Chapter 1:What is a Business Model Canvas
With the Ipod Business Model example step by step
How Apple dominate the market readily
Apple led the market as soon as they launched the IPod due to their innovation in the business model. On the one hand, Apple offered a better user experience by mixing three ingredients:
1- Design: A original and distinctive IPods design;
2- Software: A user-friendly software the iTunes;
3- On-line Store: Possibility to purchase or download content easily.
The offer of Apple is to allow customers to easily search, buy and enjoy digital music.
On the other hand, to make this value proposition works, Apple had to bargain deals with all the record music leaders to create the largest online music library.
This strategy lets Apple earn money from selling iPods devices while protecting itself from competitors by the integration of the online music store.
To resume the difference between the iPods and others devices is the Business Model used to generate this highly preferment value proposition.
Business Model Definition
By definition, a Business model describes the rationale of how an organisation creates, delivers, and captures value.
The main concept of a Business Model Canvas that everybody understands describes and manipulates easily the Business Model of your organisation or of your competitors or any other enterprise.
Starting by the point that there are four main areas of a business:
- Customers
- Offer
- Infrastructure
- Financial Viability
This four areas can be divided into nine basic building blocks that show the logic of how a company intends to make money.
The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.
The nine Building Blocks
BLOCK N°1: Customers Segments
Customers are the heart of any business model. The big question of any organisation who try to be profitable has to ask is "How can we satisfy our customers??" Without customers, no company can survive for long.
Therefore, you have to begin by knowing how are you customers, which are their needs, how they react to your products, which are their characteristics…
The better you know you customers, the better you will satisfy them by offering an adequate products and services.
In addition, once you know you customers you can divide them into segments that share similar characteristics. A business model defines one or several customers segments to serve or to ignore.
After choosing your customers, segments target you can craft your business model around their needs and characteristics.
Types of Customers Segments
- Mass Market: Focus on one large group of customers with similar needs and problems.Niche Market: Specific, specialized customers segmentsDiversified: Serve different customers segments;
- Multi-sided platforms (or multi-sided markets): Two or more interdependent customer segments. Example: Newspaper needs a large reader base and also needs advertisers.
Example: iPod Customers Segments
The iPod was designed for serving the mass market. In this time, we can distinguish one similar group, which they have the same problems and needs.
