The first environmental forces block is related to the market forces of the customer segments in your Business Model Canvas.
The purpose of the “Market Forces” block is to verify that your model is in line with the evolving needs of your chosen customer segment. When you are looking at market forces, you should start by asking, “Can I break down the customer segment further using demographic and psychographic data?”
If your market segment relates to individual consumers (B2C), a tool called DemographicsNow can help break down the customers into consumer archetypes. Here is a link to the MOSAIC (DemographicsNOW) Group and Type Manual used by DemographicsNow. If your customer segment is a business (B2B), you can use a list of NAICS codes to consider alternative customer segments.
After you create a list of potential customer segments:
- Are there some segments that are more aligned with your business model?
- Do some have greater potential for higher profits margins?
Next, take a look at your list and determine which segments are most likely to grow and which are most likely to shrink. Harry Dent is an economist that looks at age and buying habits to assess the health of various consumer segments (B2C). A copy of Harry Dent’s Demand Curves can be found under the Free Downloads Tab of SteveBizBlog.com.
Next, you should look at what the specific customer segments really want and what will they likely resist. For example, if you are appealing to an older crowd, is it wise to develop a mobile app since many resist buying a smartphone?
Finally, it is time to consider if they really like your product or service better than other options and if there are customer switching costs you have to mitigate in your business model to finally get these customers to switch. For example, Sprint offers to buy out your existing contract if you agree to switch to their phone service as a way to mitigate switching costs. Also, commercial landlords often offer one or more months of free rent to compensate the customer expenses of relocating their business.
What are the market forces affecting your Business Model Canvas?
Next post in the series: Key Trends
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