value-proposition-canvas-business-model-canvas

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.

AspectExplanation
Value PropositionValue 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. It focuses on defining the unique value a product or service offers to its customers.
Importance– Defining a clear and compelling value proposition is essential for attracting and retaining customers. It answers the critical question: “Why should customers choose your product or service over alternatives?”
Customer Segment– The Value Proposition is intimately connected to the Customer Segment. A business must understand its target customers’ needs, pain points, and preferences to create a value proposition that resonates with them.
Customer Jobs– In the Value Proposition Canvas, you identify the Customer Jobs, which are the tasks or problems your customers are trying to solve. Understanding these jobs is key to crafting a value proposition that addresses their needs.
Pains and Gains– The canvas also involves capturing the Pains (customer frustrations and challenges) and Gains (desired outcomes and benefits) experienced by your customers. These insights help tailor the value proposition effectively.
Fit and Alignment– A successful value proposition aligns with the specific jobs, pains, and gains of your target customer segment. Achieving this fit ensures that your product or service addresses real customer needs, creating value.
Unique Differentiators– The value proposition should highlight what sets your offering apart from competitors. Unique Differentiators are elements that make your product or service distinctive and appealing to customers.
Features and Benefits– The canvas helps in mapping out the key Features of your offering and the corresponding Benefits they provide to customers. Clear communication of these features and benefits is crucial for customer understanding.
Testing and Iteration– Value propositions are not set in stone. Businesses should be open to Testing their value propositions with real customers and be willing to Iterate based on feedback and changing market dynamics.
Cost vs. Value– Balancing the Costs of delivering the value proposition with the perceived Value it provides to customers is critical. Businesses must ensure that the cost-to-value ratio remains attractive to customers.
Segment Fit– A business may have multiple customer segments, each with its unique value proposition. Ensuring that the value proposition fits each segment’s needs and preferences is important for market relevance.
Clear Communication– Effectively communicating the value proposition through marketing and messaging is vital. Customers should quickly grasp why your product or service is the best solution to their problems or needs.
Conclusion– The Value Proposition Canvas helps businesses articulate the value they offer to customers and tailor it to specific segments. Achieving a strong fit between the value proposition and customer needs is key to success.

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:

  1. 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.
  2. Customizationvalue 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. 
  3. Design – companies like Apple and Prada create value amongst consumers because they are perceived to add value through superior design.
  4. 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.
  5. 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:

Dropbox:

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.

Value Map:

  • Products and Services: Cloud storage.
  • Pain Relievers: Easy sharing, data backup.
  • Gain Creators: File sync across devices, collaboration tools.

Airbnb:

Customer Profile:

  • Jobs: Find affordable, unique accommodations.
  • Gains: Experience local culture, cost savings.
  • Pains: Expensive hotels, lack of local experiences.

Value Map:

  • Products and Services: Platform for home rentals.
  • Pain Relievers: Affordable lodging, unique experiences.
  • Gain Creators: Local experiences, variety of choices.

Apple (iPhone):

Customer Profile:

  • Jobs: Need a device for communication, entertainment, work.
  • Gains: Efficient multitasking, status symbol.
  • Pains: Carrying multiple devices, low-quality user experience.

Value Map:

  • Products and Services: iPhone with diverse apps.
  • Pain Relievers: One device for multiple tasks.
  • Gain Creators: High-quality design, brand status.

Nike (Custom Shoes):

Customer Profile:

  • Jobs: Wear comfortable, stylish shoes.
  • Gains: Unique design, personal expression.
  • Pains: Generic designs, lack of uniqueness.

Value Map:

  • Products and Services: Customizable shoe designs.
  • Pain Relievers: Ability to choose unique colors and materials.
  • Gain Creators: Self-expression, brand status.

Spotify:

Customer Profile:

  • Jobs: Listen to a variety of music on-the-go.
  • Gains: Discover new music, create playlists.
  • Pains: Buying individual albums, lack of music discovery.

Value Map:

  • Products and Services: Music streaming platform.
  • Pain Relievers: Unlimited music access, curated playlists.
  • Gain Creators: Music recommendations, offline listening.

Rolex:

Customer Profile:

  • Jobs: Want a luxury accessory.
  • Gains: Status symbol, luxury feel.
  • Pains: Cheap watches, lack of durability.

Value Map:

  • Products and Services: Luxury watches.
  • Pain Relievers: Durability, time accuracy.
  • Gain Creators: Brand status, investment.

Ryanair (Budget Airlines):

Customer Profile:

  • Jobs: Travel at an affordable price.
  • Gains: Save money, more frequent travels.
  • Pains: Expensive flights, less frequent vacations.

Value Map:

  • 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.
  • Two Building Blocks: The Value Proposition Canvas comprises two foundational building blocks:
    • Customer Profile: This block delves into the customer’s perspective and includes three key elements:
      • 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).
    • Value Map: This block explores how the organization’s products and services provide value to the customer. It includes:
      • 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.
  • Value Proposition Types: Value propositions can take various forms, catering to different customer segments and preferences. Some common types include:
    • 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
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

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
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
Business Model Template - FourWeekMBA

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.

vbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
VBDE Blockchain Business Model Template

Download The VBDE Framework Template Here

Connected Strategy Frameworks

ADKAR Model

adkar-model
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived from whether the market is new or existing, and whether the product is new or existing.

Business Model Canvas

business-model-canvas
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

lean-startup-canvas
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Balanced Scorecard

balanced-scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

GAP Analysis

gap-analysis
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

GE McKinsey Model

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

McKinsey’s Seven Degrees

mckinseys-seven-degrees
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

McKinsey Horizon Model

mckinsey-horizon-model
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis

Scenario Planning

scenario-planning
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

Main Guides:

About The Author

Scroll to Top
FourWeekMBA