Value analysis and business model (vers. 2014)

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Perceived value.
What is a business model and how to fulfill a business model canvas.

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Value analysis and business model (vers. 2014)

  1. 1. Value analysis and business model IED Lesson 5/2014 Frieda Brioschi / Emma Tracanella frieda.brioschi@gmail.com / emma.tracanella@gmail.com
  2. 2. 5. Value Analysis and Business Model Course program 1. Italian Startups 2. Set up a startup in Italy 3. I've got an idea. And now? 4. Market and costs 5. Value analysis and business model 2
  3. 3. 5. Value Analysis and Business Model Today's table of content 1. Perceived Value 2. Business Model 3
  4. 4. 5. Value Analysis and Business Model Market & costs: quick recap Past slides available on Slideshare @ubifrieda: https://www.slideshare.net/ubifrieda/ 4
  5. 5. 5. Value Analysis and Business Model Market & costs: quick recap During last lesson we discussed: • Who are your customers and who will buy your product • Who are your competitors • Which is the specific demographics to target • Which is the psychographics of your target • Evaluate your decision (target market to big?,…) ! 5
  6. 6. 5. Value Analysis and Business Model Market & costs: quick recap B2C Make a product or service and charge consumers for using it. This model is being used by Starbucks, McDonald’s, Amazon and others. ! B2B Make a product or service and charge other companies for using it. Google, Cisco, MySQL and others are using this model. 6
  7. 7. 5. Value Analysis and Business Model Market & costs: quick recap During last lesson you learnt about direct and indirect costs: • the former are costs that can be identified specifically with a particular project or activity labour agreements • the latters include all the other costs 7
  8. 8. 5. Value Analysis and Business Model Market & costs: quick recap You went through the definitions of cash and accrual basis accounting: • difference between them has to do with the time frame in which revenues and expenses are recorded and reported 8
  9. 9. 5. Value Analysis and Business Model5. Value Analysis and Business Model Value 9
  10. 10. 5. Value Analysis and Business Model5. Value Analysis and Business Model Value • The extent to which a good or service is perceived by its customer to meet his or her needs or wants, measured by the customer’s willingness to pay for it • It depends more on the customer’s perception of the worth of the product than on its intrinsict value. • How do we create the perception of value when we talk to our customers? 10
  11. 11. 5. Value Analysis and Business Model5. Value Analysis and Business Model Gillette Fusion ! • Amazon’s price: 19.25$ • 8 cartridges • Cost/cartridge: 2.41$ • You need the razor (11.49$) 11
  12. 12. 5. Business Model5. Value Analysis and Business Model Gillette Custum Plus Disposable ! • Amazon’s price: 20.97$ • 30 razors • Cost/razor: 0.70$ 12
  13. 13. 5. Value Analysis and Business Model5. Value Analysis and Business Model Gillette Fusion vs. Custom Plus • Prices • 19.25$ vs. 20.97$ • 8 cartridge vs. 30 razors • Cost in use • 2.41$ vs. 0.70$ • Additional perceived values justify the additional cost in use • Durability of blade • Comfort • Less irritation 13
  14. 14. 5. Value Analysis and Business Model5. Value Analysis and Business Model Gillette Idea By providing something at below the market price (the razor), you can create a market for a secondary product (the blade) upon which you make ongoing profits. The mark-up on the secondary products is disproportionate relative to their cost so were highly profitable for the manufacturer. 14
  15. 15. 5. Value Analysis and Business Model5. Value Analysis and Business Model 3M Scotch® Tape ! • Amazon’s price: $1.70 • Lenght 650 inches • Cost/inch: $0.003 • Cost to hang a poster: $0.01 15
  16. 16. 5. Value Analysis and Business Model5. Value Analysis and Business Model 3M Scotch® Command Strips ! • Amazon’s price: $2.70 • 12 strips • Cost/strip: $0.08$ • Cost to hang a poster: $0.32 16
  17. 17. 5. Value Analysis and Business Model5. Value Analysis and Business Model 3M Scotch® Tape vs. Strips • Prices • $1.70 vs. $2.70 • Using Scotch Tape, the user can hang 75 posters vs. 3 for the command strips • Cost in use • $0.01 vs. $0.32 to hang 1 poster • Additional perceived values justify the additional cost in use • Less damage to wall • Simplicity to remove • Durability 17
  18. 18. 5. Value Analysis and Business Model5. Value Analysis and Business Model A-Style • Logo • 1989 stikers on the walls of Milano and Roma • Patented by Italian designer Marco Bruns ! • Clothing Brand • Italian brand founded in 1999 ! • A-style has used street-level buzz marketing to grow to international prominence 18
  19. 19. 5. Value Analysis and Business Model5. Value Analysis and Business Model Lacoste ! • Founded in 1933 by the tennis man Rene Lacoste • At the end of 1990 the company change its strategy: marketing, retails outlets, product range, … • Sale of t-shirts in limited series • Re-establishing Lacoste as “a distinctive premium brand” 19
  20. 20. 5. Value Analysis and Business Model5. Value Analysis and Business Model Models 20
  21. 21. 5. Value Analysis and Business Model5. Value Analysis and Business Model Freemium Giving away a product that people want for free and selling premium products. Skype: • A free quality product • Selling cheap calls to ordinary phones ! Only 8% buy something 21 https://www.freemium.org
  22. 22. 5. Value Analysis and Business Model5. Value Analysis and Business Model 4 Freemium Models • Time-limited • Feature-limited (Dropbox – Flickr) • Seat-limited • Customer-type limited 22
