Heads up! To view this whole video, sign in with your Courses account or enroll in your free 7-day trial. Sign In Enroll
Preview
Start a free Courses trial
to watch this video
A prerequisite to creating a business plan is understanding your business model. In this video we're going to use a book called Business Model Generation as a starting point to explore our business model starting with our customer segments.
Book
- Business Model Generation by Alexander Osterwalder and Yves Pigneur
Related Discussions
Have questions about this video? Start a discussion with the community and Treehouse staff.
Sign upRelated Discussions
Have questions about this video? Start a discussion with the community and Treehouse staff.
Sign up
[Pasan Premaratne] To run through this exercise, we're going to borrow a model created by a wonderful group of people
0:00
and put together in a book called Business Model Generation.
0:05
Now, I'm a big fan of this process and I've used it in a few other videos because it's a relatively easy way
0:08
for you to get acquainted with your business model.
0:14
We're going to use it as a starting point to create all the business plans we want.
0:16
All of business, big or small, old or new, can be broken down into a set of 9 distinct sections.
0:21
Customer segments, value propositions, channels, customer relationships, revenue systems,
0:29
key resources, key activities, key partnerships, and the cost structure.
0:38
Exploring each section for your business or idea
0:44
will help you generate all the information you need to know to create your business plans.
0:47
Let's start with customer segments--In this section, we're going to think about
0:51
who our potential customers are based on a certain set of characteristics.
0:57
And then, note them down in as much detail as possible.
1:01
Your customer segments are the different groups of people or organizations that you are going to reach out to and business with.
1:06
We call this section customer segments because we can usually identify our customers in separate distinct groups
1:13
that necessitate different strategies in terms of customer relationships, channels, and revenue streams.
1:21
Grouping customers into segments involves looking on their relationships with other parts of our business model.
1:27
For example, if you reach a certain group of customers through a different channel than normal,
1:33
you should group them into a separate customer segment.
1:39
Here are a few different ways we can group customers.
1:41
If you modify your value proposition for some customers, there are different segment.
1:45
Don't worry, we'll get into what a value proposition is in a bit.
1:50
If you get to these customers through different channel than your usual customers different segment.
1:53
If the revenue stream is different, different segment.
1:59
Finally, if the customer relationship is different, we're going to put them in a different segment.
2:02
When trying to define customer segments, start at a high level.
2:07
You could have a mass market segment. In this situation, you don't really have a distinct customer segments with one large market.
2:11
You only offer one flavor of your product or service and don't differentiate it much in terms of pricing, relationships, or channels.
2:19
A good example of this is a Playstation or Xbox.
2:26
They have a single marketing message, price point, and a channel for the entire customer base.
2:30
You could have a niche market where you focus your business on a very specific customer segment.
2:35
Everything is tailored to that specific segment including your distribution channels, revenue streams, and so on.
2:41
Consultants are the best example of a niche market.
2:48
They usually work in a specific section with an industry and with a small group of clients.
2:52
You can have segmented markets where you have different customer segments
2:59
with slightly different variations of the same problem.
3:02
Apple has a large customer base of people who want to listen to music on the go.
3:05
This market is then segmented into people who want a small form factor with the iPod Nano and Shuffle,
3:10
large storage base with the iPod Classic and a touch screen device capable of running apps with the iPod Touch.
3:17
Finally, you can have diversified markets. This is where a company serves 2 customer segments that are completely unrelated.
3:24
Amazon has its retail store where you can buy almost anything.
3:32
Then, they also have a completely separate cloud computing service that targets an entirely different market.
3:36
Those are just few examples of the different types of customer segments you can have.
3:42
Once you have figured out the high levels of who your customer segments are, you can dig deeper and start to define them properly.
3:47
Understanding your market will allow you to better estimate the size of your target audience
3:54
and figure out who your competitors are.
3:59
You need to sign up for Treehouse in order to download course files.
Sign upYou need to sign up for Treehouse in order to set up Workspace
Sign up