building sustainable business

Empowering New Business

Building Sustainable Business // About Marketing Strategy & Organization Lecturer: Marian Dragt

Overview // Strategy // Direction, Future and

Sustainability // Advantage & Environment // Understanding the Business

// Business Models // Customer Segments // Value Propositions // Distribution Channels // Customer Relationships // Partner Network // Key Activities // Key Resources // Revenue Streams // Cost Structure // Example Business Model // Try it yourself! // References & Contact Details

“Marketing is building sustainable business” // Business: the objective of marketing is to realise

organisational goals, through the exchange of ‘offerings’ (goods and services) with customers;

// Sustainable: to ensure the survival of the company as a going-concern, value must be created for the company as well as for the customer;

// Building: the results of a company are the result of the integrated efforts of the whole organisation.

– Moenaert & Robben

“Visionary marketing relates to the planning and the implementation of marketing activities in order to optimise the company’s current and future competitiveness” // Where are you now? // Where do you want to be? // How do you get there


It’s all about Strategy… // “Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a changing environment, to meet the needs of markets and to fulfill stakeholder expectations.”

Source: Johnson and Scholes (2002)

Direction //What’s your ambition and vision?

Long term //And what about the future?

And what about Sustainability?

Advantage & Environment //Please look outside…you’re not alone!


Product / Service

Image

Customer Process

Price

Source: Robben & Moenaert (2008)

The CODA (Customer’s

Outlook on Differentiating Advantages)

// What do you offer? // How and where do you offer it? // What are the costs to the

customer? // What do you represent?


Suppliers

Company Competitors Complementors

Source: Robben & Moenaert (2008)

Dir

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Customers

Technological Environment

Economic Environment

Socio-cultural Environment

Political Environment

Economic Environment

Economic factors reflect a country’s attractiveness as a market

Industrial structure // Subsistence economies // Raw material exporting

economies // Industrializing economies // Industrial economies

Income distribution // Low-income households // Middle-income households // High-income households

©2012 Pearson Education


Political-Legal Environment // Country’s attitude toward

international buying // Government bureaucracy // Political stability // Monetary regulations

Your Environment if you are a Global Company // You operate in more than one country // You gain marketing, production, R&D, and financial advantages not available to purely domestic competitors // You see the world as one market


Why go Global?

// Global competitors might attack the home market

// More growth in foreign markets

// Customers might be expanding abroad

But… // Difficult to understand foreign

buyers // Making products competitive // Adapting to foreign business

conditions // International experience of

managers // International regulations

Questions for Global Companies // What market position should you try to establish in your own country, in

your economic region, and globally? // Who will your global competitors be, and what are their strategies and

resources? // Where should you produce or source your product? // What strategic alliances should you form with other firms around the

world?


Understanding the Business // What do you offer? // How and where do you offer it? // What are the costs to the

customer? // What do you represent?

…How do you do that?

Business Models “Stories that explain how enterprises work” // A good business model begins

with an insight into human motivations and ends in a rich stream of profits.

Source: Magretta (2002)

Partner Network The partners and suppliers you work with

Value Proposition The bundles of products and services that satisfy your customer segment’s needs

Customer Segments Your group of customers with distinct characteristics

Key Activities The most important activities performed to implement your business model

Cost structure The costs you incur to run your business model

Revenue streams The streams through which you earn your revenues from your customers for value creation and customer facing activities

Key Resources The key resources on which your business model is built

Customer Relationships The types of relationships you entertain with each customer segment Distribution Channels The channels through which you communicate with your customers and offer your value proposition

The Business Model Canvas // Which story are you telling?

Source: Osterwalder & Pigneur: Business Model Generation (2010)

Partner Network

Value Proposition

Customer Segments

Key Resources

Cost structure

Revenue streams

Key Activities

Customer Relationships

Distribution Channels

The Business Model Canvas // The building blocks


Customer Segments // For whom are you creating value? // Who are your most important customers? // Who pays?

Customer Segment Examples // Mass Market // Niche Market // Segmented // Diversified // Multi-sided Platform

Customer Segment Examples

// Mass market

// Niche markets

// Segmented

// Diversified

// Multi-sided platform

Customer Segment Questions // Do you know your customers and

their needs good enough? // Are some customer groups likely

to defect soon? // Do you regroup different

customer segments well enough?

Skiing became a sport in Norway where it was invented 4,000 years ago.

Global Market Segmentation // Demographics // Psychographics // Behavioral characteristics // Benefits sought


Demographic Segmentation // Income // Population // Age distribution // Gender // Education // Occupation


Communication is about perception


Global Consumer Culture

// Culture–ways of living, built up by a group of human beings, that are transmitted from one generation to another

// Culture has both conscious and unconscious values, ideas, attitudes, and symbols

// Culture is acted out in social institutions // Culture is both physical (clothing and

tools) and nonphysical (religion, attitudes, beliefs, and values)


Cultural Environment

“The need to adapt to local cultural values and traditions rather than imposing their own”

Marketing Culture

Value Propositions // What value do you deliver to the customer? // Which one of your customer’s problems are

you helping to solve? // What bundles of products and services are

you offering to each Customer Segment? // Which customer needs are you satisfying?

Value

Proposition

Characteristics // Newness // Performance // Customization // “Getting the Job Done” // Design // Brand/Status // Price // Cost Reduction // Risk Reduction // Accessibility // Convenience/Usability

Glocalization


Aesthetics “Aesthetic elements that are

seen as attractive in one country may be viewed differently in another.”

