The document discusses various business models including the subscription business model, razor and blades business model, pyramid scheme business model, multi-level marketing business model, network effects business model, monopoly business model, cutting out the middleman model, and auction business model. It provides details on each model such as how they generate revenue, examples of companies that use each model, and potential benefits and drawbacks.
An advertising model is the strategic use of an advertising medium, with the goal of reaching a specific target audience. An advertising medium is the type of media or vehicle the advertising is placed on.
An advertising model is the strategic use of an advertising medium, with the goal of reaching a specific target audience. An advertising medium is the type of media or vehicle the advertising is placed on.
Fcb model: done by sathish kumar G, Department of management studies, kingsto...Gsathish Kumar
Richard Vaughn of FCB advertising agency and his colleagues developed a useful advertising planning model. They built this model based on response hierarchy theories and degree of involvement.
They also incorporated two important dimensions, thinking and feeling to both high and low involvement levels.
This model separates four basic advertising planning approaches
Informative
Affective
Habit formation and
Self-satisfaction
This PPT gives basic over view on sales and advertising.This will be used as notes for U.G & P.G arts and management students.
Advertising-Functions-Types-Advertising & Marketing mix-AIDA Model- Lavidge strainer model-Challenges, opportunities & Ethics in Advertising
Advertising Agency-Role and Functions-Type of Advertising agency-Agency Compensation-Client-Agency relationship
Creativity & Advertising-Appeals in advertising-Components of print ad-Layout stages-Layout types
Advertising Media planning—Media objectives-Media strategies-Media decision-TV-Radio-Web Advertising-Advertisement Regulation
Sales promotion-Features-Importance-Types-Tools & Techniques of promotion-Organising & Evaluation of sales promotion
Promotion is the entire set of activities which communicate the product, Brand, Service so on to the user. The Idea is to make people aware, attract and induce to buy the product, in preference over others
Fcb model: done by sathish kumar G, Department of management studies, kingsto...Gsathish Kumar
Richard Vaughn of FCB advertising agency and his colleagues developed a useful advertising planning model. They built this model based on response hierarchy theories and degree of involvement.
They also incorporated two important dimensions, thinking and feeling to both high and low involvement levels.
This model separates four basic advertising planning approaches
Informative
Affective
Habit formation and
Self-satisfaction
This PPT gives basic over view on sales and advertising.This will be used as notes for U.G & P.G arts and management students.
Advertising-Functions-Types-Advertising & Marketing mix-AIDA Model- Lavidge strainer model-Challenges, opportunities & Ethics in Advertising
Advertising Agency-Role and Functions-Type of Advertising agency-Agency Compensation-Client-Agency relationship
Creativity & Advertising-Appeals in advertising-Components of print ad-Layout stages-Layout types
Advertising Media planning—Media objectives-Media strategies-Media decision-TV-Radio-Web Advertising-Advertisement Regulation
Sales promotion-Features-Importance-Types-Tools & Techniques of promotion-Organising & Evaluation of sales promotion
Promotion is the entire set of activities which communicate the product, Brand, Service so on to the user. The Idea is to make people aware, attract and induce to buy the product, in preference over others
Taken from the Portable MBA in Entrepreneurship by by William D. Bygrave and Andrew Zacharakis
http://www.amazon.com/Portable-MBA-Entrepreneurship-William-Bygrave/dp/0470481315
Competitive advantage through servitizationFatima Arshad
How Firms gain Competitive Advantage through Servitization Concept. This concept is more famous specially in developed countries like U.S. Servitization is actually bundle of product and services that provide the best solution of customer need/problem. Choice of Suitable services are important here.
AIDA Model is a model to create awareness regarding dedication of work to the employees as well as every individual, they can get to know about interest of work in the organization and how they can take action.
