business model marketing course 2
TRANSCRIPT
advanced course business model
marketing
session 2
the business model canvas
homework.. Literature/theory/background -study today’s slides Act different: -read the hand-out -pick your industry and search for articles about trends that may lead to opportunities and threats (1 a4 + min. 3 articles)
last session introduction, definitions, the goal, getting to know each other, planning, het importance and relevance, looking at business models, searching for business mode l s , c h a ng i n g mar ke t s , changing people
today Theory, different business model patterns, business model canvas, business model building blocks, real life examples, working on the assignment!
but how does it work?..
a business model.. - earning model: how does the organisation make money? -distribution model: how does the organisation deliver the product? -(co-) creation model: how do the products originate? -user model: what about the power of the customers?
Business models
Earning model
Subscrip4on model
Bait and hook model
Freemium model
Package deal
Service model
Adver4sing model
Auc4on based model
Brokerage model
Yield management
Long tail model
Unbundeled models
Insurance model
Distribu4on models
Tupperware model
Online sales model
Clicks & bricks model
Franchise model
Labeling model
Mul4-‐channel model
Affiliate model
(Co-‐)crea4on models
Mass customiza4on
Open source model
User-‐generated content
Open business model
User models
Mass-‐effect model
Community model
Mul4-‐sided plaNorm
Sources: Interac4eve marke4ng, Business-‐modellen, Business model genera4on
Subscrip)on and consump)on model The aim of this model is to generate money with subscrip4ons. It guarantees the organisa4on a steady stream of earnings. It guarantees the consumer a steady delivery of products and service. The consump4on model also charges money for the density of use of a product. …(earning model)…
Example: Vodafone
Bait and hook The aim of this model is to lure consumers with an aUrac4ve, oVen extremely cheap product (bait), aVer which the organisa4on makes great profit with selling complementary parts or repea4ng purchases (hook). The organisa4on has a guarantee that the customer does return. By making use of a vender lock-‐in an organisa4on oVen tries to make it even harder to switch to a compe4tor. Examples are patents, licences and other switching costs.
Examples: GilleUe, HP-‐printers
Freemium model The freemium model resembles the bait-‐and-‐hook model. The product is given away for free. A beUer version of the product is only accessible aVer buying an updated version. There are also freemium models used that have a connec4on with annoying adver4sing. AVer a paid update you don’t get this adver4sing anymore. …(earning model)…
Examples: Spo4fy, Skype, Dropbox
Package deal The aim of the package deal is to sell less interes4ng products or by-‐products with the successful product. These supplements are much less interes4ng than the stand-‐alone product. The organisa4on oVen tries to get rid of stock or to get higher margins on specific parts. …(earning model)…
Examples: 3 for 1 magazines, Bank of Scotland
Service model The thought behind the service model is the fact that the organisa4on earns money with the service provided to the product. Some4mes this service income is even bigger than the ini4al purchase. Consumers feel psychological pressure to service the product at the place where they bought it. OVen this pressure is increased by a specific service deal or other agreements. …(earning model)…
Examples: Remeha, BMW
Adver)sing model The aim of this model is to gain money by all means of adver4sing. Very oVen the organisa4ons offers the product for free in exchange for showing all these adver4sements. This way the adver4ser takes advantage of the aUrac4ve power of the organiza4on. …(earning model)…
Examples: Facebook, Metro
Auc)on model The aim of the auc4on model is to maximise profit by means of an (online) auc4on. The price of the products is determined by demand and offer. An online auc4on enlarges the playground of an offering organiza4on. This organiza4on earns money by placement fees and some4mes by asking a part of the actual transac4on. …(earning model)…
Examples: Vakan4eveiling.nl, e-‐bay
Brokerage model The aim of the brokerage model is to gather demand and offer. The broker however offers extra informa4on and / or knowledge. The added value of the broker is the fact that he organises the money transac4on. This model is also used by so called informa4on brokers. They make money by selling informa4on about search and buying behaviour. …(earning model)…
Examples: Independer.nl
Yield management The yield management model makes use of very accurate market informa4on and sta4s4cs in order to con4nually change the price. This means there is no fixed price. The model is aimed primarely at maximising profit. Yield management cannot go without ICT techniques and the internet. …(earning model)…
Examples: KLM, Hertz, Carré Theatre
Long tail model Long tail models are about selling less from more different products. The long tail focuses on selling a large amount of niche products. All together these sales are equally profitable as the tradi4onal model which makes use of some top bestselling products. …(earning model)…
Examples: Amazon.com, iTunes, NeNlix
Unbundled models The concept of an unbundled organiza4on focuses on three fundamental types of business: Customer rela4on, product innova4on and infrastructure. These three types can go along eacht other in one single organiza4on but it’s beUer when they are unbundled in separate en44es (SBU’s). …(earning model)…
Examples: NS/prorail, Sony/Ericsson
Insurance model The insurance model is the opposite of the freemium model. A large customer base pays a regularly fee in order to protect itself from unlikely, but financially disastrous happenings. …(earning model)…
Examples: Rega, Allianz
Business models
Earning model
Subscrip4on model
Bait and hook model
Freemium model
Package deal
Service model
Adver4sing model
Auc4on based model
Brokerage model
Yield management
Long tail model
Unbundeled models
Insurance model
Distribu4on models
Tupperware model
Online sales model
Clicks & bricks model
Franchise model
Labeling model
Mul4-‐channel model
Affiliate model
(Co-‐)crea4on models
Mass customiza4on
Open source model
User-‐generated content
Open business model
User models
Mass-‐effect model
Community model
Mul4-‐sided plaNorm
Sources: Interac4eve marke4ng, Business-‐modellen, Business model genera4on
read.. - Read the article “Apps shake up video game industry”
- Ask yourself: how do mobile games earn money?
