business model

marketing

bmm,an

advanced course

session 2

last sessionintroduction, definitions, the goal, getting to know each other, planning, the importance and relevance, looking at business models, searching for business models, changing markets, changing people

business model canvas

homework last week..

Literature/theory/background-study today’s slides-study BMG page 1- 51

act different..• Read the hand-out• Pick your industry and search at least three articles

about trends that may lead to opportunities and threats for that industry

• 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 among friends):

What does the segment want to change?What attracts the segment to the product?What does the segment hate/love?Which problems do the segments stumble upon?

shifting your perspective..

From ‘you’ to ‘them’:- What does he/she see?- What does he/she hear?- What does he/she really think and feel?- What does he/she say and do?- What is the customer’s pain- What does the customer gain

understanding your target group

todayBusiness model definition, different business model patterns, working on the assignment!

business model canvas

A business model..

- Is about how money is earned- About how business is done- About how the company is organized- About how the products are sold- About how products are created- About how customers gain value- About what the brand stands for

definitions..- Earning model- Organisation model- Selling model- Publishing model- Advertising model - Branding model- Creation model- User model

new business models..

- In every part of the world- In every industry- In big and small organisations- Profit and non-profit- Totally new business models are created- With a totally new shape or - By simply altering the current model

A business model, huh?

“.. the definitions in management science confuse entrepreneurs and

marketeers.

How often don’t we use the definition ‘business model’, hoping our listener

understands us..”

Source: Business modellen, focus en samenhang in organisaties, D. Houtgraaf en M. Bekkers

A business modelOsterwalder & Pigeur:

“.. A business model describes the rationale of how an organisation

creates, delivers and captures value..”

business model canvas

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

Subscriptionmodel

Bait and hookmodel

Freemium model

Package deal

Servicemodel

Advertisingmodel

Auction basedmodel

Brokeragemodel

Yield management

Long tail model

Unbundeledmodels

Insurancemodel

Distributionmodels

Tupperware model

Online salesmodel

Clicks & bricksmodel

Franchise model

Labelingmodel

Multi-channelmodel

Affiliatemodel

(Co-)creationmodels

Mass customization

Open sourcemodel

User-generated content

Open businessmodel

Usermodels

Mass-effectmodel

Community model

Multi-sided platform

Sources: Interactieve marketing, Business-modellen, Business model generation

Subscription and consumption modelThe aim of this model is to generate money with subscriptions. It guarantees the organisation a steady stream of earnings. It guarantees the consumer a steady delivery of products and service. The consumption model also charges money for the density of use of a product. …(earning model)…

Example: Vodafone

Bait and hookThe aim of this model is to lure consumers with an attractive, often extremely cheap product (bait), after which the organisation makes great profit with selling complementary parts or repeating purchases (hook). The organisation has a guarantee that the customer does return. By making use of a vender lock-in an organisation often tries to make it even harder to switch to a competitor. Examples are patents, licences and other switching costs.

Examples: Gillette, HP-printers

Freemium modelThe freemium model resembles the bait-and-hook model. The product is given away for free. A better version of the product is only accessible after buying an updated version. There are also freemium models used that have a connection with annoying advertising. After a paid update you don’t get this advertising anymore. …(earning model)…

Examples: Spotify, Skype, Dropbox

Package dealThe aim of the package deal is to sell less interesting products or by-products with the successful product. These supplements are much less interesting than the stand-alone product. The organisation often 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 modelThe thought behind the service model is the fact that the organisation earns money with the service provided to the product. Sometimes this service income is even bigger than the initial purchase. Consumers feel psychological pressure to service the product at the place where they bought it. Often this pressure is increased by a specific service deal or other agreements. …(earning model)…

Examples: Remeha, BMW

Advertising modelThe aim of this model is to gain money by all means of advertising. Very often the organisations offers the product for free in exchange for showing all these advertisements. This way the advertiser takes advantage of the attractive power of the organization. …(earning model)…

Examples: Facebook, Metro

Auction modelThe aim of the auction model is to maximise profit by means of an (online) auction. The price of the products is determined by demand and offer. An online auction enlarges the playground of an offering organization. This organization earns money by placement fees and sometimes by asking a part of the actual transaction. …(earning model)…

Examples: Vakantieveiling.nl, e-bay

Brokerage modelThe aim of the brokerage model is to gather demand and offer. The broker however offers extra information and / or knowledge. The added value of the broker is the fact that he organises the money transaction. This model is also used by so called information brokers. They make money by selling information about search and buying behaviour. …(earning model)…

Examples: Independer.nl

Yield managementThe yield management model makes use of very accurate market information and statistics in order to continually 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 modelLong 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 traditional model which makes use of some top bestselling products. …(earning model)…

Examples: Amazon.com, iTunes, Netflix

Unbundled modelsThe concept of an unbundled organization focuses on three fundamental types of business: Customer relation, product innovation and infrastructure. These three types can go along eacht other in one single organization but it’s better when they are unbundled in separate entities (SBU’s). …(earning model)…

Examples: NS/prorail, Sony/Ericsson

Insurance modelThe 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

distribution models..

Tupperware modelThe aim of the tupperware model is to gather a small group of interested buyers in a home setting. The one who organises a so called ‘party’ earns money by means of a storage rate. Distribution costs are low and there is a social pressure to buy. …(distribution model)…

Examples: Tupperware, Aloë Vera, Upperdare..

