• Business model canvas: Creating a Value Proposition

value proposition in business model canvas

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value proposition in business model canvas

© Entrepreneurial Insights based on the concept of Alex Osterwalder

In this article, we will explore, 1) what is a value proposition , 2) elements of the value proposition , 3) designing  a value proposition , and 4) a case study .

WHAT IS A VALUE PROPOSITION?

In simple terms , a value proposition makes a case for why a customer should pick one product over another, citing the unique value the product provides over its contenders.

The Business Model Canvas value proposition provides a unique combination of products and services which provide value to the customer by resulting in the solution of a problem the customer is facing or providing value to the customer. This is the point of intersection between the product you make and the reason behind the customer’s impulse to buy it.  A product can have a single value proposition or multiple value propositions.

Most start-ups fail to define their value proposition before they launch their products . This is because entrepreneurs tend to give too much credence to the ‘idea’ they have and run with it as opposed to exploring how this idea would actually perform in the market.

It is important for a product to solve a problem in a unique way. The problem could be unworkable, unavoidable, urgent or underserved. On the other end of the spectrum, the need for your product or service could be blatant, critical, aspirational or latent. A blatant need, as the word suggests, is one openly voiced and expressed by the customer. A latent need, conversely, is one which the customer himself may not be aware of having. A critical need is an immediate need that the customer MUST have fulfilled.

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ELEMENTS OF THE VALUE PROPOSITION

Some value propositions are based on the newness or novelty factor that they provide. This element usually comes into play for technology-intensive products.

The telecommunications industry was spawned through the newness element. Originally the market for cellphones was very small but once the technology became more mainstream the market for the product expanded exponentially with increasingly advanced cellphones and smartphones being created to take advantage of the telecommunications technology.

Performance

Better performance has been the hallmark of many product offerings over the years with most industries managing to thrive for decades on improved performance versions of the same products. Intel doubles the speed of its chip every year, resulting in faster computers able to support much more sophisticated software.

Customization

The modern consumer believes in self-expression and individualism. They expect the products they use to be an extension of their personality and a medium through which they can communicate their values and priorities to the world. Providing the option to tailor the product to the consumer’s preferences adds value for the customer. In recent times products have gained heavily on market share through utilizing concepts such as mass customization or customer co-creation. Where traditionally customization has resulted in prohibitively expensive products, today this option provides the opportunity for customers to put their personal stamp on a product while still providing economies of scale.

Nike lets its customers customize their shoes through NikeID on their website. A consumer can go online and create a completely original design with their preferred color palette, placement, color and size of the swoosh etc for their shoes. They can see what the end product will look like visually, play around with different permutations till they reach a result that suits their tastes and then order the final product when they are ready.

Getting the job done

When a product helps a consumer or business reach the end goal, its value proposition is getting the job done. Rolls Royce is best known for the cars they make but one of their major value propositions is getting the job done through the jet engines they manufacture and service for Boeing as well as providing financing through leasing.

A product whose value proposition is ‘getting the job done’ enhances the customer’s productivity and helps the customer to focus on more relevant details.

Most clothing labels rake in a higher price tag because of the superior design they have. Prada charges top dollar for something as simple as a T-shirt because of the strength of its designs.

Brand/ Status

Design and brand/status can be clustered together because their appeal is quite similar. Just as people will show loyalty to a brand because of its design, people will also show loyalty to a design because of the perceived status the brand name itself lends to the owner or user.

Almost everyone today owns and wears a watch on a regular basis but the brand of the watch could vary from your local watchmaker/ jeweler to the iconic brand Rolex. A Rolex is more than just a watch though, it is a statement that the wearer has money and status, since even a simple Rolex is exorbitantly expensive compared to regular brands.

Ultimately a brand/ status intensive product will help the customer look and feel in control, important and part of the in-crowd.

One of the most common elements a value proposition is based on is price . There are many companies that enter into the market with the premise that they are providing a product or service which is cheaper than the existing options in the market. However, organizations competing on price, or in some cases, even offering free services, usually have different business models to sustain the organization.

One example is the spate of ‘no frills’ airlines that sprung up like Southwest airlines. Southwest offered fares equivalent to a bus-ride, however, in a complete about face from the traditional airline, they did away with all the extra services which formed the pomp and show traditional airlines charged a premium for. In doing so, Southwest opened air travel up to a section of the market which had been previously untapped; the common man.

Cost Reduction

Products and services catered towards enhancing customer experience by reducing the cost a customer would ultimately incur cater to the cost reduction value proposition.

Technology has played a great role in helping consumers reduce costs. One such example is Salesforce.com which allows customers to use a customer relationship management software for a fee, voiding the need for the customer to buy the software, hardware and install and run it, each action associated with a significant cost.

Risk Reduction

The less risk associated with purchasing a product or service, the more value a customer derives from it. A reduction of the risk associated with a purchase provides peace of mind to a consumer. One example of this is the one year service warranty received when buying a used car. In the buyer’s mind, the risk of buying a second hand vehicle is diminished by the comfort of having the warranty.

Essentially a product whose value proposition is Risk Reduction aims to make people feel safer, whether real or imagined safety, as well as guarantees a solution to a problem he/ she is facing for a time bound period.

Accessibility

Another key ingredient for an effective and robust value proposition is making a previously inaccessible product or service available to a consumer segment. Innovative technologies and variations in business models have both led to offering accessibility to unserviced customers. NetJets is a wonderful example of providing accessibility. The company allows individuals and corporations to have access to private jets, which has traditionally been cost prohibitive and therefore unavailable to many who did not have the cash reserves to afford this luxury.

Convenience/ Usability

Providing consumers with a product that increases their convenience or is characterized by ease of use is a very strong value proposition and one on which some companies have built empires and legends around. One example of this type of value proposition is Apple which through its iconic iPod provided consumers with a convenient way to listen to music and by pairing it with iTunes, increased the convenience factor significantly; since now users could easily search, download and play songs, all through one medium!

DESIGNING A VALUE PROPOSITION

value proposition

When designing a value proposition we often use traditional tools and models instead of thinking outside the box or taking into consideration how much technology, businesses and consumers have evolved. Ultimately, we need to understand whether what an organization delivers actually matters or is it relevant to a customer’s needs.

A value proposition can be more effectively designed by utilizing a value proposition canvas, which is essentially an equation of three key ingredients. First, the entrepreneur needs to understand the customer in its entirety by creating a customer profile through analyzing customer jobs, their pains and their gains. This is followed by a value map which clarifies the products and services offered to the customer, their pain relievers and gain creators. Finally a Fit will be achieved when a match is achieved between the Customer Profile and the Value Map.

Products and Services

It is important in the beginning to do an evaluation of the products and services around which your value proposition is built.

Products can be either tangible or intangible. They can also be characterized as digital or financial. When designing and evaluating your value proposition, it is crucial to get inside the customers head. A useful exercise would be to rank your product and services offerings in order of importance to the consumer. For this, the company needs to understand the appeal of the product. Is it a must-have for the customer because it fulfills a basic need? Or does it serve a functional, social or emotional requirement?

Pain Relievers

Your product or service must solve a problem the customer is facing. In essence it is relieving a chronic pain that the customer goes through on a regular basis and which no other product has been able to alleviate to the same degree. This pain could take the form of emotional stress, higher costs and increased risks

An effective way to evaluate your product is to analyze whether it generates lower usage of customer resources such as time, effort or money; Produces a positive change in the customer’s life by reducing his/ her frustration, monotony or boredom; resolve the challenges customers may face, reduce the chances of negative social stigmas and behaviors, reduce risks, alleviate stress, reduce chances of error, eliminate barriers between the customer and a possible solution etc.

By ranking the intensity with which each of these pains impacts your customer and the frequency of their occurrence, an entrepreneur can build up a detailed analysis of the pain relievers the various products and services in his/ her repertoire represent for customers.

Gain Creators

In this section, an entrepreneur needs to evaluate how the products and services in his portfolio lead to customer gains. An effective metric would be to understand how aspects of your products and services would enhance the customer experience by fulfilling his/ her expectations and wishes and even going beyond to surprise and delight him/ her.

The entrepreneur can analyze whether the product or service results in savings that delight the customer, has results that meet or surpass customer expectations, produce better results than the alternatives the customer is currently using, result in positive social relationships and status, fulfill a customer need and are easy to adopt, among other concerns.

By ranking the intensity with which each of these gains impact your customers and the frequency of their occurrence, an entrepreneur can build up a detailed analysis of the gain creators the various products and services in his/ her repertoire represent for customers.

Steps for using the Framework

In short, following are the main steps for using the framework effectively and efficiently;

  • Jot down all the products and services in your portfolio which combine to make up your value proposition
  • Describe how your value proposition contributes to eliminate your target customer’s pain points. Separate sticky notes should be used for each pain reliever
  • Describe how your value proposition contributes a positive result for your target customer. Separate sticky notes should be used for each gain creator.
  • Ultimately all three elements; products and services, pain relievers and gain creators should be ranked according to their relative importance to the target customer.

Best practices & Common mistakes when using the Framework

Best practices.

  • List only the combination of products and services that directly provide value to the relevant customer segment.
  • Pain reliever and gain creators list characteristics of your products and services that are of relevance to the target customers.
  • Products and services will be of value to customers only if they match the target segment’s profile, pains and gains
  • It is imperative for an entrepreneur to understand that no product or service will be able to meet all the pains and gains in a customer’s profile. Instead the entrepreneur needs to prioritize which pains and gains their product and service should match.

Common Mistakes

  • Mention all the products and services in your portfolio regardless of the specific customer segment they target.
  • Categorize your products and services as either pain relievers or gain creators.
  • Add additional pain relievers and gain creators even if they don’t match the pains or gains in your target segment’s profile
  • Try to resolve all pains or gains of the target segment.

[slideshare id=9945937&doc=customersegmentsandvaluepropositionforslideshare3-111030040451-phpapp01]

Evernote is an online company aiming to provide mobile professionals with the capability to take notes while they are on the move.

The main webpage provides a detailed overview of how the product and its various features can help its target market store organize and interpret a seemingly random hodgepodge of information and data. The website makes the features of the service as well as the overall experience come alive for the consumers, helping them understand how they can benefit by using the service.

The trifecta of the service features, the advantages of using Evernote and the overall customer experience are matched exactly to the customers wants, needs and fears. The company has also created further bifurcation of its customer segment so that each page is tailored to a specific kind of customer with the inherent benefits the customer can reap mentioned as well, creating a rudimentary level of customization.

The website’s value proposition is a quick and simple tool that syncs easily with other platforms so sharing ideas is convenient.

  • One workspace for all
  • Write everyday
  • Work together
  • Gather research
  • Find everything fast
  • Share your ideas
  • Stay in sync
  • Removes the need to carry notebooks, consolidated notes or other forms of data around
  • Removes the need for complicated slides during meetings
  • Single place to save online material available on a topic of interest
  • Economically accessible for individuals without requiring a heavy investment in hardware or software
  • Provides a common working space for a team to share ideas and information
  • Provides access to freelancers, and individuals to a free service where his or her notes are backed up and available to him at a moment’s notice,
  • Cost effective for individuals who can use the service for free
  • Provides tools that help customers effectively and efficiently plan and execute projects.

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Value Proposition Canvas Template and Examples – Step-by-Step Guide

The Value Proposition Canvas provides a framework that centers your customers. It supports understanding the problem your customer is truly trying to solve so that you can design an elegant and effective solution.

Value Proposition Canvas

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Table of Contents

Understanding and effectively communicating your value proposition to customers is important in business. One powerful tool for achieving this is the Value Proposition Canvas developed by Alex Osterwalder , a part of the Business Model Canvas that evolves dynamically, birthing new value propositions by uncovering unmet customer needs through the “Jobs to be Done” theory . The Value Proposition Canvas is a great tool serves as a framework to guarantee that a product or service aligns with the values and needs of the customer. By adopting a value proposition canvas approach , businesses can fill in the value and tailor their offerings to address specific customer pain points and desires. With a clear understanding of customers’ problems and needs, businesses can develop compelling value propositions that resonate with their target audience and differentiate themselves in competitive markets.

Understanding your customers’ desires helps you grasp what they want to achieve while addressing obstacles get in the way. In the circles of a successful value proposition framework, the value proposition is represented by the Value Proposition Canvas and Business Model Canvas . At Digital Leadership, our specialized Business Model Strategy services leverage the potential of both the Value Proposition Canvas and the Business Model Strategy. Through this integration, we catalyze transformative changes that resonate closely with shifting market trends and customer preferences. our Innovation Blueprint service adds another dimension to our offerings. we help businesses develop comprehensive strategies for fostering innovation across all aspects of their operations.

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In this complete guide, let’s take a look at the intricacies of the Value Proposition Canvas, providing a step-by-step template help you understand your customers’ needs trying to satisfy them and help them fulfill the gains. and real-world examples to illustrate its application. Whether you’re a seasoned entrepreneur or embarking on a startup journey, mastering the Value Proposition Canvas can significantly enhance your business strategy and success.

What is Value Proposition Canvas

The Value Proposition Canvas functions as a framework to guarantee that a product or service is strategically aligned with the customer’s values and needs. Developed by Dr. Alexander Osterwalder, the Value Proposition Canvas ensures a harmonious fit between the product and the market. The Value Proposition Canvas provides a structured approach to identifying customer pains, gains, and jobs to be done , as well as mapping how products or services alleviate customer pains and create gains.

