Business model marketing course 2
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  • 1. advanced coursebusiness model marketing
  • 2. session 2
  • 3. thebusiness model canvas
  • 4. homework..Literature/theory/background-study today’s slidesAct different:-read the hand-out-pick your industry and search forarticles about trends that maylead to opportunities and threats(1 a4 + min. 3 articles)
  • 5. last sessionintroduction, definitions, the goal,getting to know each other,planning, het importance andrelevance, looking at businessmodels, searching for businessmodels, changing markets,changing people
  • 6. todayTheory, different business modelpatterns, business model canvas,business model building blocks,real life examples, working on theassignment!
  • 7. but how does it work?..
  • 8. a business model..- earning model: how does theorganisation make money?-distribution model: how does theorganisation deliver the product?-(co-) creation model: how do theproducts originate?-user model: what about the power ofthe customers?
  • 9. Business     models   Earning     Distribu4on   (Co-­‐)crea4on   User   model   models   models   models   Subscrip4on   Bait  and  hook   Tupperware     Online  sales   Mass   Mass-­‐effect   model   model   model   model   customiza4on   model   Freemium     Package     Clicks  &  bricks   Franchise     Open  source   Community     model   deal   model   model   model   model   Service   Adver4sing   Labeling   Mul4-­‐channel   User-­‐generated   Mul4-­‐sided     model   model   model   model   content   plaNorm  Auc4on  based   Brokerage   Affiliate   Open  business   model   model   model   model   Yield     Long  tail    management   model   Unbundeled   Insurance   Sources:  Interac4eve  marke4ng,  Business-­‐ models   model   modellen,  Business  model  genera4on  
  • 10. 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          
  • 11.  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            
  • 12.    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        
  • 13. 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          
  • 14. 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                
  • 15.  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            
  • 16. Business     models   Earning     Distribu4on   (Co-­‐)crea4on   User   model   models   models   models   Subscrip4on   Bait  and  hook   Tupperware     Online  sales   Mass   Mass-­‐effect   model   model   model   model   customiza4on   model   Freemium     Package     Clicks  &  bricks   Franchise     Open  source   Community     model   deal   model   model   model   model   Service   Adver4sing   Labeling   Mul4-­‐channel   User-­‐generated   Mul4-­‐sided     model   model   model   model   content   plaNorm  Auc4on  based   Brokerage   Affiliate   Open  business   model   model   model   model   Yield     Long  tail    management   model   Unbundeled   Insurance   Sources:  Interac4eve  marke4ng,  Business-­‐ models   model   modellen,  Business  model  genera4on  
  • 17. read..-  Read the article “Apps shake up video game industry”-  Ask yourself: how do mobile games earn money?
  • 18. 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.  
  • 19. a business model
  • 20. A business model describes the basicprinciple of how the organizationcreates, delivers and retains value. Source: Business model generation, Osterwalder & Pigneur
  • 21. 9 building blocks... (in order to explain this basic principle)
  • 22. customer segments
  • 23. 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
  • 24. 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)
  • 25. value proposition
  • 26. 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?
  • 27. 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)
  • 28. channels
  • 29. 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?
  • 30. channels.. 1.   2.   3.   4.     5.    Awareness   Evalua4on   Purchase   Delivery   AVer  sales  
  • 31. customer relationships
  • 32. 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?
  • 33. 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)
  • 34. revenue streams
  • 35. 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
  • 36. revenue streams..Different kinds of earnings:-  Sales of goods-  User fee-  Subscriptions-  Renting / leasen-  Licensing-  Brokerage fees-  Advertising
  • 37. key resources
  • 38. 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
  • 39. key resources..Key resources can be:-  Physical (buildings, machines)-  Intellectual (brands, partnerships)-  Human resources (knowledge, experience)-  Financial (cash, stocks)
  • 40. key activities
  • 41. 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?
  • 42. key activities..Examples of key activities:-  Design-  Innovation-  Problem solving /advice-  Knowledge management-  Database management-  Platform management-  Service-  Promotion-  Cost reduction
  • 43. key partners
  • 44. 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
  • 45. key partnerships..Three motivations to startpartnerships:-  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
  • 46. cost structure
  • 47. 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
  • 48. business model canvas
  • 49. 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.
  • 50. homework..Literature/theory/background:-read BMG page 1 till 50Work on the assignment:
  • 51. 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!
  • 52. tillnext week!