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Product-Business Model Development

What it is: A Business Model that tells us how to generate revenue by means of a product.

Made up of 4 basic building thoughts:


  • How will this be working?
  • What is this all about?
  • Who are the end users?
  • What is the revenue generation model? i.e. $P=$R-$E

  • Generally any model will have a context, drivers and constraints. These are driven by:


  • Key Trends
  • Industry Forces
  • Market Forces
  • Macro-Economic Forces

  • And these are dependent on:


  • Foresight
  • Competitive Analysis
  • Market Analysis
  • Macro Economics

  • To derive any Product Business model:


  • Identify Customer Segments, by classifying which Market segment are we targeting
  • Define Value Proposition, for each market segment
  • Identify and define Distribution Channels
  • Find and analyse what is the Relationship with the customer segments
  • Define Revenue Streams/Social or Environmental Benefits
  • Infer what Key Resources we require to deliver the customer Value Proposition
  • Extrapolate what are the Key Activities we are going to perform
  • Derive whom should we make Partnership with
  • Understand and accordingly define Cost Structure to make above current industry level margins

  • Defining Key elements of Product Value Proposition, sharpen on:


  • Promise: Can be either Functional, Economic or Emotional or a mix of all/some of them.
  • Differentiation: Competing Alternatives
  • Support: Infrastructure, Testimonials and 3rd Party Certification

  • For any Target Group, if:


  • Promise+Differentiation+Support == Cost+Effort+Risk, Value Proposition is just Marginal
  • Promise+Differentiation+Support >= Cost+Effort+Risk, Value Proposition is Reasonably Good
  • Promise+Differentiation+Support >> Cost+Effort+Risk, Value Proposition is Exceptional!