TECHNOPRENEURSHIP 101

BS ELECTRONICS AND CIVIL ENGINEERING – 3

INSTRUCTOR: ENGR. JOHN CARLO B. MAMPUSTI
 BUSINESS MODEL CANVAS
- It generally used by startup companies or organization that serve as
guiding tool to think of a better solution in how to generate new
innovating ideas and apply the strategies in marketing the products
and services.
- It was proposed by Alexander Osterwalder based on his book
Business Model Ontology. It outlines the nine segments which form
the building blocks for business model in one-page canvas and the
key segments.
1. Customer segments
List the top three segments. Look for the segments that provide the most revenue.
Who are the customers? What do they think? Feel? Do?

a. Segment Dimensions. Do you have a single or multi-sided market? If you have

a multi-sided market, you’ll have at least as many segments as you have sides.
b. Segment Composition. You have should be able to visualize the individual
customer types as “Personas”, as for instance. What kind of clothes that most
buyers want, what kind of gadgets are they interested with. What they think, see,
feel, and do about your product or service should be well understood.
c. Problems, Needs, Habits and Current Alternatives. What job are you doing for
the customer? What need are you satisfying? It is necessary to know customers’
wants and needs at the same time, you should be able to identify several
alternatives that they use today. Perform market research by talking to people and
hear their interests.
2. Value proposition
What are your products and services? Why do customers buy, use? What is the job
you get done for your customer? What is compelling about proposition?
A value proposition refers to the promises of the company to offer to customers
should they choose to buy their product or service. It is the declaration of intent or a
statement that introduces the company’s to consumers through by telling what the
company stands for, it’s operations and the reason why it deserves their business
(Twin, 2019).
Some of the most common forms of value propositions are:
1. Newness 8. Risk Reduction
2. High 9. Convenience
Performance
3. Ability to
customize
4. Design
5. Brand/Status
6. Price
7. Cost Reduction
Value Proposition Vs. Mission Statement
Your value proposition details what you offer customers and why they should
choose you, while a mission statement details your objective as an organization.
While the two can have points in common, a value proposition is more product-
and service-oriented while a mission statement is more goal-oriented.
Here are two examples for HubSpot and our CRM platform:

Value Proposition: “An easy-to-use CRM.”

Mission Statement: “To help businesses grow better.”
Value Proposition Vs. Slogan
A slogan is a short, catchy statement that brands use in marketing campaigns to
sell a specific product. While your value proposition wouldn’t necessarily go in an
ad (at least, not usually), a slogan would. The most important thing to note is that
a company can have different slogans for different campaigns or products.
Here are two examples from De Beers Group:

Value Proposition: “Exquisite diamonds, world-class designs, breathtaking

jewelry.”
Slogan: “A diamond is forever.”
Value Proposition Vs. Tagline
A tagline is a short statement that embodies a certain aspect of your brand or
business. While a value proposition is more concrete, a tagline can represent a
concept or idea that your business stands for. Most businesses have only one
tagline that is instantly recognizable and connected to their brand.
Here’s an example from Apple:

Value Proposition: “The best experiences. Only on Apple.”

Tagline: “Think Different.”
Value Proposition Vs. Mission Statement Vs. Slogan Vs.
Tagline

NIKE CAMPAIGN

Value Proposition: “Customizable performance or lifestyle sneakers with

unique colorways and materials.”

Mission Statement: “To bring inspiration and innovation to every athlete in

the world.”

Slogan: “Twice the guts. Double the glory.”

Tagline: “Just do it.”