การสร้างนวัตกรรมรูปแบบธุรกิจ Business model innovation maruay songtanin
การสร้างนวัตกรรมรูปแบบธุรกิจ
การสร้างนวัตกรรมรูปแบบธุรกิจ (Business model innovation) เป็นสิ่งที่วิเศษ
เป็นวิธีเรียบง่ายที่สุด ไม่ต้องอาศัยเทคโนโลยีใหม่ หรือหาตลาดใหม่: โดยอาศัยผลิตภัณฑ์ที่มีอยู่ (existing products) เทคโนโลยีที่มีอยู่ (existing technologies) และตลาดที่มีอยู่ (existing markets)
อีกทั้งเป็นการเปลี่ยนแปลงที่โลกภายนอกไม่รู้ จึงเป็นข้อได้เปรียบและยากที่จะลอกเลียนแบบ
การมองว่า นวัตกรรมรูปแบบธุรกิจ เป็นกระบวนการการตัดสินใจ (a set of key decisions) ที่ทำให้มีเกิดมีการเพิ่มรายรับ ลดค่าใช้จ่าย และมีการจัดการกับความเสี่ยง
โดยตั้งชุดของคำถาม 4 ประการ และทำให้ประสบความสำเร็จคือ สิ่งที่ต้องการนำเสนอใหม่คืออะไร เมื่อใดจึงจะตัดสินใจ ใครเป็นผู้ตัดสินใจ และเพราะเหตุใด: (What your offerings will be, when decisions are made, who makes them, and why.)
Four Paths to Business Model Innovation
by Karan Girotra and Serguei Netessine
The secret of success lies in who makes what decisions when and why.
We analyzed the Nespresso Business Model through the framework provided by Teece - Business Model, Business Strategy and Innovation (2010) and through the Business Model Canvas tool by A. Osterwalder and Y. Pigneur. Moreover, we provided a future generation of the business model to led the company maintain the competitive advantage in a growing competitive market.
Indian Mid-market SaaS companies: Forging a new path to disruptionProductNation/iSPIRT
SaaS has changed the competitive dynamics for Indian enterprise software product firms, putting them on a level playing field with their western counterparts. It has opened up new market segments, notably the small and medium sized enterprise market, whose requirements are different from those of large global 2000 businesses. These customers demand products that are less complex, plug-and-play and come at a lower price tag. This has pushed product companies catering to this segment towards a light-touch, virtually enabled model, dramatically reducing the need for close customer engagement, large field sales force, and elaborate implementation – all of which traditionally put Indian companies at a disadvantage.
Leveraging this wave, a new generation of Indian software product firms such as FreshDesk, Fusion Charts, KissFlow, WebEngage, RecruiterBox and others have started to emerge. This has created an important disruptive force in the mid-sized enterprise market. What is also interesting is that, in their pursuit for a light-touch model, these companies have evolved a unique strategy to define the product, market/sell the product and engage with customers. This iSPIRT report discusses the three core tenets of their strategy - Digital immersion, Desk marketing/selling and Cloud-based customer engagement.
ptg16513123There’s not a single business model, and the.docxpotmanandrea
ptg16513123
“There’s not a single business model, and
there’s not a single type of electronic
content. There are really a lot of
opportunities and a lot of options and we
just have to discover all of them.”
—TIM O’REILLY
A business model describes how an organization creates, captures, and
delivers value to its customers. Every business performs some activity
with the intention of generating value for its customers. At a conceptual
level, what does that look like and what existing businesses can you point
to as examples to determine that your model is sound?
Identifying your business model is helpful for two important reasons.
First, by studying businesses with a similar business model, you can
increase your own odds of success—an activity referred to as modeling.
Second, it provides a blueprint by which you can begin taking action to
define your business model. If you already have a model, you still can
make improvements or reinvent it by comparing it to well-established
models—an activity referred to as benchmarking.
CHAPTER 6
BUSINESS
MODELS
From the Library of Moaath Alangari
ptg16513123
Seven business model
archetypes
After spending considerable time mapping the various business models
online, we began to realize that many of the models were similar. We
observed there are fundamentally three archetypes that drive all business
models: Trade, Product, and Service. This was a breakthrough observa-
tion for us, because it paved the way for the model we then created.