How do we make money?.. 1. Premium games. Tradi4onal payment of a download. 2. In-‐app sales. Most popular model. Gamers are asked to invest as they are playing the game. In 2011 the average sales were 11.40 euro per customer. 3. Freemium. Giving away free games. Gamers have to pay for a beUer update (or ad free). 4. Subscrip4ons. A monthly or weekly fee. Not very popular, but perhaps aVer the success of World of WarcraV this can become reality. 5. Ads. As men4oned above. But it’s also possible to cooperate with an adver4ser so you can make a game together.
a business model
A business model describes the basic principle of how the organization creates, delivers and retains value.
Source: Business model generation, Osterwalder & Pigneur
9 building blocks... (in order to explain this basic principle)
customer segments
customer segments.. - Customers are the heart and soul of the business model
- Different groups of people or organisations on which the organisations focuses its effort
- After segmentation a decision about the right segment(s) is made
- After that the needs of these segments are researched
customer segments.. - Mass market: no difference between segments
- Niche market: a small specialized market
- Segmented: different segments are chosen
- Diversified: two segments with totally different needs and problems
- Multi-sided markets: earning money on two different sides (example: advertisers & readers)
value proposition
value propositions.. - Bundle of products that creates value for a particular customer segment
- What is the reason the customer choses you?
- Which customer problem does your organization solve?
value proposition.. Mix of distinctive elements: - Newness (mobile phones) - Performance (cars) - Customization (Factory 121 horloges) - ‘Getting the job done’ (aircraft engines) - Design (Apple) - Brand (Ferrari) - Price (Ryan air) - Cost reduction (Independer.nl) - Risk reduction (Bovag label) - Accessibility (Netjets) - Convenience / Usability (iTunes, ipod, ipad)
channels
channels.. - How does the organization communicate with its customers?
- How does the organization deliver its value? (distribution)
- Which channels are effective? - Which channels are efficient?
channels..
1. Awareness
2. Evalua4on
3. Purchase
4. Delivery
5. AVer sales
customer relationships
customer relationships..
- What kind of relationship with the customer does the organization want?
- Is the contact personal or automated? - Am I focussing on acquisition, retention
or upselling? - What kind of relationship does the
customer expect? - How expensive are the relationships we
got?
customer relationships..
- Dedicated personal assistance (Private bankers)
- Personal assistance (Mc Donalds) - Self-service (Albert Heijn) - Automated services (Amazon.com) - Communities (Runkeeper) - Co-creation (Nike, Lays)
revenue streams
revenue streams.. - How much money does the organization earn from a particular segment?
- For which value is a particular segment willing to pay?
- An insight into the earning model
revenue streams.. Different kinds of earnings: - Sales of goods - User fee - Subscriptions - Renting / leasen - Licensing - Brokerage fees - Advertising
key resources
key resources.. - What are the most important assets of the organization?
- Which make delivering the value proposition possible?
- Assets can be owned, leased or obtained by making use of key partners
key resources.. Key resources can be: - Physical (buildings, machines) - Intellectual (brands, partnerships) - Human resources (knowledge, experience) - Financial (cash, stocks)
key activities
key activities.. - What are the most important activities an organization has to carry out in order to make the business model work?
- Which key activities result from our distribution channels, customer relationships and revenue streams?
key activities.. Examples of key activities: - Design - Innovation - Problem solving /advice - Knowledge management - Database management - Platform management - Service - Promotion - Cost reduction
key partners
key partnerships.. - Description of the network of suppliers and partners that make the business model possible
- That can be: - Strategic alliances between non-competitors,
- Joint ventures between organizations from different industries
- Buyer-supplier relationships - Coopetition: strategic partnerships between competitors
key partnerships.. Three motivations to start partnerships: - Optimization and economy of scale (in order to reduce costs)
- Reduction of risk and uncertainty (splitting risk of innovation: Blu-ray)
- Acquisition of particular resources and activities
cost structure
cost structure.. - Description of the most important costs that are made in order to make the business model possible?
- Some businesses are more focused on cost reduction, others more on value creation
business model canvas
DIY.. - Take a large piece of paper - Think of your chosen industry and choose an organization, company, platform or brand from that one
- Sketch the business model canvas grit
- Visualize every building block in order to create an image of the business model of that organization, company, platform or brand
- Prepare a short presentation in which you can explain how the business model you have sketched out works.
homework.. Literature/theory/background: -read BMG page 1 till 50 Work on the assignment:
act different.. - Dive deep into your future customer segment (s)
- Use the empathy-map (page 126 till 133) to get the right customer perspective
- Figure out (do some research): - What does the segment want to change? - What does attract the segment to the product? - What does the segment hate/love? - Which problems do the segments stumble upon?
- Go on building your new business model and writing the business plan!
till next week!