3. Revenue streams
List your top three revenue streams. If you do things for free, add them here too. How
does your business will earn revenue from the value propositions?
Revenue is the amount of money generated by the company through its business
activities,
for example: sales of products and services.
A Revenue Stream is the building block of presenting the cash a company generates
from each Customer Segment. At least one great revenue stream is necessary for a
company to earn money.
Revenue streams can be generated in different ways and mix of these ways:
a. Sale of physical product. The customer pays in cash for the product or service
and he is free to do whatever with it.
b. Usage fee. The customer pays for the usage of the product or service.
c. Subscription fee. The customer pays for a subscribed service once a month or
yearly. Postpaid services of telecom companies like Globe and Smart.
d. Lending/renting/leasing. The customer pays a fee for the right to use for a
particular product for a fixed period of time.
e. Brokerage fees. The company will get its revenue from an intermediate service.
Real estate agents earning from commission from a successful deals and credit card
providers getting percentage of the value of each sale completed between the
merchant and customer are good examples.
f. Advertising. The company gets its revenue for advertising a product, service or a
brand.
g. Volume and unit selling. The company charges affixed price for a product or
service. In buying products in higher quantities, customers get a discount in the form
of lower price or additional products.
4. Channels
How do you communicate with your customer? How do you deliver or
promote the value proposition? It is important to understand which
pathway or channel I best for the company to communicate or reach the
customers.
The following types of channels or mix of these can be used to satisfy
how customers want to be reached:
a. Awareness. As a businessman, it is needed to come up with ideas on
how to reach out the customers to introduce your products and
services. This will enable the customers to have knowledge and ideas
about the use of the products and the benefits as well.
b. Evaluation. This is done before the process of manufacturing the products or
finalizing the concepts of the services to be offered to the customers. Evaluation
can be done through conducting surveys, interviews and reviews of the product or
service. Evaluation is necessary so that you will be able to assess the value
proposition of the company.
c. Purchase. Customers may choose self-checkout and payment procedures
where they use credit cards, cash on delivery or even doing payments for their
convenience. d. Delivery. One value proposition to customers is the convenience
and faster delivery of products or service. e. After Sales. After Sales is a post-
purchase support service where customers can be assisted such as call center,
return policy and customer assistance.
5. Customer relationships
How does this show up and how do you maintain the relationship? How do you
interact with the customers through their journey?
A good customer relationship is an important consideration in doing business
because interaction with the customers where their experience with the products or
services met or exceeded their expectations or not.

Customer relationship provides three benefits to the company:

a. Customer Retention. Managing customer relations effectively will likely result in
higher customer retention rates. Fair customer service would likely make
customers do business with the company again.
b. Customer Loyalty. Establishing a positive customer relation drives customer
loyalty for the reason that it creates an intangible incentive for them to return. Having
a line of repeated customers makes it difficult for competitors to lure people
c. Customer Satisfaction. It is a measurement that determines whether customers’
satisfaction is met with the offered products or services of the company. Customer
satisfaction is one of the most important indicators of the purchase intentions and
loyalty of the customers.
6. Key activities
What do you do every day to run your business model? What are the unique business
strategies to deliver its value propositions?
In order to ensure success, a company must carry out key activities that are primarily
dictated by its business model. Below are some typical key activities that are
commonly undertaken by most companies:

A. Research and Development.

The research and development department are required to link up with all other
functions of the company whether it be production, marketing or sales.
The following are the typical functions of research and development department:
1. New product research. It is the work of the R & D department to undertake in
designing the product, the expected cost of production and the plan the timeframe to
produce the product.
2. New product development. Product research eventually leads to the development
of the product as a result achieved during the research phase.
3. Existing product updates. The R & D department must conduct an examination
of existing products if it requires an upgrade based on the changing needs and
benefits of the customers.
4. Quality checks. The Quality Assurance Team is in charge with the control and
inspection of the products to determine if it achieved the quality standards set by the
company.
5. Innovation. To ensure that product of the company stays with the trends in the
market, the R & D team is also responsible to be updated with the innovations and
new trends within the industry.
B. Production.
Production management consists of a number of activities which are outlined below:
1. Selection of product and design. The combination of the right product (value
proposition) and the right design (key activities) will determine the success of the
failure of the company. Value engineering and value analysis are necessary parts of
the production activity.
2. Selection of product process. In this production process, it includes the selection
of right technology, process, machines, inventory management system, etc.
3. Selection of right production capacity. The production management team should
have a full knowledge of the projected demand of the product to set the production
capacity accordingly. This is to avoid either dearth or surplus of supply. Companies
commonly employ the break even analysis as their tool.
4. Production planning. Routing and scheduling are part of this production activity.
Routing is creating a smooth flow of work by determining the easiest and most
economical ways to execute it. Scheduling is designing the period of activities to be
undertaken by mentioning the start and end of time for each activity.
5. Production control. Coordinating the interaction of people, materials, machinery
and other resources in order to produce products on a set timeframe is a very
important in the production process. The production manager compares actual
production with the planned production, knowing the deviations and correcting them
to satisfy planned production.
6. Quality and cost control. It is ideal to continuously improve the quality of the
product but also taking into consideration the reduction of costs in order to keep the
product competitive in the market in terms of both quality and price.
7. Inventory control. Products should be regularly checked to determine
overstocking or understocking. Overstocking means spending more money on
materials and understocking affects production and late deliveries and commitments.
Both should be avoided.
8. Maintenance and replacement of machines. Regular inspection of the conditions
of machines and scheduling maintenance should be done to ensure continuous
production activity and avoid unexpected breaks
C. Marketing.
The marketing department is responsible for the growth of the company by getting
word of the company’s existence and the value it offers to the customers.