In crafting a Value Proposition Canvas to map customer needs effectively, it’s imperative to start with a thorough understanding of your target customers’ profiles. This involves identifying the jobs they need to accomplish in their work or life, the obstacles they face, and the outcomes they desire. By recognizing the jobs customers need to fill and the outcomes they seek, you can develop products or services that address their specific needs and help them fulfill their goals. This process ensures that your offerings align closely with customer expectations and provide meaningful value.

The alignment between the customer profile and the value proposition map is essential for ensuring that businesses achieve product-market fit. This alignment involves identifying how each element of the value proposition map corresponds to specific aspects of the customer profile, thereby ensuring that products or services effectively address customer needs and deliver value.

Explore profound insights in our book, “How to Create Innovation” – the ultimate guide to business strategy . This comprehensive resource includes in-depth information about crucial concepts such as Business Model Canvas and the Value Proposition Canvas , providing you with the tools to drive innovation and strategic excellence in your endeavors.

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Value Proposition Canvas Template For Mapping Customer Needs

The Value Proposition Canvas Template is divided into three key parts:

  • The Customer Profile in the center allows you to get into your customer’s head and thus clarify their jobs to be done.
  • The Product Value Map on the left helps you describe how you intend to create value for that customer. The ultimate objective is to achieve fit between the Customer Profile and the Product Value Map. You have achieved that fit once the product solves a clear Job to be Done
  • The substitutes section outlines what people are currently using to solve their JTBD and identifies inertias that might prevent them from switching to your solution, even if it is superior. Most organizations struggle to understand the alternative solutions. Gaining a customer means not only serving their need but overcoming their resistance to trying something new.

Each part plays a crucial role in understanding and addressing customer needs effectively.

Value Proposition Canvas

Customer jobs refer to the tasks, activities, or problems that customers are trying to solve in their work or life. These jobs can be functional, emotional, or social in nature. Understanding functional jobs helps you identify what customers are trying to achieve, while emotional and social jobs reveal deeper insights into their desires and aspirations.

  • Main Jobs to be Done : This represents the primary goal or task the customer intends to accomplish. Sometimes, customers may have latent needs that they aren’t consciously aware of, which can be unveiled through exploring their jobs to be done.
  • Functional Jobs : These are the practical tasks or requirements that customers need to fulfill. They often reflect rational motivations and can be mapped out in detail using a Job Map .
  • Emotional Jobs : Emotional drivers influence decision-making by representing desires and aspirations for improvement in various aspects of life. These desires, while sometimes abstract, can significantly impact purchasing behavior.

Crafting the Jobs to Be Done Customer’s Job Statement model helps to distill the essence of the customer’s job into a concise and actionable statement. This model emphasizes understanding the customer’s Needs, Tasks, and Objectives, as well as the associated Context and Constraints. By utilizing this framework, businesses can gain deeper insights into the functional, emotional, and social dimensions of the customer’s job, enabling them to tailor their products or services more effectively to meet customer needs and desires.

Jobs to be Done Customer's Job Statement

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Jobs-to-be-Done Statement_Map

Customer pains in value proposition.

Pains represent the obstacles, challenges, or frustrations that customers encounter while trying to accomplish their jobs. These can range from tangible issues such as high costs to intangible concerns such as fear of change. By understanding your customers’ pains, you can develop solutions that address their specific needs and alleviate their frustrations.

Customer Gains in value proposition

Gains are the benefits, outcomes, or positive results that customers expect or desire from successfully completing their jobs or overcoming their pains. These can include functional gains like increased efficiency, emotional gains such as peace of mind, or social gains like enhanced social status. By exceeding customers’ expectations and delivering meaningful gains, you can create value and build lasting relationships with your customers.

2. Product Value Proposition Map

The product section of the canvas uses the widely accepted marketing syntax of features and benefits with the addition of a box for “experience” (taken from the fields of Design Thinking and customer experience architecture). Once businesses have a thorough understanding of customers’ needs and problems, jobs include proceeding to develop pain relievers and gain creators in the value map . Pain relievers are the features or solutions offered by products or services that alleviate customer pains and address the obstacles that prevent customers from achieving their desired outcomes. On the other hand, gain creators are the features or solutions that provide specific benefits or outcomes to customers, thereby fulfilling their needs and desires. Once you have a clear understanding of your customer profile, you can map out how your products or services address their needs and provide value. The Value Proposition Map consists of three key elements:

Pain Relievers:

Pain relievers are the features, attributes, or solutions offered by your products or services that alleviate customer pains and help them overcome obstacles in getting the job done. Whether it’s simplifying complex tasks, reducing costs, or saving time, pain relievers play a crucial role in enhancing customer satisfaction and loyalty.

Gain Creators:

Gain creators are the features, attributes, or solutions that deliver specific benefits or outcomes to customers, thereby fulfilling their needs and wants. By understanding your customers’ desires and aspirations, you can develop gain creators that exceed their expectations and provide added value. Whether it’s improving their emotional well-being, enhancing their social status, or fulfilling their existential needs, gain creators contribute to customer satisfaction and loyalty.

Products and Services:

This section of the Value Proposition Map outlines the specific products or services that your business offers to address customer needs, pains, and gains. It provides a tangible representation of how your offerings align with customer requirements and create value. Whether you’re introducing a new product or improving existing ones, focusing on customer wants and needs is essential for success.

We recommend starting the crafting of your Elevator Pitch immediately to provide yourself with an initial version to iterate. Embracing even imperfect drafts can be valuable! You can then refine it progressively. The Elevator Pitch typically adheres to a standard structure, streamlining the process for you.

Elevator Pitch Template

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Business Model Canvas Template

The Value Proposition Canvas plays a vital role within the Business Model Canvas, a strategic management tool widely utilized in various industries. Within the Business Model Canvas framework , the value proposition embodies the distinctive amalgamation of products or services provided by a business to meet precise customer demands and set itself apart from rivals. Through a deep comprehension of customer challenges and aspirations, coupled with the alignment of products or services to adequately address those needs, organizations can not only attract customers but also drive revenue and foster long-term growth. Let’s delve into the correlation between the value proposition and the business model canvas:

What is value proposition in business model canvas? And its importance?

In the Business Model Canvas, the value proposition represents the unique combination of products or services that a business offers to meet specific customer needs and differentiate itself from competitors. It serves as the core element of the business model, driving revenue generation and customer acquisition.

The importance of the value proposition in the Business Model Canvas lies in its ability to define the value that a business delivers to customers and articulate why customers should choose its offerings over alternatives. By clearly defining and communicating its value proposition, a business can attract customers, generate revenue, and sustain long-term growth.

The key measure of success for a Business Model is the ability to create and capture value. Many Business Model Innovations fail to capture enough value because their solution is poorly conceived. The Value Proposition Canvas is therefore a critical step in designing your overall Business Model.

The Value Proposition Canvas, alongside concepts like the Lean Canvas, serves as a comprehensive guide for businesses seeking to understand and address customer needs effectively. By focusing on how their product adds value and considering both positive outcomes and negative social consequences, businesses can better comprehend what motivates customers to buy and align their offerings accordingly. It’s crucial to always start with the customer, recognizing their desires and aspirations, while also acknowledging the challenges that may obstruct them from fulfilling those needs.

Through this process, businesses can identify the specific problems their customers are trying to solve and craft solutions that help fulfill their goals. By understanding the jobs customers need to accomplish and finding the right approach to satisfy those needs, businesses can create value propositions that resonate with their target audience. Ultimately, the Value Proposition Canvas provides a framework consisting of two essential components—the leftward square focusing on customer profiles and the rightward circle emphasizing value propositions. Leveraging this tool, businesses can develop a deeper understanding of their customers’ needs, refine their offerings, and ultimately achieve success in the marketplace.

Frequently Asked Questions

1. what are the 6 components of the value proposition canvas.

The six components of the Value Proposition Canvas include:

  • Customer Jobs
  • Customer Pains
  • Customer Gains
  • Pain Relievers
  • Gain Creators
  • Products or Services

2. What are the 9 elements of canvas?

The nine elements of the Canvas are:

  • Customer Segments
  • Value Propositions
  • Customer Relationships
  • Revenue Streams
  • Key Resources
  • Key Activities
  • Key Partnerships
  • Cost Structure

3. Why use a value proposition canvas?

The Value Proposition Canvas helps businesses gain a deeper understanding of their customers’ needs, pains, and gains , enabling them to develop products or services that address those needs effectively. It also facilitates communication and alignment across internal teams, guiding strategic decision-making, and fostering innovation.

4. Gain creators vs pain relievers, What is the Difference?

Gain creators are features or attributes of a product or service that deliver specific benefits or outcomes to customers, fulfilling their desires or expectations. Pain relievers, on the other hand, are solutions offered by a product or service that alleviate customer pains or challenges, making it easier for them to achieve their goals. While gain creators focus on enhancing customer satisfaction, pain relievers address obstacles or frustrations that customers encounter.

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Business Model Canvas: Explained with Examples

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Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

Business Model Canvas Explained

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

  • The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
  • The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
  • The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
  • The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
  • The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
  • It’s easier to edit and can be easily shared with employees and stakeholders.
  • The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
  • The business model canvas can be used by large corporations and startups with just a few employees.
  • The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
  • You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
  • The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
  • A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

  • Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Business Model Canvas Template

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

Customer Persona Template for Business Model Canvas Explained

There are different customer segments a business model can target and they are;

  • Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
  • Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
  • Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
  • Diversified: A diversified market segment includes customers with very different needs.
  • Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

  • Personal assistance: you interact with the customer in person or by email, through phone call or other means.
  • Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
  • Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
  • Automated services: this includes automated processes or machinery that helps customers perform services themselves.
  • Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
  • Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

Customer Journey Map

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

  • Owned channels: company website, social media sites, in-house sales, etc.
  • Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

  • Transaction-based revenue: made from customers who make a one-time payment
  • Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

  • Asset sales: by selling the rights of ownership for a product to a buyer
  • Usage fee: by charging the customer for the use of its product or service
  • Subscription fee: by charging the customer for using its product regularly and consistently
  • Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
  • Licensing: customer pays to get permission to use the company’s intellectual property
  • Brokerage fees: revenue generated by acting as an intermediary between two or more parties
  • Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

  • Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
  • Problem-solving: finding new solutions to individual problems faced by customers.
  • Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

  • Human (employees)
  • Financial (cash, lines of credit, etc.)
  • Intellectual (brand, patents, IP, copyright)
  • Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

  • Strategic alliance: partnership between non-competitors
  • Coopetition: strategic partnership between partners
  • Joint ventures: partners developing a new business
  • Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

Value Proposition Canvas

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

  • Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
  • Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
  • Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
  • Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
  • Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
  • Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

  • Use clear and concise language
  • Use visual-aids
  • Customize for your audience
  • Highlight key insights
  • Be open to feedback and discussion

More Related Articles

What is an Action Plan? Learn with Templates and Examples

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

Value proposition canvas: comprehensive guide with examples

Apr 20th, 2021

value proposition in business model canvas

What is a value proposition canvas?

How to fill in a value proposition canvas, examples of value proposition canvas, when you need value proposition canvas.

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Value proposition is a clear and concise statement that summarizes measurable benefits your customers will receive when purchasing the products or services. Value proposition motivates the prospective customers to buy from you and differentiates your offering from similar products in the market. It explains how the product solves customers’ problems. Having a value proposition, which is clearly understood and widely accepted by the target audience, gives your company a huge competitive advantage. Thus, the value proposition answers what you offer, the main benefits of the product to your users and why you are the best option.

Value proposition (sometimes referred to as, unique value proposition or UVP) is a vital component of success for any business. It is the basis of your overall marketing strategy and every product or service you create. Value proposition is a great tool to increase brand awareness and loyalty. By creating a value proposition that appeals to target customers’ needs and pain points, you will better understand your audience and convert leads into buyers.

One of the perfect examples of the excellent value proposition is WordPress . The company’s value proposition is “Create a website in minutes”. This statement illustrates the product (free website) and the benefits for the target customers (the opportunity to develop the website or blog very fast). 

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The other good example is Slack’s value proposition: “Where work happens.” It is targeted at business owners and demonstrates the solution to the problems faced by these people. Value proposition by HubSpot sounds like a simple phrase: “There’s a better way to grow”. This UVP covers the offering and the common goal of the company and the website visitors.

Value proposition canvas is a framework that allows entrepreneurs to establish a product-market fit. It is a tool intended to analyze the relationship between different customer segments and the solutions your business can provide them. The main goal of the value proposition canvas is to shape the product or service to the customers’ requirements.

Swiss business theorist Alexander Osterwalder developed the value proposition canvas in 2014 as a supplement to his Business Model Canvas . During his work on the original framework, Osterwalder understood that people often have difficulties finding the right fit between UVP and customer segments. Value proposition canvas is effective when there is a need to improve the existing product offering or when you want to develop a new offering from scratch. The tool is perfect when you’re working on creating a startup, restructuring the sales process, adding a new feature to the product, and expanding into a new customer segment or new market.

Value proposition canvas structure

Value proposition canvas includes two main elements: the circle responsible for the customer’s profile and the square with a value proposition map. The value proposition canvas template allows for visualizing customers’ needs and defining a response to these needs on one page. It is very convenient to check the match between pains and gains, gain creators, and pain relievers.

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Customer profile 

Jobs. This section includes the problems, tasks, and needs your customers are going to meet. There are several types of customer jobs : functional, social, emotional, and supporting. 