  23. 23. 5. Value Analysis and Business Model5. Value Analysis and Business Model Advertising Model • Became popular with the growth of radio and TV. • Indirect revenue from people looking to promote services • Increasingly difficult • Youtube, Facebook 23
  24. 24. 5. Value Analysis and Business Model5. Value Analysis and Business Model Low-Cost Model • Significant volumes of customers (at a low customer acquisition cost) and by charging a very low price • Revenue from a whole host of ancillary sources • Ryanair 24
  25. 25. 5. Value Analysis and Business Model Business model 25
  26. 26. 5. Value Analysis and Business Model Business model /1 • A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, cultural, or other forms of value). The process of business model construction is part of business strategy. • It's a way to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. 26 http://en.wikipedia.org/wiki/Business_model
  27. 27. 5. Value Analysis and Business Model Business model /2 The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit. 27 http://en.wikipedia.org/wiki/Business_model
  28. 28. 5. Value Analysis and Business Model The business model canvas 28
  29. 29. 5. Value Analysis and Business Model The business model canvas http://www.youtube.com/watch?v=QoAOzMTLP5s 29
  30. 30. 5. Value Analysis and Business Model 1 – Value proposition The collection of products and services a business offers to meet the needs of its customers. It's what distinguishes itself from its competitors. It provides value through various elements: • newness, • performance, • customization, • "getting the job done", • design, • brand/status, • price, • cost /risk reduction, ecc. 30 http://en.wikipedia.org/wiki/Business_Model_Canvas
  31. 31. 5. Value Analysis and Business Model Value Proposition Builder • Market: for which market is the value proposition being created? • Value/customer experience: what does the market value most? The effectiveness of the value proposition depends on gathering real customer, prospect or employee feedback. • Offering: which products or services are being offered? • Benefits: what are the benefits the market will derive from the product or service? • Alternatives and differentiation: what alternative options does the market have to the product or service? • Proof: what evidence is there to substantiate your value proposition? 31 http://en.wikipedia.org/wiki/Value_proposition
  32. 32. 5. Value Analysis and Business Model 2 – Customer segments A company must identify which customers it tries to serve. Various set of customers can be segmented based on the different needs and attributes to ensure appropriate implementation of corporate strategy meets the characteristics of selected group of clients. The different types of customer segments include: • Mass Market • Niche Market • Segmented • Diversify (multiple customer segments with different needs and characteristics) 32 http://en.wikipedia.org/wiki/Business_Model_Canvas
  33. 33. 5. Value Analysis and Business Model Do you know who your customers are? 33 http://www.designvision.com/strategy/
  34. 34. 5. Value Analysis and Business Model Really? 34 http://www.designvision.com/strategy/
  35. 35. 5. Value Analysis and Business Model 3 - Channels A company can deliver its value proposition to its targeted customers through different channels. Effective channels will distribute a company’s value proposition in ways that are fast, efficient and cost effective. 35 http://en.wikipedia.org/wiki/Business_Model_Canvas
  36. 36. 5. Value Analysis and Business Model 4 – Customer relationship To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments. • Personal Assistance • Dedicated Personal Assistance • Self Service • Automated Services • Communities • Co-creation 36 http://en.wikipedia.org/wiki/Business_Model_Canvas
  37. 37. 5. Value Analysis and Business Model Why does it matter? 37 http://soffrontblog.com/2011/02/07/benefits-of-an-on-demand-crm-application/
  38. 38. 5. Value Analysis and Business Model 5 – Revenue streams The way a company makes income from each customer segment. • Asset Sale • Usage Fee • Subscription Fees • Lending/Leasing/Renting • Licensing • Advertising 38 http://en.wikipedia.org/wiki/Business_Model_Canvas
  39. 39. 5. Value Analysis and Business Model39 http://www.flickr.com/photos/silkcharm/2893602428/
  40. 40. 5. Value Analysis and Business Model 6 – Key resources Are the assets required to offer and deliver value proposition to the customer. • Physical • Intellectual • Human • Financial 40 http://en.wikipedia.org/wiki/Key_resources_(business_model)
  41. 41. 5. Value Analysis and Business Model 7 – Key partner • In order to optimize operations and reduce risks of a business model, organization usually cultivate buyer- supplier relationships so they can focus on their core activity. • Complementary business alliances also can be considered through joint ventures, strategic alliances between competitors or non-competitors. 41 http://en.wikipedia.org/wiki/Business_Model_Canvas
  42. 42. 5. Value Analysis and Business Model 8 – Key activities The most important activities in executing a company's value proposition. 42 http://en.wikipedia.org/wiki/Business_Model_Canvas
  43. 43. 5. Value Analysis and Business Model 9 – Cost structure This describes the most important monetary consequences while operating under different business models. • Fixed Costs • Variable Costs • Economies of Scale • Economies of Scope 43 http://en.wikipedia.org/wiki/Business_Model_Canvas
  44. 44. 5. Value Analysis and Business Model Next week Business model examples and pitch. 44

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