Business Model Canvas: a tool for defining Business Models (part 3)

Value Proposition I have devoted this series of articles to the tool developed by Alexander Osterwalder and Yves Pigneur called the Business Model Canvas. I you haven’t followed this series of articles I recommend you to read the first part in which I wrote an introduction about the tool and the second part in which I explained the first building block: customer segments.

In our business model once we determine the customer segments we must define more than the products and services we will offer. We must understand what are our clients expect in order to offer them what they want and need and also their motivators in order to buy our goods and services and not the ones offered by our competition.


The value proposition, more than goods and services

Many books say that the value proposition is the good or service offered to our clients by which we will receive money in exchange. However this proposition is much more because it comes with some attributes that may make the difference between being bought or not by the customer. The value proposition should solve a customer problem or satisfy any of his needs in the best possible way. We may conclude that the value proposition is the product or service plus a bundle of benefits we can offer our customers.

There are many benefits people are willing to pay for. For example certain segment might be interested in buy or good or service because its newness; because it has an excellent performance; because it is customizable; because the status of the brand; because it has the best price; because it can help to reduce risks and costs; because it has a beautiful design; among other reasons and benefits that can be perceived.


Value propositions for different segments

Not every person appraises the same attributes in a good or service. This is the reason why we should differentiate among different groups of customers and offer them a value they are willing to pay for. In the same way, there are cases in which for a same attribute different segments are willing to pay different prices. In this way we must also differentiate them and charge them a price they are willing to pay.


Having explained what the value proposition is, on the next posts I will write about the building blocks that unite this block and the customer segments, in other words the channels by which we deliver our value proposition to our clients and the relationship we want to build with them.


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