  • Functional jobs are specific tasks your customers want to achieve with your product or service. If you are selling drills, a functional job would be making a hole in the wall to place a new piece of furniture. 
  • Social jobs are related to the impressions people want to make on others with the help of your product or service. In the case of new clothes, a social job would be to look trendy or get compliments from friends.
  • Emotional jobs are related to the feelings the customers want to achieve due to the product. For example, a woman buys some makeup products to feel more confident.
  • Supporting jobs are ancillary tasks when the core job is done. There are three main roles: buyer, co-creator, and transferrer. In the buyer’s role, your customer compares offers, stands in the checkout line, or takes delivery of product or service. The co-creator’s role requires posting feedback or reviews or participating in the design of the product. Transferrer’s role implies reselling the product or canceling the subscription.

Pains. These are the difficulties, negative emotions, risks, and undesired situations the customers face before, during, and after getting the job done. The customer pains can include things that the customers find too expensive or time-consuming, make them feel bad, or the obstacles preventing the customers from coming to a decision.

Gains. This segment should contain the benefits, desires, and positive experiences the customers have. Gains often include cost savings or functional utility. It is essential to mention that pains and gains are not polar notions, so they are not necessarily interrelated.

Value proposition map 

Products and services. Here you need to mention the products and services which relieve a pain and create a gain for the customer. You can also add various versions of products like standard and premium. 

Pain relievers. This section describes how the product or service solves undesired situations, alleviates risks, or reduces negative emotions when your customer gets the job done.

Gain creators. This part of the value proposition map explains the extra value of the product or service, the expected benefits, and how the product would make your customer happier. You can also mention what your product does better than the other offerings in terms of quality, functionality, usability, and other features.

Therefore, value proposition canvas allows you to put yourself in a customer’s shoes and better understand their wishes.

Value proposition canvas seems to be quite easy to understand; however, filling it in requires some effort. You need to see your business from the customer’s perspective and go through all possible questions from the target audience. Avoid a common mistake of completing both sides of the canvas simultaneously. Instead, start from the customer’s side of the template. 

Uncover customer jobs

Besides the types of the jobs (functional, social, emotional, and supporting), there are other important things to consider, such as the context (place, time, event), observations (past behaviors and decisions), and situational analysis (the anxieties and motives). Examples of customer jobs are eating at a restaurant, attending an event, learning a new skill, buying clothes, choosing a new car, etc.

Here are some key questions to define customer jobs:

  • What is the main goal your customer wants to accomplish?
  • What are the context and the situation?
  • What are the customer’s needs for every stage of getting the job done?
  • What are the tasks the customers try to complete in work or personal life?
  • What emotional needs does the customer try to fulfill?

List customer pains

Pains are the things that prevent your customer from achieving the goals. There are different types of pains, including internal and external adverse outcomes, risks, and obstacles. Customer pains can be severe or light. 

For example, an office worker feels a loss of productivity during the day. He gets interrupted every 11 minutes and it takes about 25 minutes to return the focus on the original task. The solution to this pain would be a mobile application that blocks social media and certain notifications.

As in the case with the jobs, the pains can also be subdivided into functional, social, emotional, and ancillary.

The trigger questions to understand customer pain points are:

  • What makes customers feel bad?
  • What do your customers find too costly, time-consuming, or demanding significant effort?
  • What are the main challenges and difficulties faced by your customer?
  • What are the negative social consequences your customers are afraid of?
  • What are the financial, technical, or social risks your customers fear?
  • What are the common mistakes your customers make?

Describe customer gains

Customer gains are the benefits and positive outcomes expected or desired by the customer. Depending on the gains’ overall significance, they can be distinguished into minimum requirements, the basics, desired gains, and unexpected benefits. Some gains are more preferred than others. For example, the gains can include feeling like a valued team member or saving costs on electricity bills.

The main questions you need to ask to define gains include:

  • Which savings would make your customers feel better?
  • What would make your customers’ lives and jobs easier?
  • What quality levels do they expect?
  • How do your customers estimate success and failure?
  • What do they dream about?
  • What are the positive social consequences they want?
  • What features do the customers expect from your product or service?

Define your offering

The next step is to focus on the left side of the canvas and outline the products and services you offer. You have already listed the problems in the customer profile part, so now you can prioritize jobs, gains, and pains according to their importance - from the most severe to least significant.

Lay out pain relievers

Pain relievers outline how the products and services can alleviate the pains you already described on the other side of the value proposition canvas. Different pain relievers address different pain points. Examples of pain relievers are reviews and videos to assure the quality of the product or a guide for a device.

To list the pain relievers, you can answer the following questions, if the product can…

  • … produce cost savings, reduce the time and effort needed to complete the job?
  • … make the customers feel better?
  • … solve difficulties and challenges faced by your customers?
  • … eliminate financial, social, and technical risks your customers encounter?
  • … put an end to the mistakes customers make?

Outline gain creators

Gain creators are the ways in which you can improve your customers’ life and create benefits like positive emotions, cost savings, functional utility, and social gains. You need to assess how your product or service would help your customers receive desired or unexpected benefits. 

The key questions are whether your products and services could…

  • … deliver cost savings, save time and effort?
  • … exceed the customers’ expectations in terms of outcomes?
  • … make your customers’ life more manageable?
  • … create positive social impact?
  • … fulfill the customers’ dreams by helping them realize aspirations?
  • … help make adoption easier?

After completing the listed steps, you need to measure the fit between the customer’s needs and value proposition. The target goal is for your gain creators and pain relievers to cover at least 50-70% of the customer gains and pains. 

Let us consider five examples showing how you can work with value proposition canvas in practice.

Adidas x Parley

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Source: finchandbeak.com

In 2015, the largest sportswear brand Adidas and ecological organization Parley partnered to produce a clothing and footwear collection. The brands developed the concept of sneakers made with recycled ocean plastic. Above is an example of the value proposition canvas for the Adidas Parley sneakers. 

The main aspects of the value proposition canvas are the following:

  • The product is sneakers for leisure and sports. The footwear design is functional and attractive, so it satisfies the consumers’ requirements;
  • Visible branding and limited edition create the feeling of belonging to the exclusive club. 
  • Ocean plastic storytelling increases brand recognition in the world.
  • 6-month warranty serves as a pain reliever so that consumers would have fewer doubts about the product quality.

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Source: designabetterbusiness.com

Value proposition canvas by Tesla shows an admirable product-market fit and a deep understanding of the target audience. In contrast to the other cars in the market, Tesla has a 17-inch touchscreen display and a beautiful design that makes it exclusive. The eight years battery warranty is a huge pain reliever. Besides the functional gains, the offering also provides emotional and social gains, including compliments from your friends.

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Source: slideshare.net

Value proposition canvas by Apple Pay provides the customers such gains as privacy, fast checkout at retail stores, and the ability to shop anywhere. The customers can store and manage cards digitally instead of carrying the wallet, cash, or cards. The offering’s features fully compensate for the main pain points: theft and fraud, lack of security, the necessity to have a photo ID, and the customers’ needs in finance protection. That’s an example of an excellent product-market fit.

Harvard University website 

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Source: medium.com

The value proposition canvas of the Harvard University platform demonstrates that the offering is aimed to improve multiple customers’ jobs. The platform helps relieve pains related to social (communication with faculty and peers, feel integrated into the community), functional (planning schedule, submitting assignments on time), and emotional (feeling comfortable and confident) jobs. 

The website has many useful features that comply with such pain points as lack of centralization, absence of direct communication tools, and lack of visibility across all courses. The product serves as a peer-to-peer interaction tool, course dashboard, centralized student platform, and homework management tool.

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Source: businessmakeover.eu

The value proposition by Airbnb is targeted at the customer segment that comprises the travelers looking for a place of accommodation for the group. Their critical pain points include finding appropriate housing for a reasonable price, the risk of fraud, and a large number of holiday homes which creates difficulties with making a final decision. 

Airbnb provides the opportunity to read the other visitors’ reviews and book the apartment online, which eliminates the risk of fraud. The customers can also search for housing according to personal preferences and easily find a place to stay. Thus, there is a good correlation between the product value and the customers’ needs.

Value proposition canvas would help in a variety of business situations, such as entering refining your marketing strategy or finding new opportunities to market your product . 

Finding the product-market fit

One of the most common situations where the value proposition canvas will come in handy is when you will be testing the product-market fit. Value proposition canvas will help you understand the needs of the target audience and create a product that will fulfill the requirements.

Entering a new market or customer segment

If you are going to sell into a new market or market segment, a value proposition canvas will help you to understand whether the market truly needs the product or service or not. The analysis of the customer problems will allow you to make the right decision.

Refining marketing strategy

Value proposition canvas is an easy way that will help your team visualize and improve the marketing strategy. It is also a relevant tool to create a winning go-to-market strategy for startups. 

All-in-all, value proposition canvas is a systematic approach to defining a unique value proposition. It is a major step in driving overall marketing strategy because it covers the most vital aspects of your business — your customers and your product. Value proposition canvas encourages you to ask questions and perceive the world through your customers’ eyes, which is the keystone of success for any business.

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The Business Model Canvas

What is the business model canvas.

The business model canvas is a tool designers use to map out a business or product’s key actors, activities and resources, the value proposition for target customers, customer relationships, channels involved and financial matters. It gives an overview to help identify requirements to deliver the service and more.

“A business model describes the rationale of how an organization creates, delivers, and captures value.” — Alexander Osterwalder, Co-creator of the Business Model Canvas  

Learn about the business model canvas and how it helps in design.

  • Transcript loading...

The Business Model Canvas – Flexible Chart, Early-Warning System and More 

In service design , two tools are essential to use early in your design process: the business model canvas and the value proposition canvas . You can use the business model canvas to build an overview of changes to be made to an existing business (e.g., a merger) or of a totally new business opportunity or market gap . At the start of your design process, it’s vital to map out the business model of your service to see how it will fit into the marketplace. You’ll also need to ensure what you propose can bring maximum value to both your customers and business, and keep doing so in terms of customer retention, profitability and more.

To gain the most accurate vision of a proposed product or service, it’s essential to understand all the components and dynamics of not only the customer experience but also the service as a whole ecosystem . This ecosystem contains all the channels and touchpoints that must work together to deliver and sustain maximum value to the customer.

This canvas gives you several important advantages, namely these:

It’s collaborative – so you can bring the various partners together on the same page to generate and analyze ideas, and have an early testing ground for concepts before you advance to service staging a prototype.

It’s human-centered – so you can keep close track on how to create and maximize value for customers as well as stakeholders and other partners.

It makes it easier to collect rich data – if you have a clear purpose and strategy in mind. 

A business model canvas typically contains 10 boxes:

Key Partners – The people who will help you fulfill the key activities, using the key resources. 

Key Activities – Those vital actions that go into the everyday business to get things done; these are all the activities needed to realize and maintain the value proposition, and to power everything else involved.

Key Resources – The tools needed to get those things done, stretching across all areas the canvas covers to include, for example, customer retention.

Value Proposition – The item you think will create value for your customer: e.g., a new idea, a price drop. This is a summary of what your business will deliver to customers, and feeds into the value proposition canvas, the tool you’ll use to expand this.

Customer Relationships – Where you envision the relationship each customer segment expects: e.g., customer acquisition, retention and upselling (i.e., How do you get customers? How do you keep customers? How do you continue to create value for them?).

(Note: boxes 5 and 4 are closely linked as everything you do revolves around retaining the customer and considering the customer lifecycle.)

Customer Segments – Your most important customers (e.g., seniors); consider the value of personas here.

Channels – How you deliver the value proposition. Will it be online, through physical means or a combination? Here, you identify which channels are the best (both desirable for customers as well as cost-efficient and cost-effective for the brand).

Cost Structure – Here you find the most essential cost drivers. This allows you to consider the return on investment (ROI).

Revenue Streams – Where you find potential revenue sources (e.g., advertising). 

Sustainability – How sustainable your offering is overall, to the environment, to the social good, etc.

value proposition in business model canvas

© Strategyzer AG, modified, CC-BY-SA-3.0

How to Build a Business Model Canvas

For the best results, follow these guidelines and aim to fill in all the gaps, looking out for cause-and-effect relationships that run between boxes/throughout:

Complete the top seven boxes (Key Partners to Customer Segments) – using all the information you can gather from your research.

Complete the next boxes:  

Cost Structure – Determine the cost drivers from the Key Partners, Activities and Resources boxes; and

Revenue Streams – Determine these from the Customer Relationships, Customer Segments and Channels boxes.

Once you have established these, you can work to estimate them in monetary terms.

Complete the Sustainability box – according to the insights you’ve found.  

Here’s an example of a business model canvas as a work in progress:

value proposition in business model canvas

© Interaction Design Foundation, CC BY-NC-SA 3.0

Overall, remember your canvas is a flexible tool. It’s also a living document that you can revisit and use to find the most effective alternatives. With a clear sense of goals, a keen eye for detail and ear for input, and a readiness to refine this canvas, you can use it to fine-tune the best service prototype every time.

Learn More about The Business Model Canvas

Take our Service Design course , featuring a template for service blueprints.

Read this example-rich piece by experienced strategy designer Justin Lokitz for tips on using the business model canvas .

Find some additional tips on how to make the most of your business model canvas here .

