The business model is a description of how the new venture plans to make money. Basically, this involves getting the customer to use a product or service and getting paid for it.
The core concept is to do something that the customer values. The four P’s of marketing provide the framework for constructing the venture’s business model.
The reference for creating a product is the set of needs to be addressed of the target customer.
The key is to recognize that the customer needs a solution. The concept of whole product was introduced by Geoffrey Moore to capture this idea.
“. The whole product is the complete set of products and services needed to fulfill the customer's reason to buy.”
So the key questions for the entrepreneurial team are:
Industry and firm value chain analysis are useful tools to help answer these questions.
Read more about value chain analysis here.
How will potential customers find out about the venture’s product and be persuaded to buy? The venture must decide how it will create demand. These activities
Demand creation activities must align with
Not only must demand be created, it must be fulfilled. The venture must be able to deliver the product to the customer in a way that is efficient and convenient for the customer. The venture must decide whether it will fulfill demand
Finally, the venture must get paid. In order to set a price, the entrepreneur must understand the value of the solution to the customer and the customer’s willingness to pay.