each other. .
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Value Propositions
The value solution is what the company's products/services meet the needs, desires or even latent preferences of customers. What do customers need? What can your business provide to customers?
In order to increase the level of competition in Canvas business model, value solutions require differentiation from competitors in the market. For example, your laundry detergent product is simply laundry detergent. Consumers will not have any attraction to choose to buy only your washing powder, they can completely buy from your competitors. However, when your washing powder meets the needs of cleaning, long-lasting fragrance and still safe for hands, consumers are likely to be more interested because they meet the needs, desires and preferences. .
There are two types of value solutions: quantitative value and qualitative value. Quantitative value refers to the effectiveness of products and services, while qualitative value refers to customer experience and product use.
There are 11 types of value statements that businesses can consider:
- Beautiful packaging design
- Brand new product/service
- Effective in use
- Brand name
- Optimizing production costs
- Competitive price
- Limit risk
- Good support in work/life
- Easy to access and convenient
- Quick response
Claiming to be valuable is extremely important because it taps into customer insights, addressing customer needs and pain points.
Distribution channel (Channels)
The distribution channel is the intermediary point between the value solution and the customer segment, which is the output of the business, pushing the product to the consumer.
Distribution channel can be owned by the business as the store is available. Or partner distribution channels such as resellers, shopping malls, convenience stores, social networking platforms, etc. Depending on product characteristics and target customer file, you need a distribution channel. be suitable. Some businesses combine 2 types in parallel
To determine the most effective distribution channel for your business, you need to analyze the channel that your target customers focus the most on. Then do a SWOT analysis to comprehensively evaluate each channel. For example, when you sell daily life products with regular consumption frequency, the more your distribution channel the better, the more coverage, the more people will buy. This will make it easier for you to apply canvas model in its business.
Customer Relationships
Customer relationship is how you attract new customers and take care of old customers. Common types of customer relationships include:
- Personal Assistance: The company will have employees to interact and take care of customers from before, during and after purchasing the product.
- Dedicated Personal Assistant: Almost like personal support, but here is a representative serving and responsible for 1 client file.
- Self-Service: Surely when you hear the name, you also imagine a couple of parts. Here, the company provides some means for customers to serve themselves. A good example is the automatic water dispenser.
- Automated Services: That is, customer feedback will be saved, to help make product adjustments more appropriate.
- Communities: This is considered a rising trend in today's time, when most companies focus on building images through social platforms such as Facebook, Tik Tok, ... to create a community of talented people. potential and future customers, record feedback from customers who have used the service, answer questions, concerns, ..
- Co-creation: Customers also participate in the company's product development process.
In short, no matter what, you should focus on loyal customers first, because they are a stable source of revenue and if taken care of well, they will refer new customers in the future. Next, it is necessary to evaluate the priority customers and then choose the appropriate customer relationship solution when building canvas model.
Revenue Stream (Revenue Stream)
Revenue stream plays a very important role in Canvas business model. To create a revenue stream, businesses can use the following ways:
- Sell ownership of goods to customers, or make sales
- Charges for using products and services, such as travel fees, car rides, train rides, etc.
- Registration fee for regular use of products/services
- Calculate loan, rent, interest. For example, commercial banks charge interest when lending capital to businesses.
- Charges for the use of intellectual property properties. For example, companies now have to install Microsoft Word copyrighted for use, if found to download the Crack version, businesses will be fined for violating intellectual property rights.
- Charge brokers like real estate brokers.
- Advertising fee.
There are many sources of revenue generation in today's era, on top of which revenue streams can be generated. However, make sure your revenue streams are legitimate.
Key Resources
Follow canvas modelTo start a business, businesses need 4 main resources:
- Human Resources
- Financial resources, or business capital
- Physical resources, which are physical facilities such as offices, tables and chairs, computers, etc.
- The source of that knowledge is the knowledge to start a business.
If one of the four is missing, your business plan will fail. Therefore, it is necessary to consider the above 4 factors and promptly supplement them before starting to implement the business plan.
Key Activities
Operations are the work that helps create value solutions and sustain the organization's business. Therefore, it is necessary to create a difference, in order to increase the value of the product and thereby make a profit. Normally, it will include the following 3 basic activities: Business platform, production activities, deployment policy
Specifically, when you open an English center, the main activity is recruiting sales, improving product quality and searching, consulting and closing potential customers. When you open a coffee shop, the main activity is to make delicious coffee.
With a product business, the work category includes customer research, market research, product creation and improvement. For a multi-platform service business, the work items include updating technology trends, filling security holes and security knowledge. For businesses doing business on infrastructure, the work item includes maintaining and maintaining the system when building the Canvas model.