// The sense of what is beautiful and what is not beautiful

// What represents good taste as opposed to tastelessness or even obscenity

// Visual–embodied in the color or shape of a product, label, or package

// Styles–various degrees of complexity, for example, are perceived differently around the world

Value Propositions Questions // Does your value proposition still cater well

enough to your clients’ needs? // Do you know how your customers perceive

your value proposition? // Are your competitors offering similar value

propositions at similar or better prices? // How well are your customers served by

other competitors?

Distribution Channels // Through which Channels do your Customer Segments want to be reached? // How are you reaching them now? // How are your Channels integrated? // Which ones work best? // Which ones are most cost-efficient? // How are you integrating them with customer routines?

// How do you raise awareness about your company’s products and services?

1. Awareness

// How do you help customers evaluate your organization’s Value Proposition?

2. Evaluation

// How do you allow customers to purchase specific products and services?

3. Purchase

// How do you deliver a Value Proposition to customers?

4. Delivery

// How do you provide post-purchase customer support?

5. After sales

Distribution Channel Phases

Distribution Channels Questions // Do you have a well thought-through

communication and distribution channel design?

// How well do you reach your clients? // Do you know how successful your channels

are in terms of customer acquisition? // How well are your different channels

integrated? // Do you know how cost efficient are your

channels are? // Do you use the right channels for the right

clients (e.g. in terms of profitability)?

Customer Relationships // What type of relationship does

each of your Customer Segments expect us to establish and maintain with them?

// Which ones have you established?

// How are they integrated with the rest of your business model?

// How costly are they?


Examples // Personal assistance // Dedicated Personal Assistance // Self-Service // Automated Services // Communities // Co-creation

Customer Relationships Questions // Do you have a customer relationship strategy? // How good are your relationships with your best customers? // Do you spend too much time and money in relationships with unprofitable

clients? // How well are you doing in managing your customer relationships (e.g.

follow-up, etc.)

Partner Network // Who are your Key Partners? // Who are your Key Suppliers? // Which Key Resources are you acquiring from partners? // Which Key Activities do partners perform?

Partner Network Motivations // Optimization and economy // Reduction of risk and uncertainty // Acquisition of particular resources

and activities

Partner Network Questions // Do you use partners enough? // How well do you work with your existing partners and suppliers? // How dependent are you on your existing partners and suppliers?

Key Activities // What Key Activities do your Value

Propositions require? // Our Distribution Channels? // Customer Relationships? // Revenue Streams?

Key Activities Categories // Production // Problem Solving // Platform/Network

Key Activities Questions // How efficient are you in performing your activities? // Do you perform too many activities ourselves, leading to a lack of focus?

Key Resources // What Key Resources do your Value

Propositions require? // Our Distribution Channels? // Customer Relationships? // Revenue Streams?

Key Resources Types // Physical // Intellectual (brand patents, copyrights, data) // Human // Financial


International Trade


Restrictions

to trade // Tariffs // Quotas // Exchange controls // Non-tariff trade barriers



Facilitators of trade

// WTO and GATT // Region free trade zones // EU and NAFTA


Key Resources Questions // Do you dispose of the right key resources in terms of

quality and quantity? // Do you dispose off too many resources internally,

leading to a lack of focus?

Revenue Streams // For what value are your customers really

willing to pay? // For what do they currently pay? // How are they currently paying? // How would they prefer to pay? // How much does each Revenue Stream

contribute to overall revenues?

Revenue Streams Types // Asset sale // Usage fee // Subscription Fees // Lending/Renting/Leasing // Licensing // Brokerage fees // Advertising

Revenue Streams Pricing Fixed pricing // List Price // Product feature dependent // Customer segment dependent // Volume dependent Dynamic pricing // Negotiation (bargaining) // Yield Management // Real-time-Market // Auctions

Revenue Streams Questions // How sustainable are your current revenue streams? // How diversified are your revenue streams? // Are you dependent on too few revenue sources (e.g.

from some big clients or one single business)? // How well do you price your value proposition?

Cost Structure // What are the most important costs inherent in your

business model? // Which Key Resources are most expensive? // Which Key Activities are most expensive?

Is your business more: // Cost Driven (leanest cost structure, low price value

proposition, maximum automation, extensive outsourcing)

// Value Driven ( focused on value creation, premium value proposition)

Cost Structure Characteristics // Fixed Costs (salaries, rents,

utilities) // Variable costs // Economies of scale // Economies of scope

Cost Structure Questions // Is your cost structure appropriate (e.g. low cost business model = low cost

structure)? // Do you clearly understand which parts of your business model have the

highest costs? // How lean is your cost structure?

Partner Network

Value Proposition

Customer Segments

Key Activities

Cost structure Revenue streams

Key Resources



High-end Restaurant

quality espresso at

home

The Business Model Example // Nespresso


Value Proposition

Partner Network

Customer Segments

Key Activities


Key Resources



The Business Model Example // Charles den Tex (writer)

Value Proposition

Partner Network

Customer Segments

Key Activities


Key Resources



The Business Model Example // YOU!

References // Gulati, R. (2009). Reorganize for Resilience. Boston:

Harvard Business School Publishing. // Johnson, G., & Scholes, K. (2002). Exploring corporate

strategy. Harlow: Financial Times Prentice Hall. // Moenaert, R., Robben, H., & Gouw, P. (2009). Marketing,

strategy & organization (4th ed.). Leuven: LannooCampus.

// Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. Deventer: Kluwer.

// ©2012 Pearson Education // http://www.businessmodelgeneration.com // Image courtesy of FreeDigitalPhotos.net

Contact Details // Website: www.md2consultancy.com // Email: [email protected]

http://www.md2consultancy.com/

mailto:[email protected]

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