Literature on the Business Model Canvas

Here’s the entire UX literature on the Business Model Canvas by the Interaction Design Foundation, collated in one place:

Learn more about the Business Model Canvas

Take a deep dive into Business Model Canvas with our course Service Design: How to Design Integrated Service Experiences .

Services are everywhere! When you get a new passport, order a pizza or make a reservation on AirBnB, you're engaging with services. How those services are designed is crucial to whether they provide a pleasant experience or an exasperating one. The experience of a service is essential to its success or failure no matter if your goal is to gain and retain customers for your app or to design an efficient waiting system for a doctor’s office.

In a service design process, you use an in-depth understanding of the business and its customers to ensure that all the touchpoints of your service are perfect and, just as importantly, that your organization can deliver a great service experience every time . It’s not just about designing the customer interactions; you also need to design the entire ecosystem surrounding those interactions.

In this course, you’ll learn how to go through a robust service design process and which methods to use at each step along the way. You’ll also learn how to create a service design culture in your organization and set up a service design team . We’ll provide you with lots of case studies to learn from as well as interviews with top designers in the field. For each practical method, you’ll get downloadable templates that guide you on how to use the methods in your own work.

This course contains a series of practical exercises that build on one another to create a complete service design project . The exercises are optional, but you’ll get invaluable hands-on experience with the methods you encounter in this course if you complete them, because they will teach you to take your first steps as a service designer. What’s equally important is that you can use your work as a case study for your portfolio to showcase your abilities to future employers! A portfolio is essential if you want to step into or move ahead in a career in service design.

Your primary instructor in the course is Frank Spillers . Frank is CXO of award-winning design agency Experience Dynamics and a service design expert who has consulted with companies all over the world. Much of the written learning material also comes from John Zimmerman and Jodi Forlizzi , both Professors in Human-Computer Interaction at Carnegie Mellon University and highly influential in establishing design research as we know it today.

You’ll earn a verifiable and industry-trusted Course Certificate once you complete the course. You can highlight it on your resume, CV, LinkedIn profile or on your website.

All open-source articles on the Business Model Canvas

Service design - design is not just for products.

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Denis Oakley & Co

Denis Oakley & Co

I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

February 10, 2018 By Denis Oakley

The Value Proposition in the Business Model Canvas: What Problem are We Solving?

This is the second lesson in our free business model canvas course . In this lesson we cover the role of the value proposition in the business model canvas. Customers have problems. They need solutions to THEIR problems. A value proposition solves the problem for them. Shell solves the problem of how people get to work. It provides the petrol that powers their cars. Google solves the problems of not knowing about X. It provides the most relevant useful results on the internet. Jim Bean solves the problem of emotional pain and loneliness by reducing inhibitions.

Photo by rawpixel.com on Unsplash

Customer Pain and the Value Proposition

So when we start thinking about the value proposition the first step is always to think about the problem that we are solving. There are some great questions that you can ask as you think about this.

  • What is the pain
  • Who has the pain
  • How painful is it
  • How is it being solved now
  • How much will people pay to avoid it?

Let’s use knowledge as an example. There are frequent times during the day when i want to do something. Often I don’t know how to do it. It may be treating a child for a bumped head, finding a particular item in a shop, translating something someone says or learning how to water avocado trees.

The problem is that I do not know the information I need to do a good job for any of these tasks. the pain is that I have to spend lots of time finding out answers. alternatively I have to accept a substandard solution as I solve it myself.

In this case almost everyone in the developed world has a lot of problems that they don’t have immediate answers for. This is a function of the size and complexity of the society and the rate that it is changing at.

When I want to do lots of things the pain is pretty intense. In some cases it can be a matter of life or death – How do I say that

My daughter has been bitten by a sea snake

in Thai? (ลูกสาวของฉันได้รับการกัดโดยงูทะเล). In other cases it is trivial.

Right now this problem (in the 90’s) was being solved by asking friends or family, using encyclopaedia and calling companies in the yellow pages.

How much will people pay to avoid the pain of not having a good answer almost immediately. As it turned out, people didn’t want to pay. They’d always got the information for free. Why should they start paying for it now. And anyway how do you value the information in so many cases and for so many people?

We now know how Google developed it’s value proposition to answer these questions. This is the process that every business needs to go through as it determines the value that it provides to customers. It is no longer enough to say “We make X”. Too many industries are being disrupted to make that viable for more than a few years. You need to say “We are solving this problem” A value proposition is a clear way of doing that.

The Value Proposition in the Business Model Canvas

The Value Proposition  in the business model canvas is the unique offer your company provides to the customers. It can be a product or service that solves the customer’s problem.

For example, Domino’s Pizza delivers hot fresh pizza to you within 30 minutes or else it is free.

The Value Proposition in the Business Model Canvas: What Problem are We Solving?

Hence, Domino’s Pizza value proposition is the guaranteed short delivery time customers receive.

What is my Value Proposition?

Your value proposition has to be clear to convince customers to do business with you and benefit from it.

Here is a formula that will assist you in crafting a value proposition:

End Result Customer Wants + Specific Period of Time + Addresses the Objections

Example,  Domino’s Pizza

(End Result)  Customers want hot fresh pizza to be delivered to their doorstep.

(Specific Period of Time)  Domino’s Pizza aims to deliver hot fresh pizzas in 30 mins.

(Address the Objections)  If Domino’s Pizza fails to do so, customers do not have to pay for the pizza

*Tip* It is ideal to include all 3 categories into a value proposition but not necessary.

This formula allows your customers to immediately understand how the product benefits them. Customers choose Domino’s Pizza because they are guaranteed hot fresh pizza in 30 mins, if not they will receive other benefits (free pizza).

Moreover, it forces you to think more about the customer and less about the solution. This is emphasized over and over again as we have the tendency to focus on the (first) solution instead of listening to the customers’ problems.

Checklist The following will give you the confidence you are on the right track:

Will your value proposition tempt your customer to read further if it was used a the header of an article?

Check if your focus is on your customer problem instead of your product. Example: We sell green salad vs Take a healthy lunch and feel better each day

How to Build a Great Business Model Canvas – The FREE Course

  • Introduction 
  • Value Propositions
  • Marketing & Distribution Channels
  • Customer Relationships
  • Key Resources
  • Key Activities
  • Key Partners & Suppliers

About Denis Oakley

Explorer | Trail Runner | Mountain Lover

'Big' companies are civilisation. I stay in the wilderness guiding entrepreneurs and startups on their journey to becoming 'Big'.

Then I head back to the frontier

Strategy | Marketing | Operations

Ready to start?

The Value Proposition in the Business Model Canvas: What Problem are We Solving?

I help entrepreneurs transform their industries through wiser choices

Outcome : More Traction, Bigger Rounds, Better Products

Method : Problems, Customers, Business Models, Strategy

value proposition in business model canvas

The 9-Step Business Model Canvas Explained (2023 Update)

value proposition in business model canvas

Written by Raquel Alberdi

Business | entrepreneurship, 16 comments(s).

Business Model Canvas

Blog » The 9-Step Business Model Canvas Explained (2023 Update)

value proposition in business model canvas

“A major mistake made by many start-ups around the world is focusing on the technology, the software, the product, and the design, but neglecting to ever figure out the business . And by “business” we simply mean how the company makes money by acquiring and serving its customers”.

-Reid Hoffman

After meeting with hundreds of entrepreneurs and business owners over the years I believe the LinkedIn co-founder and Blitzscaling author Reid Hoffman’s got it spot on.

People tend to focus on specific parts of their business, such as which software packages are being used, which is the cheapest supplier, how to optimize internal processes…?

They get so bogged down in the details of the day-to-day running that they lose the overall vision of their business.

Without this vision they are unable to scale, they make marginal profits, miss opportunities, struggle to innovate, and end up running “just another” business.

Another handy metaphor in understanding this common mistake is the soldier in the trenches .

Every meter of ground gained comes at a heavy cost, mistakes are made, and progress is hard-fought and slow…a day-to-day experience for 99% of entrepreneurs and businessmen.

But when you do have that 360 vision you see the entire battlefield. Decisions are much clearer, fewer mistakes are made, and progress is fast and methodical.

Fortunately, a business model framework exists that gives you both vision and clarity .

The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind.

So let’s take a closer look at how it works.

Table of Content

What is the Business Model Canvas?

Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It’s a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.

Why is it so popular within the business community?

Its simplicity. The business model canvas allows us to carry out a high-level analysis without drilling down and getting lost in the details. You just draw out the 9 building blocks on a blank canvas, fill them in as each concept relates to your business, and hang it somewhere everybody can see.

It’s a visual overview of your entire business on a single canvas.

While the Business Model Canvas is an extremely fluid concept and hyper-specific to individual companies, each canvas is still broken down into these 9 key building blocks:

Customer Segments

Value propositions, customer relationships, revenue streams, key resources, key activities, key partners.

When laid out on the canvas the model will look something like this:

 Scheme of business model in which 9 important fields are developed for its execution.

While you’ve probably come across each of the 9 building blocks before, the attractiveness of the Business Model Canvas is that it confines them to a single page , not a traditional 42-page document.

This makes it a lot easier to digest, as well as assess existing business models or map out new ideas.

How do I fill out the Business Model Canvas?

To start your Business Model Canvas you will need to breakdown and analyze each of the 9 building blocks.

A good way to approach this is to gather the heads from marketing, sales, operations, finance, and manufacturing (if product-based) and pencil-in a morning where you can all meet together.

Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of the 9 building blocks as they relate to your business. You can use sticky notes to better organize your thoughts around the canvas.

If you are an entrepreneur or new business owner working alone and don’t have a team to bounce your ideas off, not to worry. You can still carry out your analysis before sharing it with a like-minded entrepreneurial community or forum, like those found on ThePowerMBA , to get useful, insightful feedback.

Whichever way you decide to approach it, I recommend you complete each block in the following order:

  • Cost structure

For continuity, I’m going to use the fashion retail giant Zara when analyzing each of the 9 key building blocks.

If you’d like to skip to another case study similar to your own business, navigate to the table of contents at the top of the page and select one of the other business model canvas examples.

Customer segment business model canvas for Zara company

The first block of the Business Canvas Model is about understanding who is the most important customer(s) you’re delivering value to. Or, in other words, who are they? What do they do? And why would they buy your product or service?

Not a single company exists without its clients, making customer segments the best block to start with while drawing out your business model canvas.

A great exercise to define your customer segments is to brainstorm and create your company’s buyer persona (s) .

Buyer personas are fictional depictions of an ideal or hypothetical client. Typically when brainstorming a buyer persona you’d want to define certain characteristics (age, demographic, gender, income, industry, pain points, goals, etc.)

However, remember at this stage we want a snapshot of our customer segment. There’s no need to jump into great detail just yet.

In the case of Zara, there are three distinct customer segments to whom they offer different products.

The products created for each of these customer segments (clothing, shoes, and accessories) are not trans-consumable. That is to say, a woman’s dress is highly unlikely to be worn by a 7-year-old child.

Once we know exactly who it is we are targeting, it’s time to look at what we as a company have to offer.

Zara Customer Segments business model canvas template showing the development of the 9 fields

The second phase is about figuring out your company’s value propositions , and importantly, your UVP (unique value proposition). The “what” that makes customers turn to you, over your competitors? Which of their problems are you best at solving?

Each value proposition consists of a bundle of products or services that fulfill the needs of a buyer persona from your customer segment. It’s the intersection between what your company offers, and the reason or impulse customers have for purchasing.

Some popular questions to ask while determining your UVP are:

  • Which specific customer pain point are you trying to solve?
  • What job are you helping customers get done?
  • How does your UVP eliminate customer pain points?
  • What products or services do you provide that answer this specific pain point?

So let’s try and apply this to Zara. Why do people choose to purchase from them, over their competitors?

Zara’s principal value propositions are fairly clear. They offer various ranges of stylish men’s, women’s, and children’s clothing and accessories at an affordable price.

But there’s more to it than that.

If we dive a little deeper we see Zara’s value propositions are more complex, which are behind the success of the brand:

Fast fashion

Zara adds new clothes and designs to its collections every 2-3 weeks, both in its stores and online. It keeps the brand updated, fresh, and modern while maintaining its all-important medium price point

Great eCommerce experience

Once you enter Zara’s online store you’re presented with a clean, easy-to-navigate, and high-end feel. The customer segments are visible on the left navigation bar with a search tab to further aid customers with their online experience.

Zara's Canvas business model where you can see the innovative presentation of its image

Localized stores

You can find a store in nearly all major retail locations (shopping malls, retail outlets, airports, etc.) meaning accessibility is not an issue for the majority of consumers.

Flagship stores

Zara demonstrates its aesthetic evolution to customers through its flagship stores. The recent opening of their Hudson Yards , New York City flagship is a great example of this. Customers shop around its vivid, minimalist layout offering them an experience aligned with the brand’s deeper, eco-friendly values.

Zara's Canvas business model where you can see the innovative presentation of the image of its stores

Zara Hudson Yards, New York

Business Model Canvas Template Zara - Value Propositions

The next step is to ask yourself how you are reaching your customers, and through which channels ?

This includes both the channels that customers want to communicate with you as well as how they’ll receive your products or services.

Is it going to be a physical channel? (store, field sales representatives, etc.) Or is it a digital channel? (mobile, web, cloud, etc.).

Zara has 3 primary channels in which they communicate and deliver products to its customers:

  • Direct sales through their stores
  • Online (both app and website)
  • Social media

Customers can go to a traditional “bricks and mortar” store to browse, model, and purchase different items of clothing at one of their retail stores.