Key Partnerships
Partners are the relationships that businesses need to make their business run smoothly. The main partners that have those categories are:
- Supplier
- Venture business
- Strategic alliance partner
You should determine if your business model is the main partner needed, more interaction for effective business plan implementation.
Cost Structure
The cost structure is the amount of money a business needs to maintain its business model. Follow canvas model, the cost structure includes:
- Fixed Costs: fixed or constant costs over a long period of time.
- Variable Costs: Cost fluctuates depending on business and production situation.
- Economies of Scale: cost reduction if production scale is increased.
- Economies of Scope: Costs cut when you invest in what's involved in the product.
Social and environmental benefits
Social and environmental benefits are the external benefits that businesses create for society and the environment. Careful consideration of these issues is important to position yourself as a business with a positive environmental and social impact. This could be a way to create avenues for financial support from governments, donors or influential investors.
Social and environmental costs
The social and environmental costs are different from the operating costs of the business. These are external costs arising from an organization's activities that have an impact on the environment and society. Businesses must take these potential costs into account when designing their business model and minimize them as these costs have monetary and legal implications for the overall sustainability of the business. .
4 Benefits of the Canvas business model
It is not natural that the Canvas business model is widely accepted and adopted even in large guess sets. Let's take a look at the salient features of this model as follows:
- Provide a clear direction: Canvas Model concretize the core issues when doing business on paper, they are easy to understand and practical so businesses can easily deploy.
- Fast and convenient: With only 11 factors, businesses can follow the above keywords to solve their startup problems.
- Understand the relationship between the 11 factors: With the Canvas model, understanding each link between the 11 elements will help you come up with new solutions or improvements.
- Convenient traffic: Because of their ease of understanding, you can completely share them with colleagues and companies for easy deployment.
See more 11 Steps to create an effective Canvas business plan
Download the latest detailed Canvas PDF model
To make it easier to make a Canvas model, here is a Canvas PDF template to help you quickly plan and save time.
Download the latest Canvas PDF model now
Some examples of successful Canvas model applications
Besides analyzing the Canvas business model through the above factors, we will offer some example of business model Canvas In today's business:
Here are some of the big brands' business models:
Apple's Canvas Model
Apple launched the Ipod to change the way people listen to music across the globe. Along with that is the Itunes application. With iTunes, Ipod, and modern technology apps and an online store, Apple has created a music industry on the ear.
Compared with the Canvas model, Apple has combined the main elements and pillars to offer solutions that produce typical results. In addition, Apple also builds long-term relationships with music suppliers. The revenue stream from Ipod has been and is a big pressure for current competitors.
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Facebook's Canvas Model
In terms of partners, Facebook has partners that provide content such as TV shows, music, news. Besides, the main activities are platform development and data and operations management center. Facebook has those values as a platform to connect friends, discover, learn and express yourself, reach target users as well as organize contests.
Facebook's customer relationship is peer-to-peer and cross-network. In addition, Facebook's customer segment targets Internet users, advertisers and marketers, and application developers. Distribution channels are web, mobile apps, fanpage ads, facebook, tools and develop APIs. In terms of costs, costs will include data center costs, management and operations, marketing and sales, and research and development. Facebook's revenue stream comes from running ads and downloading apps.
Upwork's Canvas Model
Next, I will introduce to you canvas model by Upworks. Upwork's customer segments are freelancers and employers, agencies and companies large and small. Upwork's main activities are upgrading its portfolio, facilitating recruitment and finding jobs for freelancers. Upwork's main partners are recruitment agencies and job seekers.
The value of Upwork is to connect businesses and freelancers around the world. In which, the parties involved gain their benefits, freelancers find work and employers hire people. Upwork's main resource is the platform, on which users decide whether to use it, clients and registered freelancers.
In terms of customer relations, Upwork ensures the safety and confidentiality of all recruitment data on both sides, including user personal information and payment information. In terms of revenue, Upwork mainly collects fees from customers, specifically from invoices when paying public customers.
Notes when implementing the Canvas model need to know
- List all content in categories, listing as much as possible in each category.
- When you have listed all the contents of the first sheet, continue to use the 2nd, 3rd printed sheets...
- Keep filtering, choose content in 11 categories, keep growing and perfecting, only when you can't keep growing then stop, don't tear the first sheets, keep them.
- Put all your focus and mind on 90 productive minutes a day for each performance, then you can continue to study, think about the model, and then do it again tomorrow. Sometimes great ideas come from moments of rest.
>>> See more:
- What is Six Sigma?? 6 benefits of applying Six Sigma that you should know
- Model BSC in business management and operation
- What is Pipeline?? 5 Important Stages of the Pipeline Process
Ending
Thus, we have shared with you useful knowledge and some examples of canvas model. The Canvas business model is very popular because of its ease of use and specificity. Hope the article is useful to you.
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