Two crucial key components of the business model: customer segment and value proposition
Kai Hockerts, Professor, Copenhagen Business School
The first step in building the business model canvas is to identify its customer segment or segments.
Only after a specific customer group has been identified, can the value proposition be described. It refers to how and why a product or service is relevant to a specific customer group. The value proposition needs to do four things. It needs to identify the problem the customer has. It needs to specify how the product solves that problem and thirdly, it needs to quantify the specific benefits delivered. Then finally, you should argue for why your enterprise is better positioned to deliver that value. This is called differentiation.
Many social entrepreneurs are too much occupied with their own startup to spend much time on studying the market environment, and to understand how the incumbents, the people in the market differentiate themselves. Breaking into an existing market is always difficult. Don't make it more so by failing to thoroughly understand how your competitors position themselves. Note how they differentiate themselves from each other. If you have no competitors then actually, you do not understand your market well enough. Go out and do some more research, you will always realize that there is somebody competing with you.
The first step in building the business model canvas is to identify its customer segment or segments.
Only after a specific customer group has been identified, can the value proposition be described. It refers to how and why a product or service is relevant to a specific customer group. The value proposition needs to do four things. It needs to identify the problem the customer has. It needs to specify how the product solves that problem and thirdly, it needs to quantify the specific benefits delivered. Then finally, you should argue for why your enterprise is better positioned to deliver that value. This is called differentiation.
Many social entrepreneurs are too much occupied with their own startup to spend much time on studying the market environment, and to understand how the incumbents, the people in the market differentiate themselves. Breaking into an existing market is always difficult. Don't make it more so by failing to thoroughly understand how your competitors position themselves. Note how they differentiate themselves from each other. If you have no competitors then actually, you do not understand your market well enough. Go out and do some more research, you will always realize that there is somebody competing with you.
This blog post is based on my learnings from the course on ‘social entrepreneurship’ offered by Copenhagen Business School through Coursera (2014).
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