Online sales modelWith the internet a company can easily get around wholesalers and retailers. Often the saving of costs are in favour of the consumer. This way it’s cheaper to buy online. A disadvantage is the fact that markets have become much more transparent.…(distribution model)…

Clicks-and-bricks modelWhen an organization uses the online sales model all sales are based on making use of the internet. However for some organizations the shop in the street is still very important because its customers demand a place where they can meet the physical product. This is why lots of organizations combine internet sales (clicks) and retail (bricks). Despite of the fact that this leads to higher costs. Organizations are always searching for the perfect internet/retail proportion. …(distribution model)…

Examples: Bjorn Borg, IKEA

Franchise modelThe franchise model aims at spreading a successful retail formula by independent entrepreneurs. These entrepreneurs have to follow strict rules in order the keep the formula clear. This business model is an example of spreading risk for both formula as the entrepreneurs. …(distribution model)…

Examples: KFC, supermarkets

LabellingThe labelling model is a special kind of franchising. Using the labelling model means that products that are labelled with a specific strong brand are distributed by other organizations who earn money with a storage rate. The labelling model is often used for luxury brands for which the brand is more important than the product itself …(distribution model)…

Examples: Disney

Multi – channel modelMulti channel management means optimizing the number of communication and distribution channels an organization has. Past years big organizations have become more aware of the fact that a good multi-channel strategy can lead to cost reduction and customer retention. …(distribution model)…

Examples: G-star, Apple

Affiliate modelThe aim of the affiliate model is offering a product on a large number of places by making use of a network of partners. These partners get a comission for every new customer they deliver the organization. Often the affiliate uses a button, banner or webpage in order to persuade consumers to buy a product. The difference between the affiliate model and the advertising model is the fact that the offering organization doesn’t have to pay for the tools the affiliate uses. They only have to pay the affiliate for the leads he delivers. …(distribution model)…

Examples: cheapinsurance.com, mortgage.tv

(co) creation models..

Mass customizationThe mass customization model is a good example of a model that lets organizations and consumers work together when it comes to product development. The organization has divided its product in several components that can be altered by the consumer. The consumer can make combinations with these components and this way make its one ‘personalized’ product.. …((co) creation model)…

Examples: Nike, Lego

Open source modelThe open source model is often used in the software industry. It leads to important but free software. Software companies develop great free software that can be used by a lot of customers. After they start using it they often discover they want some customized solutions. This way the customer becomes a paid customer. …((co) creation model)… Examples: OpenOffice, Android

User – generated contentUser-generated content is a co-creation model that is often designed as a social network. The organization behind it is facilitating the service. The product itself emerges by the energy invested by volunteers. The organization makes money by donations and advertising. And sometimes also by selling a premium service. …((co) creation model)…

Examples: Wikipedia.org, IMDB.com

Open – business model Open business models can be used by organizations in order to create value through sustainable partnerships with other organizations. This can be done outside-in (ideas from outside the company are exploited inside the company) or inside-out (ideas from the company are exploited elsewhere). …((co) creation model)…

Examples: Mercedes & Swatch, Philips & DE

user models..

Mass effect modelThe mass effect model applies to certain products of which the amount of users determines the success immediately. Because of more and more people become users the product becomes an industry standard and that’s why other consumers don’t have an actual choice anymore. (user model)…

Examples: Microsoft Word, Whats app

Community modelThe community model is special kind of mass effectmodel. The product / platform originates from a community of users. The platform often makes money with advertising or a freemium business model …(user model)…

Examples: Runkeeper, iphoneclub

Multi – sided platform Multi-sided platforms bring together two or more independent customer groups or segments (often suppliers and consumers). These multi-sided platform are only interesting for a customer group when the other group is also using the platform. The platform creates value by facilitating interactions and transaction between the groups. The value of a multi-sided platform grows when it attracts more users, after which it will automatically attract a new group of suppliers. …(user model)…

Examples: Apple appstore, Sony Playstation

Business models

Earning model

Subscriptionmodel

Bait and hookmodel

Freemium model

Package deal

Servicemodel

Advertisingmodel

Auction basedmodel

Brokeragemodel

Yield management

Long tail model

Unbundledmodels

Insurancemodel

Distributionmodels

Tupperware model

Online salesmodel

Clicks & bricksmodel

Franchise model

Labelingmodel

Multi-channelmodel

Affiliatemodel

(Co-)creationmodels

Mass customization

Open sourcemodel

User-generated content

Open businessmodel

Usermodels

Mass-effectmodel

Community model

Multi-sided platform

Sources: Interactieve marketing, Business-modellen, Business model generation

-look at the business model patterns on the screen

-make an overview of the Google products

-write down which business model patterns Google uses the most

assignment

Business models

Earning model

Subscriptionmodel

Bait and hookmodel

Freemium model

Package deal

Servicemodel

Advertisingmodel

Auction basedmodel

Brokeragemodel

Yield management

Long tail model

Unbundeledmodels

Insurancemodel

Distributionmodels

Tupperware model

Online salesmodel

Clicks & bricksmodel

Franchise model

Labelingmodel

Multi-channelmodel

Affiliatemodel

(Co-)creationmodels

Mass customization

Open sourcemodel

User-generated content

Open businessmodel

Usermodels

Mass-effectmodel

Community model

Multi-sided platform

Sources: Interactieve marketing, Business-modellen, Business model generation

so..-sometimes it’s hard to find out the differences between patterns… -an organization always uses different patterns at the same time…-organizations are constantly changing there strategy that’s why they always develop new patterns

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. Traditional 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 better update (or ad free).

4. Subscriptions. A monthly or weekly fee. Not very popular, but perhaps after the success of World of Warcraft this can become reality.

5. Ads. As mentioned above. But it’s also possible to cooperate with an advertiser so you can make a game together.

homework..Literature/theory/background:-read BMG page 52 till 194

Work on the assignment!

till next week!