Freebee: A Business Model


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These slides use ideas from my (Jeff Funk) class to develop a business model for Freebee. Freebee is a new form of consumer research service that combines mobile coupons with trial free gifts and marketing using mobile phones. Registered users can receive free products by providing feedback on the product through a mobile survey. This service is particularly useful for the fast moving consumer goods market where firms need to obtain very fast feedback from the market. Freebee captures value from these clients and hopes to prevent entry through network effects associated with users, clients, and retail outlets.

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Freebee: A Business Model

  1. 1. - Creating better products MT4002 – Technology Management Strategy Henrik Nilsson Adam Lewenhaupt Yuwei Zhang
  2. 2. Agenda 1. Introduction 2. Competitive landscape 3. Under the hood 4. Analysis and the future
  3. 3. The FMCG Industry What is Fast-Moving Consumer Goods (FMCG)? “Frequently purchased goods such as milk, soft drinks, chocolate bars, shampoo, etc.” Problems faced by FMCG companies Increase consumer awareness Develop attractive products • Advertisement • Loyalty programs • Trial marketing • Follow best practices • Product development • Market research +30 000 SGD
  4. 4. freebee – the FMCG market’s missing link Solves FMCG companies two major problems twice as fast, cheaper and with better accuracy than any of its competitors Mobile coupons = Campaign initialization Workflow Trial Marketing + Data collection Market research + Analysis report
  5. 5. freebee’s value proposition Consumers (app users) Get access to free and discounted offers Clients (companies) Product awareness • • • Shelf driving Word of mouth marketing Facilitates further sales Consumer insights • • • Campaign analysis and surveys Facilitates R&D Facilitates brand positioning Cheaper and faster than current solutions Retail stores Opportunity to Increase their number of customers
  6. 6. Scenario – freebee at its best Problem: Coca Cola wants to test launch and create awareness about their new “Coke Pink”, which is targeted to women aged 15-30 living in urban areas freebee’s solution: • • • • • • Coca Cola chooses which question types they want to ask and to whom freebee pushes out the chosen segment using metadata Consumers receives push and decides to make a stop at 7 /11 on her way home to redeem a free Coke Pink Having consumed the Coke Pink she completes the survey while taking the elevator up to her apartment The result is sent to freebee who checks if the survey is done correctly The campaign is analyzed and a Power Point with actionable results is sent back to Coca Cola
  7. 7. What paradigm shifts made freebee possible? FMCG companies have been increasingly interested in • Who their consumers are and what characterize them • Data analysis as opposed to focus groups Technologies and methods • Smartphone penetration • Secure mobile coupon system • Convenience stores cashier systems opened to 3rd party coupons Environment and Culture • Social networking and viralability • Generation Y comes of age • Mobile apps have become parts of our everyday life
  8. 8. freebee’s market freebee bridges two markets and can therefore gain market shares from both Trial marketing Market research
  9. 9. Two types of competitors Trial marketing • Mobile coupons • Printed coupons • Sampling Market research • Internet and mobile surveys • Traditional market research • Focus groups • Interviews • Observations
  10. 10. Scenario – freebee at its best Remember this one? • Clients to freebee Which questions and to whom? • freebee to consumers Effective distribution • Consumers to freebee Convenient offer collection and survey completion • freebee to clients Fast actionable results
  11. 11. Client’s perspective – Trial marketing industry Effective segmentation Inexpensive Viral Shelf driving Create awareness How is the learn where your Whatspecifically can that target your consumers Spread the cost of the about your product product Consumers awareness service product exists Let consumers know youthey can find your through self-replicating processes freebee Mobile Coupons Printed Coupons Sampling Create awareness Shelf driving Viral Inexpensive Effective Fast results Respone segmentation accuracy and quality Consumer insight
  12. 12. Client’s perspective – Market research industry Inexpensive Effective segmentation Fast results Response insight Consumer accuracy and quality What is gain thecan you target How specifically of insights time when products Can youthe the the the service of youryou need Learnreliable is consumers thinkyour consumers them How what cost insights in freebee Internet/Mobile Surveys Market Research Create awareness Shelf driving Viral Inexpensive Effective segmentation Fast results Respone accuracy and quality Consumer insight
  13. 13. Consumer’s perspective Convenience Availability Low time Reward consumption Number of offers At how myoffers from to Ime choose from Amountmanyitplaces cancollect the offer offer How easy isgain take the collect the offer Whatlong doesforavailableoffer collect the is of it me for to to freebee Sampling Printed Coupons Market Research Number of offers Reward Low time consumption Availability Convenience
  14. 14. Testimonials Number of downloads (in thousands) 120 100 80 60 40 20 0
  15. 15. Scope of activities Expand consumer base Support Activities Research and development App and client-web maintenance Identify and connect new retail stores Campaign Campaign design distribution Analyze & present results Primary Activities Marketing & Sales
  16. 16. Value network – flow chart Retail stores Clients Kuponginlösen freebee Consumers
  17. 17. Customer selection – Clients • freebee’s services is best suited for FMCG companies • Targeting the major FMCG companies • • • Most products to offer More money to spend on freebee’s services Facilitates international expansion
  18. 18. Customer selection – Consumers and retail stores Consumers • • • freebee is available to all smartphone owners connected to Android Market or App Store Early focus on generation Y Gained diversification through high app rankings 25% 19% 44% Men 18% 13% Women 56% 9% 8% 2% 0-19 20-29 30-39 3% 40-49 1% 1% 50- Retail stores • freebee works with the major convenience store chains in Sweden
  19. 19. Method of value capture Fee-for-Service and cross subsidization • • Clients are charged depending on the services they use Partnership – discounts on campaigns and analysis Free Initial fee 0 SGD 4000 SGD Push notification Campaign addons Discount 2000 SGD 2000 SGD Segmentation 2000 SGD 2000 SGD facebook marketing 2000 SGD 2000 SGD Campaign analysis Analysis 0 SGD 0 SGD Segment analysis 2000 SGD 2000 SGD Product analysis Customized analysis 8000 SGD - 8000 SGD -
  20. 20. Market characteristics and strategic control Weak appropriability regime • • • Hard to protect intellectual property Easy to imitate Small initial investment needed for new entrants Moment 22 • Critical mass of stakeholders Strong network effects • More clients and retail stores attract and is attracted by more consumers Dependent on an effective standard for coupon redemption • Everyone has to adopt this standard in order to compete successfully
  21. 21. Strengths and weaknesses Strengths • Large and steadily growing number of connected retail stores and consumers • • • • • • 2 000+ connected retail stores 100 000+ downloaded apps Fast and high response rates High data quality Efficient segmentation possibilities Great customizability of campaign services Weaknesses • • • • • Highly dependent on external party for coupon redemptions Low barriers to entry Low brand recognition Highly imitable No international experience
  22. 22. Opportunities and threats Opportunities • Strengthen first-mover advantages • • • • New Methods of value capture • • • Network effects Brand recognition Expand to international markets View advertisement before offer collection Share the offer on social networks before collection Create and control a new and superior standard for coupon redemption • Create barriers to entry and possibility for receiving licensing/transaction fees Threats • • New entrants enter freebee’s market niche Strong existing market research and trial marketing firms enter the smartphone market
  23. 23. The future Retail stores Clients Kuponginlösen freebee Consumers
  24. 24. Thank you for listening Any Questions?