Pepsi revenue model

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Pepsi revenue model

  1. 1. Revenue Models of PEPSI and Coca-Cola<br />HOW DO THEY DIFFER ?<br />COMMERCE<br />
  2. 2. Slide Show By –<br />MUZAHID KHAN<br />Integrated BBA+MBA<br />muzahidkhan123@gmail<br />COMMERCE<br />
  3. 3. COMMERCE<br />Revenue/Business Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Definition: <br />How does the firm earn revenue?<br />Three issues to consider: <br />What does it sell (product/services).<br />To whom does it sell (customers).<br />How does it sell (distribution channel).<br />Common e-commerce revenue models:<br />Web catalog (e-tailing): Amazon, Dell, Land’s End.<br />Advertising-based: Yahoo, Google, CNN.com.<br />Subscription-based: WSJ.<br />Fee per transaction: eBay, E-Trade.<br />Fee per service: CNN videos.<br />
  4. 4. COMMERCE<br />Web Catalog Revenue Model<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Similar to mail-order catalogs predating the web:<br />Works best for:<br />Standardized products with little quality concerns:<br />(New) Books, music, and videos.<br />Impulse purchases:<br />Gifts, electronics.<br />Problems:<br />Thin margins because users shop around for the lowest price.<br />High volume sales are needed to remain profitable (economies of scale).<br />
  5. 5. COMMERCE<br />Advertising-Supported Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Free programming used to attract viewers, and then sell ads to marketers based on viewership (like broadcast TV).<br />Revenue = CPM * # of eyeballs.<br />CPM: Cost per thousand banner ads.<br />Who has higher CPM: Yahoo or Yahoo Finance?<br />Horizontal versus vertical portal.<br />Stickiness: Website’s ability to retain visitors.<br />Sticky content: e-mail, message boards, chat.<br />Non-sticky content: news, search.<br />Not very effective: <br />Low CPM rates due to low ad effectiveness.<br />Non-sticky content costs money!<br />
  6. 6. COMMERCE<br />Yahoo versus Google<br />
  7. 7. COMMERCE<br />Subscription-Based Revenue Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Subscription fee charged for preferred content (like cable TV):<br />New York Times (crosswords)<br />Wall Street Journal (special articles).<br />CBS Marketwatch (archived articles).<br />AOL (monthly fee for ISP connection).<br />Pornographic web sites.<br />Usually a combination of free and premium (fee) content:<br />Attract customers using free content, then try to make them pay for premium content.<br />Some sites use subscription-advertisement mixed revenue model.<br />
  8. 8. COMMERCE<br />Fee-for-Transaction Revenue Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Businesses offer services and charge a fee based on number or size of transactions processed.<br />Ebay: Listing fee + % of highest bid (commission).<br />Ameritrade: $8 flat per trade.<br />Expedia: $5 surcharge per ticket.<br />Ticketmaster: Commission per ticket purchased.<br />Plagiarism services: Surcharge per term paper downloaded.<br />
  9. 9. COMMERCE<br />Fee-for-Service Revenue Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Fee based on value of service provided.<br />Online games:<br />Customers pay to play premium games on the Web.<br />Concerts and films:<br />Subscribers pay for streaming concert videos and films accessed via broadband connection.<br />Professional services:<br />Prepaid legal, dental, insurance, warranty, and other services marketed and sold through the Web.<br />
  10. 10. COMMERCE<br />Comparison of Three Models<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />The Amazon model (catalog/e-tailing):<br />Low profitability (due to high fulfillment costs).<br />Easy to replicate.<br />Only sustainable through sales volume and repeat sales.<br />Economies of scale and scope are vital for survival.<br />The Dell model (customization):<br />Complex to operate (sophisticated supply chain).<br />Difficult to replicate.<br />Requires end-to-end optimization of supply chains for lowest costs.<br />The eBay model (marketplace):<br />Low operating costs.<br />Strong network effect (non-replicable).<br />First-mover advantage critical.<br />
  11. 11. COMMERCE<br />Revenue Strategy Considerations<br />Revenue/Business Models<br />Web Catalog Revenue Model<br />Advertising-Supported Models<br />Subscription-Based Revenue Models<br />Fee-for-Transaction Revenue Models<br />Fee-for-Service Revenue Models<br />Comparison of Three Models<br />Revenue Strategy Considerations<br />Channel conflict (cannibalization):<br />When both online and offline channels are used, growth in online sales may come at the cost of lower offline sales at retail outlets.<br />Strategic alliance:<br />Two companies can jointly sell a common product to help them both.<br />Ford and Firestone, Sears and Kenmore.<br />Minimize customer effort using value-added services:<br />Provide search and comparison tools for customers to compare alternatives.<br />Provide user personalization/recommendation services.<br />Provide account aggregation services: Single site login for all accounts for online bill payment.<br />

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