Alternatively, they can shop online or through their mobile application and have the product delivered straight to their door or nearest store. The choice is completely up to them!

So that covers Zara’s commercial channels, but what about how they communicate with customers?

While they do communicate through their mobile app, their predominant channel is social media.

What’s more, they’re really, really good at it.

For example, did you know that Zara invests less than 0.3% of its sales revenue into advertising?

This is only possible due to an A-rated social media presence . Customer queries are not only dealt with quickly, but recommended re-works are sent back to HQ, forwarded onto in-house designers who then apply the feedback to future collections.

This customer-first approach through fluid communication channels has saved them thousands of dollars in marketing, strengthened their brand, and created a loyal customer base.

You should only step away from this building block once you’ve decided how each of your customer segments want to be reached.

Zara Channels business model canvas template where its components are developed

Once you have acquired customers, you will need to think about how you can build , nurture, and grow those relationships.

Now, this can be automated and transactional like large eCommerce brands Amazon or Alibaba. Or, it could be at the complete opposite end of the scale and require a more personal relationship you’d typically have with a bank or your local bike shop.

Zara’s relationship with its customers is threefold, and lies somewhere in the middle of transactional and personal:

  • Salesperson at store
  • Brand through social media
  • Sentimental attachment to a product

Yes, you have the initial transactional touchpoint at the store or online, something relatively impersonal and for many the only interaction they’ll have with the brand.

However, customers (especially in the fashion industry) are encouraged to continue to interact with a brand through social media platforms.

As we mentioned before when discussing channels, Zara has a very effective communication system in place. Not only can people instantly get in touch with the brand, but also engage with new posts, images, and collections uploaded to social media.

This personal approach to customer relationship building can, in some cases, lead to the natural growth of brand ambassadors and communities .

An attachment can also develop between customers and particular garments or accessories from one of their collections. The sentimental attachment to these products also creates another potential form of brand loyalty.

The relations with Zara's clients to give a Business Model Canvas where the 9 points to be developed are seen

Now that you’ve described how you are going to create real value for your customers, it’s time to look at how you plan to capture that value.

What are your revenue streams? Is it going to be a transactional, direct sales strategy ? Are you going to consider a freemium mode l, where you give a portion of your product or service away for free with the idea of converting later on down the line?

If you’re a SaaS company such as SalesForce or Strava , then it’s likely that a licensing or subscription revenue model will be more appropriate.

At Zara, it’s extremely simple. They make their money by selling clothes and accessories either at a store or online.

Zara business model canvas template for the development of Revenue streams within the 9 points to work

As you can see, we’ve filled in the entire right-hand side of our business model canvas. We touched upon:

Customer segments

  • Value propositions
  • Revenue streams
  • Distribution channels

Now it’s time to move over to the left side of the business canvas model and look at what we need, internally , to deliver our value propositions.

Key resources of the Zara Business Model Canvas

To start with, let’s take a look at key resources.

The key resources are all things you need to have, or the assets required to create that value for customers.

This could be anything from intellectual property (patents, trademarks, copyrights, etc.) to physical holdings (factories, offices, delivery vans, etc.) right down to finances (the initial cash flow perhaps needed to start your brand).

Another key resource every company needs to consider is its human capital . Are you going to need highly specialized software engineers? Or field-based sales teams?

They are relatively capital-heavy resources that need to be factored into your business model.

In the case of Zara, they are going to need a number of key resources if they hope to deliver their propositions:

  • Stock management
  • A large, interconnected network of physical stores
  • A strong brand
  • Logistics and supply chain infrastructure

Stock is vital for both online and offline customers.

If they are unable to supply their range of products and meet customer demands, satisfaction levels fall and they have a serious problem on their hands.

A large distribution network of brick and mortar stores combined with a strong brand name help mitigate these factors, as well as reinforce any ongoing marketing activities and communication efforts.

Finally, an efficient logistics process within Zara is critical, especially when you consider the complexities involved with such a large-scale operation.

They will require the necessary technology to analyze data on inventory, storage, materials, production, and packaging, with the staff to execute each of these stages and manage the delivery of the final products.

Zara business model canvas template where the Key Resources are developed

The next step is to define the key activities – the areas you need to be good at to create value for your customers.

To mix it up a little let’s take a look at a slightly different business in Uber .

Their key activities can be broken down into:

  • Web and mobile app development
  • Driver recruitment
  • Marketing: customer acquisition
  • Customer service activities : drivers’ ratings, incidents, etc.

They need a fast, clean UX for their customers using the app, drivers to carry out their service, and the ability to both market the product and deal with any customer queries.

Zara’s key activities will differ to those of Uber. Some of the things they need to consider would be:

  • Manufacturing
  • Retail process (point of sale and 3rd party management)
  • Distribution channel / logistics

Design is a key activity as Zara’s value proposition is to provide stylish garments at an affordable price. Their collections need to be constantly updated to follow the latest fashion trends at the time.

To produce their collections Zara will also require manufacturing capabilities. Now Zara doesn’t own their own factories (we will get to that in the Key Partners section) but they still need to be involved in the garment manufacturing process.

Everything from fabric selection to pattern making, to detailing and dyeing affects the outcome of the final product which of course they have to then go on and sell.

The effective management of the retail and distribution channels (online, offline, shipping, and communication with providers) is also key. A breakdown in either of these activities, such as a poor relationship with an important provider will have serious consequences for the business.

Zara business model canvas template showing the key activities for its development

Most modern business models now require brands to build out and work with various key partners to fully leverage their business model.

This includes partnerships such as joint ventures and non-equity strategic alliances as well as typical relationships with buyers, suppliers, and producers.

A great example of a strategic partnership would be between ThePowerMBA and Forbes . In exchange for exposure of our brand to the magazine’s global audience, we provide expertise and content on high-level business education programs.

As we touched upon when discussing key activities , Zara requires strategic partnerships with many different providers if they are to design and produce their collections.

Another key partner is their major holding company, Inditex .

Inditex has several subsidiaries including Massimo Dutti , Pull & Bear , and Oysho . Being a subsidiary of Inditex means they share a consolidated balance sheet, stakeholders, management and control, and various legal responsibilities.

While as a subsidiary Zara is afforded certain freedoms when it comes to design, delivery, and the general running of the company, the overall strategy will need to be aligned with Inditex and its other subsidiaries.

Zara Key Partners business model canvas template where the eighth point is developed

The final step of the Business Model Canvas is to ask yourself, how much is it going to cost to run this model?

This includes some of the more obvious needs such as manufacturing costs, physical space, rent, payroll, but also areas such as marketing activities.

If you are unsure of exactly what to include in your cost structure take a look at a Profit and Loss statement ( P&L ) from a competitor or company in a similar industry to yours. You’ll find many items overlap such as research and development ( R&D ), cost of goods sold, admin expenses, operating costs, etc.

Once that’s done you should prioritize your key activities and resources and find out if they are fixed or variable costs .

As Zara is such a large, corporate business they are going to have both fixed costs (rent, payroll, point of sales personnel) and variables, such as costs associated with the fluctuating sale of goods, purchase of materials and, manufacturing costs.

Once you’ve completed these 9 steps, your Business Canvas Model should look something like this:

Business Model Canvas Examples

Hopefully, you were able to get a good feel for the effectiveness of the business model canvas with our run-through of Zara.

However, if you found it difficult to follow due to the stark difference between your industries, I’m going to quickly go through 3 more companies to demonstrate the tool’s flexibility:

  • Netflix (Media service/production)
  • Vintae (Vineyard)

Even if these business model canvas examples don’t align exactly with your industry, I honestly believe that studying different models gives you a competitive advantage in your professional career regardless.

If you’re currently employed by a company, you’ll better understand how your specific role helps the company achieve some of its “long-term” goals.

Alternatively, if you are a business owner yourself (or perhaps thinking of starting your own business) you’ll have a better understanding of your business and where potential opportunities lay.

I’m sure you’re familiar with our next business model canvas example candidate, Netflix .

The global media company offers an online streaming service of various movies, documentaries, and TV programs produced in-house or licensed 3rd-party content. Their success sparked a revolution in the online media world with the likes of Amazon, Apple, Disney, HBO, and Hulu all rushing to launch their own online video streaming platforms.

Netflix started life as an online DVD rental company, basically a web version of the more popular (at least at that time) “bricks and mortar” Blockbuster.

Co-founder Reed Hastings predicted as far back as 1999 that the future of media was in online streaming, saying “postage rates were going to keep going up and the internet was going to get twice as fast at half the price every 18 months.”

It wouldn’t be until 2007 that Hasting’s prediction would become true when Netflix, as we now know it, was born.

So let’s take a current look at their business model canvas:

Netflix business model in which the 9 topics are taken into consideration

As you probably know, there are very few people out there who haven’t subscribed, watched, or at least heard of Netflix. There is content for everybody: wildlife documentaries, sci-fi movies, rom coms, action-thrillers, you name it – it’s there.

That’s why their customer segment can be classified as a “ mass market ” as the base is just so diverse.

All people require is a computer, TV, internet, and/or smartphone and they’re good to go. For most developed markets, that covers just about everybody.

Value Proposition

Whether on the train to work, sitting in the car (if you’re not driving!), or relaxing at home in front of the TV, you can consume their online, on-demand video streaming service.

They also have a huge library of content for consumers to choose from, ensuring that people keep coming back, as well as increasing their mass-market appeal.

They also produce high-quality, original content to differentiate themselves from their competitors.

Most people access Netflix either through their website or mobile/TV App . Another popular channel that you may have picked up on is their affiliate partners .

You’ve perhaps signed up for a mobile, TV, and internet package where the provider offers Netflix as an extra to sweeten the deal, so to speak.

That would be an example of an affiliate partnership between Netflix and mobile service providers.

I doubt many consumers have had direct contact with Netflix unless it’s to resolve a subscription issue or general query. It’s very much a self-automated service – you download the app, select the program you wish to watch, and hit play.

Very simple, very effective.

Again, this doesn’t need much embellishment. Netflix generates money from the different tiers and packages put together in their subscription services.

This varies depending on the region to account for local markets, but on the whole, it’s sold at a low price point.

Originally, Netflix’s Key Resources would have been their unrivaled DVD collection combined with a cost-effective mail-order system.

Nowadays it’s undoubtedly the rights to stream online video content. Netflix has brokered deals with some of the biggest production studios worldwide.

Combined with their huge library of in-house productions , it’s more than enough to encourage customers to renew their subscriptions.

To help sustain interest in their product, Netflix understands they need to serve-up relevant content for each sub-sector of their mass audience. Therefore their machine learning algorithm selects content for consumers based on streaming habits (what they watched, at what time, etc,.) to personalize the customer experience.

This explains why over 80% of all content streamed on Netflix was cherry-picked by this algorithm, making it a Key Resource for their business model.

Also, Netflix accounts for a whopping 12.6% of global bandwidth usage . The literal capacity to stream their services must be met meaning bandwidth must also be included here.

Content procurement is arguably their biggest Key Activity. They need to find people to produce and deliver their original content, including actors, studios, writers, etc. as well as secure the licensing and streaming rights from 3rd party producers such as Sony, Warner Bros, and Disney.

Finally, they need a fast, easy-to-use application to host their online streaming service. This needs to be available for both TV and mobile devices if they are to deliver their “on-demand” value proposition.

K ey Partners

Seeing as Netflix’s entire business model is largely based around streaming 3rd party content, key partnerships need to be built with production studios . No content, no Netflix!

Also, as we touched upon earlier Netflix is one of the largest consumers of bandwidth worldwide. If the speed and delivery of their streaming service are to be continued then deals will also need to be made with internet service providers (ISPs).

Netflix’s biggest expenditures come from both their in-house content procurement and 3rd party licensing agreements . The high-quality standard of video streamed on Netflix is only possible due to the speed and performance of its online platform and application , which has additional costs of staff, software, etc.

To show you just how flexible the business model canvas can be, I wanted to throw in a slightly leftfield example. Vintae is a Spanish wine producer who, after a detailed analysis of the business model canvas, was able to innovate and disrupt one of the world’s most competitive industries.

As some of you may know, the wine industry is extremely competitive. It’s also steeped in history and tradition , making it very challenging for newcomers to grab market share, let alone think about year-on-year growth and revenue.

However, CEO “Richi” Arambarri looked at the traditional “ bodega ” business model and saw a chink in its armor.

A “small” innovation in the business canvas model helped them to become one of the region’s most important winery groups, with over 10 installations and a presence across all regional denominations (Rioja, Priorat, Rias Baixas, etc.) with year on year growth of 30% – practically unheard of in such a competitive industry.

So how did Vintae analyze the business model canvas to find a niche in their market?

To answer that question, we must first look at the traditional winery business model .

Traditional Winery Business Model with its 9 developed points

As you can see, the wine industry has historically been patrimonial. Vineyards and estates are passed down through generations with the winery responsible for all phases of production, clarification, and distribution.

The traditional winery business canvas model suggests you must be the owner of the winery/vineyard where the wine is “manufactured”, meaning physical assets are a key resource of the business model.

So, if you wanted to start producing a Rioja, for example, you’d have to set up your vineyard in the region.

This is monumentally expensive as you need to:

  • Purchase the land
  • Plant a vineyard
  • Absorb set-up and installation costs
  • Deal with maintenance costs

It’s here where Vintae saw their opportunity.

