Let's take a deeper look at each building block

• Customer Segments - A company may group customers with common needs, behavior, and other attributes into separate segments if their needs require and justify a distinct offer, they are reached through different distribution channels, they require different types of relationships, they have substantially different profitability, or they are willing to pay for different aspects of the offer.
  • Mass Market Customer Segment - The value propositions, distribution channels, and customer relationships all focus on one large group of customers with broadly similar needs and problems.
  • Niche Market - The Value Propositions, Distribution Channels, and Customer Relationships are all tailored to the specific requirements of a specific, specialized customer segment.
  • Segmented - The VP, DC, and CR serves different customer segments that are similar but have varying needs and problems.
  • Diversified - An organization serves two unrelated customer segments with very different needs and problems.
  • Multi-sided Platforms / Markets - An organization that serves two or more interdependent customer segments wherein both segments are required to make the business model work.
• Value Propositions - VP solves a problem or satisfies a need of a specific customer segment with a selected bundle of quantitative or qualitative products or services.
  • Newness Element - A VP that satisfies an entirely new set of needs that the customer segment previously didn't perceive because there was no similar offerings.
  • Performance Element -Improving a product or service's performance higher than market norms.
  • Customization Element - Tailoring products and services to the specific needs of individual customers  or customer segments with mass customization and customer co-creation.
  • "Getting the Job Done" Element - Creating value by simply helping a customer get certain jobs done. I.e. Rolls-Royce customers rely entirely on RR to manufacture and service their jet engines.
  • Design Element - Developing a product that stands out because of it's unmeasurable but superior design.
  • Brand / Status Element - Customers find value in the simple act of using or displaying a specific brand.
  • Price Element - Target price-sensitive customers by offering similar value at a lower price, A Value-oriented customer will require more value but will pay a higher price for it. Free offers are starting to permeate various industries.
  • Cost Reduction Element - Add value to your customer by helping them reduce total cost when using your product or service. I.e. if they purchase your product they won't have to buy related additional products or services.
  • Risk Reduction Element - Creating value by reducing the risk incurred when purchasing your product or service. I.e. One-year service guarantee or 100% cash back guarantee, or 30 day return policy.
  • Accessibility Element - Providing customer with access to a product or service that they previously lacked access to.
  • Convenience / Usability Element - Creating value but making a product or service easier to use or more convenient.
• Channels - Touch points that play an important role in the customer experience via communication, distribution, and sales channels serv several functions including raising awareness among customers about a company's product or services, helping customers evaluate a company's value proposition, allowing customers to purchase specific products or services, delivering a value proposition to customers, and providing post-purchase customer support. Channels have five distinct phases but each channel can cover some or all of these phases. We can distinguish between direct and indirect channel types as well as owned and partner channel types. Finding the right mix of channels to satisfy your customer is crucial in bringing a value proposition to market.
  • Owned channel types can be direct such as in-house sales force or web sales or they can be indirect with retail stores owned and operated by the organization. Owned channels, particularly direct ones, have high margins but can be costly to put in place and to operate. Partner Channel Types are all indirect and span a whole range of options such as wholesale distribution, retail, or partner-owned websites. Partner channels usually have low margins but allow an organization to expand its reach and benefit from partner strengths.
    • Channel Phase 1: Awareness                           - How to get your customer to know about your product or service.
    • Channel Phase 2: Evaluation - How to help your customer evaluate your value proposition.
    • Channel Phase 3: Purchase - How to allow customers to purchase specific products and services.
    • Channel Phase 4: Delivery   - How to deliver the value proposition to the customer.
    • Channel Phase 5: After Sales                                    - How to provide post-purchase support.
• Customer Relationships - The type of relationship established with each customer segment ranging from personal to automated, driven by customer acquisition, customer retention, and boosting sales (Upselling).

• • Personal Assistance - Based on real human interaction
  • Dedicated Personal Assistance - A customer representative provides the deepest and most intimate type of relationship specifically to an individual client over a long period of time.
  • Self-Service - Provides all the necessary means for customers to help themselves with no direct relationship.
  • Automated Services - simulated personal relationship that is a more sophisticated form of self-service.
  • Communities -  To be more involved with customers / prospects and facilitate connections between community members.
  • Co-creation - engaging with customers to create value for other customers or assist with design of new and innovative products.
• Revenue Streams - The cash generated from each customer segment. Each revenue stream may have fixed menu or dynamic pricing mechanisms but will be either one-time payments or recurring revenues.
  • Fixed Menu Pricing Mechanisms - Predefined prices are based on static variables.
    • List price - fixed prices for individual products, services, or other Value Propositions.
    • Product Feature Dependent - Price depends on the number or quality of the VP features.
    • Customer Segments - price depends on the type and characteristic of a customer segment.
    • Volume Dependent - Price as a function of the quantity purchased.
  •  Dynamic Pricing - prices change based on market conditions.
    • Negotiation (Bargaining) - depends on negotiation. power &/or skills
    • Yield Management - depends on inventory and time of purchase.
    • Real-Time Market - depends of supply and demand.
    • Auctions - determined by outcome of competitive bidding.
  • Asset Sale - most widely understood as selling ownership rights to a physical product for which buyers are free to do whatever they want.
  • Usage Fee - generated by the use of a particular service, the more the customer uses the more they pay.
  • Subscription Fees - selling access to a service.
  • Lending / Renting / Leasing - Granting the temporary and exclusive rights to use a particular asset for a fixed period of time in return for a fee.
  • Licensing - giving customers permission to use protected intellectual property in exchange for a fee.
  • Brokerage fees - intermediation services performed on behalf of two or more parties.
  • Advertising - fees for advertising a particular product, service, or brand.
• Key Resources - The most important physical, financial, intellectual, or human assets, either owned, leased, or acquired from a key partner required to create and offer a value proposition, reach markets, maintain relationships with customer segments, and earn revenues.
• Key Activities - The most important things the company must do to operate successfully.
  • Production - designing, making, and delivering a product in substantial quantities and/or superior quality.
  • Problem Solving - coming up with new solutions to customer's problems usually through knowledge management and continuous training.
  • Platform / Network - managing, servicing, and / or promoting the platform used to deliver the value proposition.
• Key Partnerships - Creating alliances between non-competitors, competitors, joint ventures, or buyer-supplier relationships  to optimize the business model, reduce risk, or acquire resources.
  • Optimization and economy of scale - optimize the allocation of resources and activities by reducing costs, outsourcing, or sharing infrastructure.
  • Reduction of risk and uncertainty - competitive companies may partner in one area and compete in another when it benefits all parties involved.
  • Acquisition of particular resources and activities - motived by the need to acquire knowledge, licenses, or access to customers.
• Cost Structures - All costs incurred to operate the business as defined in Key Resources, Key Activities, and key Partnership. Cost structures fall between cost-driven and value-driven extremes. Cost-driven focus' on minimizing costs wherever possible. Value-driven focus' on value creation and less on cost
  • Fixed cost remain the same despite the volume of goods or services.
  • Variable cost vary with the volume of goods or services produced.
  • Economies of sale benefit from lower bulk purchase rates.
  • Economies of scope are cost advantages due to a multiuse of services or materials. Use the same distribution channel for multiple products.