ITS business and revenue models Chapter | 10 119The customer segments are defined by five types of market— mass, seg-
mented, niche, diversified, and multisided. Mass market represents a large
group of customers with similar needs and problems. Segmented type divides
customers into groups based on the same characteristics. There are the products
and services tailored to the customer in niche markets. Diversified markets are
located in two or more industries with different needs and problems.
According to Osterwalder and Pigneur (2010), creation of a primary value,
is the purpose of the business which is defined in the mission of the company.
It describes the core product or service that the firm sells to the customer. The
extra value (or group of extra values) called value added, which increases a
sense of the product or service for a customer, is added to the primary value.
The distribution channels are where the company can choose between selling
through its own sales network (direct sales: store, salesman, website, appli-
cation in smartphones, and telephone) or outsource the sale (indirect: inter-
mediator). Personal assistance, which is based on human interaction, is the
standard relationship with customers. Cash flow is described by the revenue
stream component. Key resources describe tangible resources (production fa-
cilities, buildings, vehicles, and equipment) and intellectual resources (brand,
knowledge, patents, copyrights, partnerships, customer databases, and human
resources–staff and managers). The most important activities involved in val-
ue creating are called key activities. Key activities are production, delivery
of product, designing, marketing, and selling. The component key partner de-
scribes authority or people cooperating with the company. Costs represent a
monetary award of production.
According to Slávik & Bednár (2014), the main advantage of BMC is the
scheme (Fig. 10.2), which has some universal visualization features that clarify
the processes, enable connectivity of al components and can be analyzed with a
bird’s eye view. Slávik & Bednár (2014) argue that there are several advantages
when using BMC. First, BMC as a tool allows organizations to quickly define a
business model by filling in nine boxes of information. In doing so, the organi-
zation can show how it will create value through the offering for itself—and for
its customers or members. For practitioners, it is user-friendly. Second, it can be
used in any industry and is flexible. Third, the BMC gives us the structure of a
business plan. Fourth, by filling in the boxes, an opportunity is created to have
conversations around management and strategy.
However, there are limitations. According to Slávik & Bednár (2014), the
limitations are that the BMC is static because it does not capture changes in
strategy or the evolution of the model; it does not include purpose of company
and competitive environment.
10.6 Revenue model
There is often confusion between the term business model and revenue model
(Bock & George, 2011), but they are not the same. According to Bock & George