What if we move vineyard ownership across the business model canvas from key resources to key partners ?

By leasing the equipment and space of large wineries (of which there was plenty), they could still produce their wine but reduce the cost and exposure associated with land purchase, crushing equipment, huge storage tanks, vineyard maintenance, and their bottling line.

This enabled them to focus on their sales, marketing, and distribution channels to create a better brand experience for their customers.

Also, it afforded them more flexibility when creating new wines as they were no longer confined to the limitations of grapes grown on their vineyard.

The lightness of this new business model eliminates maintenance overheads, channels energy into personalizing the customer experience, and allows for unprecedented levels of growth in one of the world’s most competitive industries.

Vinate business model

Business Model Canvas Software

Although I did mention starting with a large whiteboard, sticky notes, and a pack of colorful sharpies there are several options in which you can digitize the business canvas model production process.

While I still believe the aforementioned process is extremely valuable (it gets your entire team’s input in a single hour-long session) you may decide it more viable for each member of management to pool their ideas digitally before sharing with the rest of the group.

If that’s the case, then take a look at some of the following software tools for creating your business model canvas.

Strategyzer

Created by the founders of the business model canvas Alex Osterwalder and Yves Pigneur , Strategyzer offers a range of business model canvas templates for you to get started with.

If you opt for the paid model (there is a 30-day free trial period) they offer a series of various classes that teach you how to build and test different value propositions and business models.

A real-time built-in cost estimator analyzes the financial viability of some of your business ideas, identifying alternative areas you may wish to explore with your model.

All-in-all, it’s a great resource to play around with and test some of your business ideas, with the option to dive into further detail if you see fit.

Canvanizer is a free, easy-to-use web tool that allows you to share links between team members who are brainstorming ideas for a business model canvas, but working remotely.

Like Strategyzer, there are several business model canvas templates provided to help you get started with your analysis. The strength of this platform is its accessibility. Much like a Google Doc., several people can brainstorm on the same canvas simultaneously with changes being synchronized automatically.

Business Model Canvas Tool

A ThePowerMBA alumni, impressed by the simplicity and effectiveness of the tool, went ahead and created the free application Business Model Canvas Tool .

It’s an incredibly intuitive, and easy-to-use tool that allows you to create templates simply by clicking the + button in each building block.

Each business model canvas created can be downloaded and shared as a pdf. with the rest of the team.

Would You Like to Learn More about Business Models?

If, after going through our 9-step guide on how to use the Business Model Canvas you’d like to learn more about different business model analysis tools , take a look at our alternative MBA business program .

As you’ll see, the course gives students a 360-degree view of business and management practices – such as engines of growth, segmentation and targeting, and value propositions.

I highly recommend you go check it out.

Regardless, I’d love to hear what you thought about this guide. Was it helpful? Would you like to see additional business cases analyzed from your industry?

Let us know in the comments below.

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value proposition in business model canvas

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16 Comments

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Debashis Rout

Well explained with practical business case

Allen

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value proposition in business model canvas

Value Proposition Canvas: a tool to understand what customers really want

A study by Simon Kucher & Partners found that 72% of new products and services introduced to the market fail to deliver on expectations. It doesn’t have to be that way. That’s why, a couple of years ago, Strategyzer launched the Value Proposition Canvas. Now we are launching a new introductory video for you to use.

The Value Proposition Canvas and book Value Proposition Design have been out for a while, but I wanted to share a new video we created to help explain the tool and how to create products and services that customers actually want. In addition to this video, we also offer a course on Mastering Value Propositions. This online course will teach you how to better understand customers, and create value propositions that sell. Click here for more details.

Notes on usage

We encourage you to share the video with your networks, colleagues, and clients. Don’t hesitate to use this video in your work, consulting, or teaching. You can download the video here. We do however insist on not modifying the video; to not integrate the video into products; and to always reference Strategyzer as the source. Please also refrain from uploading this content to another video sharing website. For details on use permissions of the Value Proposition Canvas, please see the copyright requirements here.

Production Credits

Daniela Berto: Content Strategy and Production Lisa Cadamuro & Jeanette Iris Mooney: Script Editing Maria Walnut: Concept, Creative Direction, Design Max Mörtl: Art Direction, Stop Motion Animation Direction Cris Wiegandt: Paper Craft Assistant Jimi Newport: 2D Animation Julian Terbuyken: Music and Sound Design Alex Belcourt: Voice Narration Crafted and filmed in Berlin at Cris Wiegandt Studio Special thanks to Björn Lefers for his contribution to audience & script analysis

About the speakers

Download your free copy of this whitepaper now, explore other examples, get strategyzer updates straight in your inbox.

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Home Blog Business Value Proposition Canvas: A Guide to Satisfying Customer Needs

Value Proposition Canvas: A Guide to Satisfying Customer Needs

Cover for Value Proposition Canvas guide

What do you think drives people to purchase a product? Is it an explosive marketing campaign? Perhaps promotional discounts? But here’s the truth. Although these strategies undoubtedly raise awareness about your product, they alone aren’t long-term solutions for building customer loyalty.

Once the novelty of the marketing campaign or the allure of discounts wears off, customers might revert to their previous purchasing patterns or switch to competitors offering similar promotions.

Thus, the real essence of sustained success hinges on developing a product that perfectly aligns with customer requirements. For this to happen, businesses should look deeply into their customer segment and understand its needs. Enter Value Proposition Canvas – a tool to guide businesses toward customer-centricity.

What Is a Value Proposition Canvas?

The Value Proposition Canvas is an instrument that facilitates comprehending customer needs and aligning them with the product or service offered. It is part of the larger Business Model Canvas developed by Alexander Osterwalder and Yves Pigneur . It comprises nine building blocks, providing a visual framework for developing, describing, and analyzing a business’s overall structure.

What is a Value Proposition Canvas

“Which of our customer’s problems are we helping to solve?” This is the guiding question for organizations building a Value Proposition Canvas. It compels businesses to dive into the world of their customers, understanding their pain points and looking for relevant solutions.

Components of the Value Proposition Canvas

Here’s what the Value Proposition Canvas looks like.

Elements of the Value Proposition Canvas

You’ll notice that it centers on the first two building blocks of the Business Model Canvas: the customer segment/profile on the right side and the company’s value proposition on the left side. This deliberate structure stems from the deep interdependence between these components, emphasizing the pivotal role of the customer in shaping the value proposition.

Let’s take a detailed look at each component.

The Customer Profile

The customer profile delves deeper into understanding the characteristics and needs of the target customers. It includes information about the tasks they are trying to accomplish (jobs), their pain points, and desired outcomes (gains).

Understanding the specific jobs customers are trying to accomplish is fundamental to developing a customer-centric Value Proposition. As Theodore Levitt said:

“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”

In other words, customers are not merely interested in buying a specific tool or item; they are more interested in the outcome or result the tool can help them achieve.

However, it’s important to consider that customers may have several motivations for purchasing a product or hiring a service. According to the Jobs-to-be-done Theory , customer requirements go beyond simply accomplishing a functional task. A job often has a social or emotional element and why an individual may choose to hire a product over an alternative.

Any car may get you from point A to point B, but you need a Porsche to fit into a high-end social circle.

The second element of the customer profile compels product designers to investigate the problems, challenges, or frustrations customers encounter in their journey. These could be obstacles, inefficiencies, or negative emotions that hinder customers from fulfilling the “jobs” they are trying to accomplish.

For instance, you might discover that excessive expenses burden your potential customers with their current providers or are receiving inadequate support. By gaining such valuable insights, you can strategically tailor your products to address these pain points and provide effective solutions.

Conducting customer surveys can be an excellent method to gather direct feedback from your target audience and know their challenges. You may also rely on your sales team to understand customer pain points. As they interact directly with prospects and customers regularly, they know firsthand about potential buyers’ obstacles and concerns.

3. Customer Gains

Customer Gains encompass all the positive outcomes and benefits customers hope to experience when engaging with a product, service, or brand. These benefits can be of various types, including functional, emotional, social, or financial advantages. 

For instance, a smartphone’s functional gains could include a high-quality camera, fast processing speed, or long battery life. On the other hand, certain brands have the power to enhance customers’ social status or reputation, offering additional social benefits beyond the functional aspects of the product.

The Value Map

On the left side of the Value Proposition Canvas, we find the Value Map describing the products and services provided by an organization. Just like the corresponding right side of the model, this section consists of three crucial components: Products and Services, Pain Relievers, and Gain Creators, all of which directly correspond to the elements on the opposite side.

1. Products and Services

Products and Services are the fundamental components that form the core of a business’s value proposition. They represent the tangible or intangible offerings the business provides to meet its customers’ specific “jobs” or needs.

Whether they are physical products, digital solutions, or services, businesses should find a way to carefully craft their offerings to cater to the unique requirements and preferences of the prospects.

2. Pain Relievers

The goal is to help the target customers fulfill their needs and alleviate the pain points they encounter while fulfilling them. It’s crucial to understand that even if the end goal of a customer is fulfilled, a painful or frustrating experience with the service could easily prompt them to switch to a competitor.

Within the Value Map, the Pain Relievers section addresses the challenges, problems, or frustrations that customers experience. It outlines how the organization’s products and services make the customer’s journey more seamless and satisfying.

For instance, a common pain point customers often face with food delivery is the uncertainty of delivery time. The food delivery service can tackle this problem by implementing real-time order tracking, reducing the anxiety and frustration of customers. A straightforward resolution could be adopting a policy similar to the one implemented by EveryPlate , which assures customers of a delivery window of 30 minutes, reducing the anxiety and frustration of customers.

If it’s a financial pain, you may need to rethink your cost structure to provide affordable options to your target segment.

3. Gain Creators

This section of the canvas highlights how a business’s offerings fulfill the desired benefits of its customers, ultimately providing them with added value and delight. It includes the expected benefits and those that pleasantly surprise them.

Businesses should continuously seek ways to exceed customer expectations and offer unique and unexpected benefits that pleasantly surprise and delight their customers. This could involve introducing new features, personalized experiences, loyalty rewards, or even social impact initiatives that resonate with customers’ values.

Implementing the Value Proposition Canvas (Slack Case Study)

Let’s consider how you can work with the value proposition canvas in practice using Slack as an example.

The evolution of Slack’s success story is an interesting one. Before becoming the widely used and valued collaboration platform, Slack originated within a struggling gaming company called Tiny Speck.

Initially, Slack was intended to be an internal communication tool to help Tiny Speck’s development team collaborate more effectively. However, the game did not achieve the desired success, and Tiny Speck faced challenges.

On the other hand, the creators saw potential in Slack and started developing it to go to the market as a standalone tool.

Slack’s journey from its humble beginnings within a struggling company to becoming a multi-billion-dollar cloud-based collaboration platform is a remarkable tale of transformation and successful value proposition creation.

1. Plotting Customer Profile

Customer Profile in a Value Proposition Canvas

The motivation of the target segment of Slack for hiring a similar service leans heavily towards functionality. Businesses seek a communication tool that enables them to communicate efficiently and effectively with their project teams.

These needs stem from the limitations and challenges of existing solutions, such as conventional email services. While these platforms offer the capacity to exchange project-related updates, they’re too arduous to keep track of. Ultimately, these limitations create a barrier to overall productivity and collaboration.

The pains experienced by the target customers underscore the urgency for a more streamlined and organized communication platform.

2. Plotting Value Map

Value Map in a Value Proposition Canvas

In response, the product designers tailored Slack’s features to ensure a fit between the customer requirements and their product—the company’s core offering centers around providing a real-time messaging and communication tool, the Slack platform.

To relieve customers’ pain points, Slack strategically incorporates features like channels, automated notifications, and document sharing. Channels, for example, offer a solution to disjointed conversations by allowing teams to create specific spaces for focused discussions.

Slack doesn’t stop just addressing customer pain points; it also provides features to make customers happy.

Its target segment expects that using a messaging platform will increase productivity and efficiency in team collaboration. The company tries to meet this expectation by incorporating built-in tools like polls and surveys to speed up ad hoc collaborative decision-making.

3. Iterating and Continuous Improvement

You can’t expect the same formula to work every time. Customer preference shifts, and new pain points arise over time. It’s paramount to keep up with these changes to ensure your product offerings align with what your customers want and need.

Slack is a living testament to this principle.

After its public release in 2014, Slack shows no sign of slowing down in user growth, but a couple of things are missing. Users find it painful to keep a different video conferencing app or telephony service for remote team huddles.

So, in 2016, Slack introduced a built-in voice call feature and a video conferencing feature with the ability to share screens for presentations.

The result? Slack reached 5 million active users before the year ended.

Benefits of Using a Value Proposition Canvas

As you can see in the case of Slack, coming up with a Value Proposition Canvas can guide a business’s strategic decisions and pivot toward a more successful direction by addressing real problems for users. During the process of mapping it out, it allows you to:

1. Identify Product Improvement Opportunities

This business tool lays down what customers are looking for (as represented in the customer profile) and what you currently offer (as represented in the value map). With this visual comparison, you can spot the requirements you can meet and are missing. This could include specific pain points you cannot adequately address or potential value-added benefits that could set the product apart.

Ultimately, this insight will prompt you to develop a product improvement plan for better product-market fit.

2. Create Satisfied Customers

Customer satisfaction naturally follows when you can tailor your offerings to your target segment. Satisfied customers are more likely to become loyal brand advocates, leading to increased retention rates and positive word-of-mouth referrals.

