Topics of the module

The Nine Pillars of the BMC

The nine pillars cover the four main areas of business, customer, offer, infrastructure and financial viability. They Are:

1. Value Proposition: The definition of Value Proposition is that it describes the benefits that customers can expect from your products and services. It summarizes all the complexity of your sales pitch into something that your customer can easily grasp and remember. 
So the value proposition is not just the product, but all the things the product can do for your customers. Why should they buy this brand instead of the others if they are basically alike? This is the question you need to answer in the Value Proposition.

2. Key Resources: Key resources are the assets required to provide and deliver the necessary elements involved in Key Activities, deployed in Distribution Channels, Customer Relationships, Revenue Stream generation, etc. Key Resources are usually scarce. Key Resources categories are physical, intellectual, human and financial.
So this is all the things that are needed by you to create your product, and to get it out to your customers. It can be raw materials, production facilities, key personnel or a special way of distribution or marketing if those are unique to your business. Basically all of the things that are going into your product to make it special.

3. Key Activities: Key Activities are basically the products or services that the company carries out and offers. They can be of great variety depending on your business. 
This is what you do to sell your product. The production, research and development, sales and shipping. The most important tasks constitute the Key Activities.

4. Key Partners: A company often needs to establish relationships with other organizations or individuals to operate efficiently and effectively while reducing risks or costs. Key partners are the network of suppliers and partners who complement each other in helping the company to create its Value Proposition.
Key Partners can be other businesses you rely on for services like distribution, IT infrastructure, marketing, products or raw materials. All the people that make you capable of producing and selling your product.

5. Costs: The cost structure is linked to the business model. Changing the business model will change the cost structure. The cost structure must be totally aligned with the value proposition. Considering the relation with revenue streams there are two kinds of costs:
Exploitation Costs that allow current revenue flows: Suppliers, Operative costs, Commercial costs.
Exploration Costs that create the conditions for the future and new revenue flows: Research & Development, Marketing.
So in other words the Exploitation Costs are your fixed costs, and the Exploration costs are what you invest in order to grow your customer base and thereby your business.

6.Customer Segments: Customer Segments are the community of customers that you are aiming to sell your product or services to. It is one of the most important elements in the Business Model Canvas for your business. Customer Segments define the different groups of people or organizations an enterprise pursues to reach and serve. Companies often segment customers according to demographics that include e.g. age, lifestyle or location.

7. Channels: Value propositions are delivered to customers through communication channels, distribution channels and sales channels.
The Channels are all of the ways you get in contact with your customers. If they see your ad, or your product in the stores, or the product name on your distribution van. If they talk to your sales people or interact through your website. All of the ways you can get in contact with a customer is happening through the Communication, Distribution or Sales Channels.

8. Customer Relationships: The Customer Relationships are the contacts with the customers that allow us to make an appropriate transfer of our Value Proposition. Customer Relationships are of three main types: customer acquisition, customer retention and boosting sales (upselling).

In other words you need to attract the customers into buying your product, you need to keep them coming back again next time and you need, if possible, to buy even more next time, or maybe even tell others about the product in a positive way.

9. Revenue Streams: Revenue Streams should be the result of successful value propositions offered to customer segments. It is a way of categorizing the earnings of a company. A business model can involve two different types of Revenue Streams: Transaction Revenues (one-time payments), and Recurring Revenues (i.e.: post-purchase support, etc.). Revenue Streams Generators are: Asset sale (ownership sale), Usage fee, Subscription fees, Lending/Renting/Leasing, Licensing, Brokerage fees, and Advertising
So Revenue Streams are all the ways that you can earn money. If a customer buys your product it's a Transaction Revenue, but if they sign up for a subscription it’s a Recurring Revenue. The Revenue streams must be able to pay for all of the costs in your business: rent, production, wages, insurance and profit.

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This project (project no: 2019-1-SE01-KA204-060527) has been funded with support from the European Commission.
The European Commission's support for the production of this publication does not constitute an endorsement of the contents, which reflect the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
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