Below are some of the functions of the marketing department:

1. Strategy. Based on the overall goals and missions of the company, the marketing
department is responsible in the drafting and getting approval of a marketing
strategy for the company before cascading it for implementation.
2. Market research. With market research, the marketing department must have an
enough knowledge of the market the company is engaged with including the
strengths and weaknesses of the product according to the customers and potential
competitors to stay competitive in terms of market share.
3. Product development. Upon identifying customer pulse and consumer needs and
feelings, the marketing team works in conjunction with the production team to
develop product to address unmet needs. Once the product is developed, pricing is
done by the marketing department.
4. Communications. All communications with regards to the product is the
responsibility of the marketing department. It includes press release, product launch,
online product reviews, advertisements, emails and others.
5. Sales support. The marketing team work closely with the sales team by providing
them with customer leads as well as other promotional materials and activities for
potential customers.
6. Events. Key or prospective customers are usually called during seminars, product
launches, exhibitions and other marketing activities organized by the marketing
department.
D. Sales and Customer Services. This marketing function plays a key role in
ensuring that customers can become advocates in the market and drive more
business in through word of mouth.
Conversely, they can become extremely vocal with their bad experience and
easily drive business away.
1. Handling problems. Customer service representatives are trained to handle
complaints about the products and services of the company. They need to be
customer-focused in order to maintain harmonious relationship and gather
positive feedback to improve products and services.
2. Assisting in sales. Customer representatives help increase the sales of the
company primarily by assisting the marketing and sales department.
3. Clerical tasks. Clerks handles clerical works and sometimes act customer
service representatives where inquiries and present possible suggestions are
made.
7. Key resources
The people, knowledge, means, and money you need to run your business.

Types of Key Resources

a. Physical Resources. It refers to the tangible resources of the company being
used to create its value proposition like equipment, inventory, buildings,
manufacturing plants and distribution networks that enable business operations.
b. Intellectual Resources. These are non-physical resources which includes
brands, patents, IP, copyrights, partnerships, customer lists, customer knowledge
and even people.
c. Human Resources. Human resources are the people of the company who
possesses great deal of creativity and extensive knowledge.
d. Financial Resources. The financial resource include cash, lines of credit and
the ability to have stock option plans for employees.
8. Key partners
List the partners that you can’t do business without (not suppliers).
Key partners are business, governmental or non-governmental entities that help the business
model works. They can be suppliers, manufacturers, business partners, etc.
Partnerships create forces that help the company succeed in areas and operations that would
hard or inefficient for the company to do alone.

Four types of partnerships

a. Strategic alliances between non-competitors. This is an alliance between your company
and another company where there is no direct competition and can work together and
both will be benefited.
b. Coopetition. “ Coopetition” is the combination of “cooperation” and “competition”. It is
business relationship where your competitor can be a partner in business as long as there
is a cooperation of ideas and knowledge how to enhance products and services.
c. Joint ventures to develop new businesses. A company may join another company to
form a different entity expected to be more profitable than operating separately.
d. Buyer-supplier relationships. In every business, the customer and supplier should
incorporate the characteristics of trust, quality, and commitment between them to maintain
an amicable relationship to achieve success.
9. Cost structure
List your top costs by looking at activities and resources. What is the business’ major
cost drivers? How are they linked to revenue?
Cost structure defines all the costs and expenses that your company will incur
during the operation of your business model. This is the final step in the process to
decide as a team whether to pivot or proceed.

There are two main categories of cost structure:

1. Value-driven.
To create more value in the product itself, not necessary producing the product at the
lowest possible cost is the focus of value-driven cost structure. Products like Michael
Kors, Louis Vuitton and Rolex are examples.
2. Cost-driven
It focuses on minimizing the costs of the product or service as much as possible.
Examples would be CD-R King and Budget Airlines like Cebu Pacific.