3. Enhance Communication

The Value Proposition Canvas is a multifaceted tool that significantly enhances communication on various fronts, both within an organization and in interactions with external stakeholders.

The organization keeps everyone on the same page regarding the customers they are catering to and the value that the product or service aims to deliver.

Externally, the Value Proposition Canvas can help you articulate a clear and compelling value proposition to potential customers. It can guide your marketing efforts by highlighting how your offerings directly address customer challenges and deliver tangible benefits.

Common Issues When Working With a Value Proposition Canvas

1. incomplete customer understanding.

Failing to gather accurate customer insights is dangerous. It may lead to a value proposition and, by extension, products or services missing the mark and falling short of meeting customer expectations.

Do not make assumptions about your customer’s needs or preferences; conduct thorough market research instead. Mobilize your sales team as part of this process. Ask your customers directly. These are the best ways to get to know customers deeply.

2. Including too Many Customer Segments

While it’s important to consider different customer segments, attempting to cater to a wide range of segments simultaneously can dilute your value proposition’s effectiveness. Each group has unique needs and problems they are trying to solve. So, if you pool them all together in a single value proposition canvas, you might devise a shallow approach that doesn’t effectively address the core problems of any segment.

3. Failure to Prioritize Needs

Failing to prioritize pain points and gains is a mistake you should avoid when taking actions based on a Value Proposition Canvas. It may highlight various pain points and gains, but not all are equally important to customers.

Instead of making your product meet all of the customer’s needs, focus your resources on improving the features that matter to them the most. Rate their needs, pains, and desired gains. Again, this can be achieved through a thorough market research activity.

4. Overlooking Competitor Analysis

As you engage with your value proposition canvas, it’s safe to assume that your competitors are also actively seeking opportunities to snatch a portion of your segment. Consequently, it becomes essential to thoroughly examine and assess what your competitors bring to the table. Conducting a comprehensive competitor analysis is advisable and imperative in shaping your value proposition and ensuring it stands out.

Use visual tools to illustrate the differentiation between your offerings and your competitors. A simple product comparison slide can spotlight specific features or aspects that differentiate your product.

You should know that the true driver of a long-lasting partnership is aligning a product with customer needs. The Value Proposition Canvas, uniting customer profiles and value maps, is a compass for crafting meaningful solutions. That said, this business tool is not foolproof. It demands accurate insights, focused segmentation, prioritization, and competitor awareness.

Now start filling out your Value Proposition Canvas using the PowerPoint templates and tips in this article!

1. 3D Value Proposition Design

Slide of Buyer and Seller Model

A 3D representation of the value proposition canvas is what your strategy presentation needs to make a powerful impact. Going in a circular motion, this diagram covers all the stages required in the value proposition framework to fulfill the customer’s jobs and give a response to its pain points. All texts in placeholder areas can be modified to suit the needs of your presentation.

Use This Template

2. Sticky Note Value Proposition Canvas in Business Model Canvas

value proposition in business model canvas

As we’ve seen, the Value Proposition Canvas is one element of the Business Model Canvas template . Use this sticky note presentation system to discuss the elements that should be covered in your value proposition canvas example. It is ideal for internal team meetings debating how to prepare a value proposition canvas presentation as it allows us to see the bigger picture or other factors that may influence it.

3. Animated Value Prop Canvas in 3D Business Model Canvas

value proposition in business model canvas

If you seek to add some extra impact to your value proposition canvas explained, you can use this animated 3D template that covers the value proposition canvas in relation to the business model canvas. By applying this template in your strategy presentation, stakeholders can appreciate how your value proposition interacts with the consumer relationships and core communication channels and which resources will significantly influence your strategy.

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Value Proposition Canvas Business Model Canvas

The Value Proposition Canvas, part of the Business Model Canvas , is a tool used to ensure a product or service is positioned around customer values and needs.

Table of Contents

Understanding the Value Proposition Canvas

The Value Proposition Canvas enables businesses to list products or services that create value for a particular customer segment. In exchange for solving a problem or addressing a core need, the customer pays the business money. 

The value proposition is fundamental to the success of any company since it is the main determinant of a customer choosing one product over a competing product. It encourages businesses to ask themselves:

  • What is the problem I am solving?
  • What is the underlying motivator?
  • Why would the consumer want this problem solved?

In clarifying the answers to these questions, it can be helpful to look at customer problems in the context of Maslow’s Hierarchy of Needs. That is, are the problems related to safety, status, belonging, or self-esteem?

Product development with a focus on value proposition and tangible customer needs helps the organization avoid launching products based on intangible ideas or innovation for the sake of innovation .

The two building blocks of the Value Proposition Canvas

Central to the Value Proposition Canvas is two foundational concepts. Each concept in turn comprises three parts. 

1 – Customer profile

The customer profile consists of:

  • Jobs – these are the tasks and goals the customer tries to satisfy. They may be emotional, social, or functional.
  • Gains – or the benefits the consumer expects, wants, or needs, or would be delighted with receiving after completing a job. Gains may be related to status, wealth, efficiency, societal contributions, functionality, or quality, among other things.
  • Pains – these are emotions, risks, and other negative experiences associated with carrying out the job. These pains can be functional and prevent the consumer from accomplishing the task, such as a lack of time or money. They can also be emotional and social, resulting in feelings of shame or foolishness. 

2 – Value map

The value map consists of:

  • Products and services – simply, the products and services being offered or under development.
  • Pain relievers – or how those products and services alleviate pain, eliminate frustrations or avoid risk. Common pain relievers include saving time and money, making consumers feel better, eliminating negative social consequences, and limiting or eradicating mistakes associated with product usage.
  • Gain creators – how can the organization make life easier for its customers? Gains may be related to quality, performance, features, usability, accessibility, social consequences, guarantees, and lower cost.

Value proposition types

Value may be qualitative (design, brand ) or quantitative (price) with some businesses using a combination of both to target customer segments.

With that said, here is a non-exhaustive list of some common value proposition types:

  • Novelty – a form of value proposition commonly seen in tech products. Novelty was (and continues to be) a key ingredient in mass smartphone uptake around the world.
  • Customization – value proposition built around customization takes advantage of Maslow’s individual needs around self-esteem and self-actualization. With many buying products as extensions of themselves, value is created by allowing the customer to tailor the product to their individual needs. For example, Nike fans can design a completely original pair of shoes online by altering the color palette and even the size and placement of the swoosh. 
  • Design – companies like Apple and Prada create value amongst consumers because they are perceived to add value through superior design .
  • Brand – value is also created via the status some people achieve by wearing a particular brand . Consumers who buy and wear Rolex watches want others to know they are wealthy enough to afford them. Brand value can also be explained by Maslow since status and belonging are higher-level consumer needs.
  • Price – a common way to create value in price-sensitive customer segments. Budget airlines have business models devoted entirely to low-cost air travel. Indian vehicle manufacturer Tata also released the Nano, which was so cheap that it became accessible to a vast and untapped segment of the national car market.

Examples Using the Value Proposition Canvas Framework:

Customer profile:.

  • Jobs: Users need to access files across multiple devices.
  • Gains: Seamless access, ease of file sharing, no need for physical storage.
  • Pains: Loss of physical storage, inability to share large files.
  • Products and Services: Cloud storage.
  • Pain Relievers: Easy sharing, data backup.
  • Gain Creators: File sync across devices, collaboration tools.
  • Jobs: Find affordable, unique accommodations.
  • Gains: Experience local culture, cost savings.
  • Pains: Expensive hotels, lack of local experiences.
  • Products and Services: Platform for home rentals.
  • Pain Relievers: Affordable lodging, unique experiences.
  • Gain Creators: Local experiences, variety of choices.

Apple (iPhone):

  • Jobs: Need a device for communication, entertainment, work.
  • Gains: Efficient multitasking, status symbol.
  • Pains: Carrying multiple devices, low-quality user experience.
  • Products and Services: iPhone with diverse apps.
  • Pain Relievers: One device for multiple tasks.
  • Gain Creators: High-quality design , brand status.

Nike (Custom Shoes):

  • Jobs: Wear comfortable, stylish shoes.
  • Gains: Unique design , personal expression.
  • Pains: Generic designs, lack of uniqueness.
  • Products and Services: Customizable shoe designs.
  • Pain Relievers: Ability to choose unique colors and materials.
  • Gain Creators: Self-expression, brand status.
  • Jobs: Listen to a variety of music on-the-go.
  • Gains: Discover new music, create playlists.
  • Pains: Buying individual albums, lack of music discovery.
  • Products and Services: Music streaming platform.
  • Pain Relievers: Unlimited music access, curated playlists.
  • Gain Creators: Music recommendations, offline listening.
  • Jobs: Want a luxury accessory.
  • Gains: Status symbol, luxury feel.
  • Pains: Cheap watches, lack of durability.
  • Products and Services: Luxury watches.
  • Pain Relievers: Durability, time accuracy.
  • Gain Creators: Brand status, investment.

Ryanair (Budget Airlines):

  • Jobs: Travel at an affordable price.
  • Gains: Save money, more frequent travels.
  • Pains: Expensive flights, less frequent vacations.
  • Products and Services: Low-cost flights.
  • Pain Relievers: Affordable fares, frequent deals.
  • Gain Creators: More travel opportunities, no-frills service.

Key takeaways:

  • The Value Proposition Canvas is a tool used to ensure a product or service is positioned around customer values and needs.
  • The Value Proposition Canvas is based on two foundational concepts: the customer profile and the value map. Each consists of three parts that help businesses clarify how their products and services address consumer pains and add value to their lives.
  • Value proposition may be qualitative, quantitative, or a mixture of both. Common value types include novelty, customization, design , brand , and price.

Key Highlights

  • Importance of the Value Proposition: The Value Proposition Canvas is a crucial tool within the Business Model Canvas framework. It ensures that a product or service aligns with customer values and needs, ultimately driving customer choice and revenue generation.
  • Problem-Solution Alignment: A central focus of the value proposition is aligning the solution (product or service) with the customer’s problem or need. It prompts businesses to ask questions like, “What problem am I solving?” and “Why would the customer want this problem solved?” This problem-solution fit is vital for success.
  • Maslow’s Hierarchy of Needs: Understanding customer problems in the context of Maslow’s Hierarchy of Needs can be beneficial. It helps identify whether the problems relate to safety, status, belonging, self-esteem, or other levels of need. This understanding guides product development toward addressing tangible customer needs rather than vague ideas.
  • Jobs: The tasks and goals the customer seeks to accomplish, which can be emotional, social, or functional in nature.
  • Gains: The benefits the customer expects or desires after completing a job. These gains may pertain to status, wealth, efficiency, functionality, or other factors.
  • Pains: The negative emotions, risks, or experiences associated with performing a job, which can be functional (e.g., lack of time or money) or emotional/social (e.g., feelings of shame).
  • Products and Services: A description of what the business offers or is developing.
  • Pain Relievers: How the products and services alleviate pain, frustration, or risk for the customer. Common pain relievers include time and cost savings, enhanced well-being, and error reduction.
  • Gain Creators: How the organization makes the customer’s life easier or better. This can relate to quality, performance, features, usability, accessibility, social impact, guarantees, and cost-effectiveness.
  • Novelty: Often found in tech products, novelty creates value by offering something new and exciting. For example, the mass adoption of smartphones was driven by their novelty.
  • Customization: Customization adds value by allowing customers to tailor products to their individual needs, fulfilling higher-level needs such as self-esteem and self-actualization.
  • Design: Superior design , as seen in companies like Apple and Prada, creates value by enhancing the product’s aesthetics and functionality.
  • Brand: Value is derived from the status associated with wearing or using a particular brand , aligning with consumers’ higher-level needs for status and belonging.
  • Price: Low-cost offerings, as seen in budget airlines and products like Tata Nano, create value in price-sensitive customer segments.
  • Qualitative and Quantitative Value: Value propositions can be qualitative (emphasizing design , brand , etc.) or quantitative (focused on price). Many businesses use a combination of both to target different customer segments effectively.

Alternatives to the Business Model Canvas

Fourweekmba squared triangle business model.

This framework has been thought for any type of business model , be it digital or not. It’s a framework to start mind mapping the key components of your business or how it might look as it grows. Here, as usual, what matters is not the framework itself (let’s prevent to fall trap of the Maslow’s Hammer ), what matters is to have a framework that enables you to hold the key components of your business in your mind, and execute fast to prevent running the business on too many untested assumptions, especially about what customers really want. Any framework that helps us test fast, it’s welcomed in our business strategy .

fourweekmba-business-model-framework

FourWeekMBA VTDF Framework For Tech Business Models

This framework is well suited for all these cases where technology plays a key role in enhancing the value proposition for the users and customers. In short, when the company you’re building, analyzing, or looking at is a tech or platform business model , the template below is perfect for the job.

business-model-template

Download The VTDF Framework Template Here

FourWeekMBA VBDE Framework For Blockchain Business Models

This framework is well suited to analyze and understand blockchain-based business models. Here, the underlying blockchain protocol , and the token economics behind it play a key role in aligning incentives and also in creating disincentives for the community of developers, individual contributors, entrepreneurs, and investors that enable the whole business model. The blockchain-based model is similar to a platform-based business model, but with an important twist, decentralization should be the key element enabling both decision-making and how incentives are distributed across the network.

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Download The VBDE Framework Template Here

Connected Strategy Frameworks

ADKAR Model

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Ansoff Matrix

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Business Model Canvas

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Lean Startup Canvas

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Blitzscaling Canvas

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Blue Ocean Strategy

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Business Analysis Framework

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Balanced Scorecard

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Blue Ocean Strategy 

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GAP Analysis

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GE McKinsey Model

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McKinsey 7-S Model

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McKinsey’s Seven Degrees

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McKinsey Horizon Model

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Porter’s Five Forces

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Porter’s Generic Strategies

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Porter’s Value Chain Model

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Porter’s Diamond Model

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SWOT Analysis

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PESTEL Analysis

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Scenario Planning

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STEEPLE Analysis

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  • Platform Business Models
  • Network Effects In A Nutshell
  • Digital Business Models

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Business Model Canvas vs Value Proposition Canvas vs Product Canvas

Nowadays, Canvas is a kind of new tool emerged and gained popularity due to is simplicity. These canvases provides different template that greatly simplify the strategic business planning process. What used to be a 40+ page document can now be expressed on a single page. While canvas templates aim to provide simple effective tools for expressing a business model; there could be a great differences exist among them, as they aim to serve wide variety of business purposes or even different domains.

The most noticeable types of Analysis Canvas including business model canvas, value proposition canvas, product management canvas, lean canvas or team canvas and you will find many more if you google around in the internet; each of them with different focus underlining philosophy for achieving different goal and nature businesses. Now, let’s briefly review these popular canvas templates, before we customize or design a new template by your own:

Business Model Canvas

The Business Model Canvas, developed by Alexander Osterwalder, is a visual representation of current or new business models that provides a holistic view of the business as a whole. It is lightweight, simple and easy to understand for visually documenting key sections of a business strategy. The Business Model Canvas gives people a common language through which is easy to discuss your business model with others.

The Building Blocks of Business Model Canvas

The Business Model Canvas consists of nine basic building blocks. These blocks show the logic of how your company intends to make profits in the business. Typically, the business use sticky notes to add items to the Business Model Canvas, in this way you can easily change something or place an item in another building block.

Create your Business Model Canvas by completing the building blocks in the following order

  • Who are the target customers?
  • For whom are you creating value?
  • Who are your most important customers?
  • Why would a customer choose your company?
  • What customer problem or need do you solve?
  • Which products or services are offered?
  • How does your company reach customers?
  • Which communication, distribution and sales channels are used?
  • How would customers want to be reached?
  • Relationships can vary from manual to automated system.
  • How personal is the relationship with the customer?
  • What type of relationship does the customer expect?
  • For what are the customers willing to pay?
  • For what are the customers currently paying?
  • How do customers prefer to pay?
  • What resources are needed to create value or revenue?
  • What resources does your company need to organize the distribution channels?
  • What resources are needed to maintain customer relationships?
  • What activities are needed to maintain customer relationships?
  • What activities are needed to generate value and revenue?
  • What is needed to organize the distribution channels?
  • Who are your partners and suppliers?
  • Which resources are acquired from them?
  • Which activities do partners perform?
  • Which Key Resources are most expensive?
  • Which Key Activities are most expensive?

Business Model Canvas

Edit this Diagram

Value Proposition Canvas

The Value Proposition Canvas was initially developed by Alexander Osterwalder as a framework to ensure that there is a fit between the product and market by zooming in on two elements of a business model: the value proposition segment (what you offer to your customers) and the customer segments (who your customers are).

Customer Profile

  • Gains – the benefits which the customer expects and needs, what would delight customers and the things which may increase likelihood of adopting a value proposition.
  • Pains – the negative experiences, emotions and risks that the customer experiences in the process of getting the job done.
  • Customer jobs – the functional, social and emotional tasks customers are trying to perform, problems they are trying to solve and needs they wish to satisfy.

A customer profile should be created for each customer segment, as each segment has distinct gains, pains and jobs.

  • Gain creators – how the product or service creates customer gains and how it offers added value to the customer.
  • Pain relievers – a description of exactly how the product or service alleviates customer pains.
  • Products and services – the products and services which create gain and relieve pain, and which underpin the creation of value for the customer.

value proposition in business model canvas

Product Canvas

Product Canvas, a simple but powerful tool proposed by Roman Pichler (Founder of the Scrum Framework) that helps you create a product with a great user experience and the right features. It combines Agile and UX by complementing user stories with personas, storyboards, scenarios, design sketches and other UX artefacts. It’s designed to work with Scrum, Lean Startup, and Business Model Generation. The canvas supports Lean UX by combining user centred-design and agile techniques.

As you have probably noticed, the Product Canvas combines form and function, a structure together with suggested techniques. The following diagram and the text below the sections of the canvas.

Product Canvas Template

The best way to understand the Product Canvas is to look at an example. Imagine that we want to develop a game that helps children learn about music and dancing. A canvas for such a game could look like the one below.

the product canvas

Here is another template for product canvas:

Product Planning Canvas Value Map

So, which version is more desirable for you? Which one would be your choice? My answer is – Choose the one you want that best fit for your needs. But, how can I customize a canvas, or design a new template for my company for reuse?

What is Analysis Canvas? Why we need it?

As I mentioned before, there are so many different type of canvas templates proposed in the internet for serving different purposes. Now let’s call them “Analysis Canvas” which is a visual chart with elements describing a firm or product value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.

Visual Paradigm Analysis Canvas empowers you to create any custom type of model canvas you want over the cloud platform. In addition, it comes with large collection off-the-shelf model canvas templates for you to get start with. You can adopt, customize or create and reuse as many as new model canvases online as you need.

How to Customize a Model Canvas?

Visual Paradigm Online Diagrams come with a large set of customizable Business Model Canvas templates to help you start quickly. You can use the templates as a starting point to create your own Business Model Canvas.

  • Visit the Business Model Canvas examples page .

open business model canvas-template

  • Click on Use This Template .

customize business model canvas

How to Create a New Model Canvas?

Besides using our Business Model Canvas template, you may also create your own canvas. Here are the steps:

  • Open the Analysis Canvas editor and start with a blank analysis canvas .

split canvas

  • Save your work by selecting File > Save from the main menu.

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  2. The Business Model Canvas Explained

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  4. What is the Value Proposition Canvas?

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  5. Value Proposition Canvas: The Best Templates, Explained

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  6. How To Use The Value Proposition Canvas

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  2. Start with This for Your Business Launch

  3. Business Model Canvas, Customer Segment & Value Proposition

  4. Writing a Business Plan (Lesson 10): Business Model Canvas Overview

  5. Value Proposition

COMMENTS

  1. What is the Value Proposition Canvas?

    Value Proposition Canvas is a tool that helps you map the value your company's product or service provides to your customers' needs and preferences. It consists of two blocks: Client Profile and Value Proposition. Learn how to use it with examples, advantages, and tips.

  2. Business model canvas: Creating a Value Proposition

    A value proposition is a case for why a customer should pick one product over another, citing the unique value the product provides over its contenders. The Business Model Canvas value proposition provides a unique combination of products and services which provide value to the customer by solving a problem or meeting a need. Learn the elements, design and case study of value proposition.

  3. Value Proposition Canvas Template and Examples

    Understanding and effectively communicating your value proposition to customers is important in business. One powerful tool for achieving this is the Value Proposition Canvas developed by Alex Osterwalder, a part of the Business Model Canvas that evolves dynamically, birthing new value propositions by uncovering unmet customer needs through the "Jobs to be Done" theory.

  4. How To Use The Value Proposition Canvas

    In a nutshell, the value proposition canvas is a transformative approach to understanding value and designing products or services that customers want. It builds on the inspiring work of the late Clayton Christensen, one of the greatest academics and thought-leaders of our time.

  5. Value Proposition Canvas

    ‍ The Value Proposition Canvas explained A 2 minute overview of the Value Proposition Canvas, a tool for marketing experts, product owners, and value creators. This method from the bestselling innovation book Value Proposition Design is applied in leading organizations and start-ups worldwide. ONLINE COURSe Mastering Value Propositions

  6. Business Model Value Proposition: Learn How To Create Value

    The Business Model Canvas Value Proposition What Is Value? The Value Pyramid Broad Value Categories B2C Value Elements Functional Elements Emotional Elements Life-Changing Elements Social Impact Elements B2B Value Elements Table Stakes Functional Value Ease of Doing Business Value Individual Level Inspirational Level Value Proposition Elements

  7. Business Model Canvas: Value Propositions In-Depth

    One of the most critical segments of a business model canvas is the value proposition. In this article, we will dive into what value propositions are, why they matter, and provide you with some examples. What Are Value Propositions and Why Do They Matter?

  8. Business Model Canvas: Explained with Examples

    Updated on: 12 December 2022 | 15 min read Exploring Business Model Canvas? Create one using a template Learn how to create a business model Key building blocks of the business model canvas Got a new business idea, but don't know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan?

  9. Business Model Canvas: Value Proposition Explained

    The value proposition is at the center of your business model canvas template and is central to your business model generation process. In this Business Mod...

  10. Value proposition canvas: comprehensive guide with examples

    Learn how to use value proposition canvas, a tool to analyze the relationship between customer needs and your product or service. Find out what is a value proposition, its structure, and how to fill it in with examples from different industries. Discover the benefits of value proposition for your business model and marketing strategy.

  11. What is the Business Model Canvas?

    Value Proposition - The item you think will create value for your customer: e.g., a new idea, a price drop. This is a summary of what your business will deliver to customers, and feeds into the value proposition canvas, the tool you'll use to expand this.

  12. The Value Proposition in the Business Model Canvas

    The Value Proposition in the business model canvas is the unique offer your company provides to the customers. It can be a product or service that solves the customer's problem. Domino's Pizza delivers hot fresh pizza to you within 30 minutes or else it is free. Hence, Domino's Pizza value proposition is the guaranteed short delivery time ...

  13. Business Model Canvas: A 9-Step Guide to Analzye Any Business

    The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind. So let's take a closer look at how it works. Table of Content What is the Business Model Canvas?

  14. Business Model Canvas: The Definitive Guide and Examples

    Value Proposition 3. Distribution Channels 4. Customer Relationship 5. Revenue Streams 6. Key Resources 7. Key Activities 8. Key Partners 9. Cost Structure Applications and Analysis What to Do After? Some Tips for Beginners Software for Business Model Canvas What Are the Benefits of the BMC? What Does the Business Model Canvas Lack?

  15. Business Model Canvas Vs. Value Proposition Canvas

    Business Model Canvas (BMC) Value Proposition Canvas (VPC) Purpose and Background: The Business Model Canvas (BMC) is a strategic tool that provides a visual framework for developing, describing, and analyzing a business model. It was introduced by Alexander Osterwalder and Yves Pigneur in their book "Business Model Generation" in 2010.

  16. How To Use The Business Model Canvas

    1. Customers Segments 2. Segment Composition 3. Problems, Needs, Behaviours & Current Alternatives Outcome Step 2 (of 10): Value Propositions What is Value? Outcome Step 3 (of 10): Channels Step 4 (of 10): Customer Relationships Step 5 (of 10): Revenue Streams Step 6 (of 10): Key Activities Outcome Step 7 (of 10): Key Resources Outcome

  17. Value Proposition Canvas: A Tool To Understand What ...

    1 min read topics Value Proposition Testing Business Ideas Customer Insights A study by Simon Kucher & Partners found that 72% of new products and services introduced to the market fail to deliver on expectations. It doesn't have to be that way. That's why, a couple of years ago, Strategyzer launched the Value Proposition Canvas.

  18. Value Proposition Canvas: A Guide to Satisfying Customer Needs

    As you can see in the case of Slack, coming up with a Value Proposition Canvas can guide a business's strategic decisions and pivot toward a more successful direction by addressing real problems for users. During the process of mapping it out, it allows you to: 1. Identify Product Improvement Opportunities.

  19. Business Model Canvas

    The Business Model Canvas is a strategic management template used for developing new business models and documenting existing ones.

  20. Value Proposition Canvas Business Model Canvas

    The Value Proposition Canvas, part of the Business Model Canvas, is a tool used to ensure a product or service is positioned around customer values and needs. - Value Proposition is one of the key components of the Business Model Canvas, which is a strategic tool used for designing, describing, and analyzing business models.

  21. Business Model Canvas vs Value Proposition Canvas vs Product Canvas

    Business Model Canvas vs Value Proposition Canvas vs Product Canvas Nowadays, Canvas is a kind of new tool emerged and gained popularity due to is simplicity. These canvases provides different template that greatly simplify the strategic business planning process. What used to be a 40+ page document can now be expressed on a single page. …

  22. Create a Business Model Canvas Online

    Finalize your business model canvas online and easily download it as a high-resolution JPG, PNG, GIF, or PDF. Share it digitally through email or social accounts, or publish it as a poster for your office using Canva Print. You can also embed it to your website, your business presentation, or visual Docs in Canva. Create a business model canvas.

  23. Value Proposition Canvas adalah Elemen Business Model Canvas

    Penyusunan Business Model Canvas (BMC) sangat diperlukan untuk mempermudah dalam melihat gambaran ide bisnis dan juga realisasinya secara cepat.Dibandingkan dengan business plan lain, BMC jauh lebih ringkas karena bisa disusun dalam satu satu halaman saja.. Value proposition canvas adalah salah satu dari sembilan elemen yang ada dalam business model canvas.