Just as a color wheel starts with three primary colors and derives a set
of basic colors from the original three (red, green, blue), we’ve done
the same with our model. Many of the interesting online businesses are
hybrids of two of the three primaries; we call these the hybrid archetypes.
They include the Marketplace, Brokerage, and Subscription models.
And lastly there is the Ecosystem, which possesses traits of all three
primary archetypes.
Figure 6.1 illustrates this framework, which can be a useful place to start
thinking about how to structure your business. To make this framework
more useful, we also overlaid two prototypes to demonstrate each arche-
type. These prototypes are more defined and actionable models of the
more abstract archetype concept. This is not an exhaustive list of possible
prototypes, just a set of examples that illustrate the concept and provide
actionable material that you can use. Following the detailed description
of each archetype, we provide a list of the prototypes and a set of exam-
ples for each that appear to be succeeding online.
Trade
Trade is the primary archetype that describes the business of connect-
ing buyers and sellers, rather than offering something to be bought or
sold. The trader is the consummate “connector” who knows everyone
and helps to make introductions. Profits are generated by commission or
arbitrage, not by selling units or hours.
PART II KNOW80
From the Library of Mo ...
The Number One Digital Challenge Facing B2B TodayImran Choudhary
IBM recently hosted an open round table in London to discuss the temperament and disruptors in UK B2B Commerce with a number of key industry influencers and subject matter experts.
We explored the challenges faced, but equally the opportunities
and notable success stories.
Our discussion centred on what the #1 Digital Challenge Facing B2B is today, and what opportunities this may present to the new digital seller.
We also explored the importance of the user experience and the supporting infrastructure, as well as managing organisational and cultural change in the implementation of a new digital B2B strategy.
It comes as no surprise that the dialogue of the session very quickly expanded into the role of multi–Channel campaigns, technology, people, culture, and business change.
These facets where explored in great detail and we have summarised the highlights and key insights in this report.
E-commerce Business Models, Major Business to Consumer (B2C) business models, Major Business to Business (B2B) business models, Business models in emerging E-commerce areas, How the Internet and the web change business: strategy, structure and process, The Internet: Technology Background, The Internet Today, Internet II-The Future Infrastructure, The World Wide Web, The Internet and the Web : Features
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2. Introduction
A business model also called a business design.
A business model is the mechanism by which a intends to generate
revenue and profits.
It is a summary of how a company plans to serve its customers. Its
involves both strategy and implementation.
It is the totality of:
How it will select its customers
How it defines and differentiates its product offerings
How it creates utility for its customers
How it acquires and keeps customers
How it goes to the market (promotion and distribution strategy)
How it defines the tasks to be performed
How it configures its resources
How it captures profit
By: Nor Aida Abdul Rahman
3. Types of Business Model
The Subscription Business
Model
The Razor & Blades Business
Model
The Pyramid Scheme
Business Model
The Multi-level Marketing
Business model
The Network Effects Business
Model
The Monopolistic Business
Model
The cutting Out the Middleman
model
The Auction Business Model
The Online Auction Business
Model
The Bricks and Clicks
Business Model
Loyalty Business Models
Collective Business Models
The industrialization of
services business models
The servitization of products
business model
The low cost carrier business
model
The online content business
model
By: Nor Aida Abdul Rahman
4. 1. Subscription Business Model
The subscription business model is a business model that has long
been used by magazines and record clubs, but the application of
this model is spreading
Rather than sell products directly, more and more companies are
selling monthly or yearly access to a product or service
This, in effect, converts a one time sale of a product into a recurring
sale of a service
In addition to magazines, book clubs and record clubs, many other
industries are using the subscription model. They include phone
companies, newspapers, cable providers, cell phone companies,
internet providers, pay TV channels, software providers, business
solutions providers and financial services firms.
By: Nor Aida Abdul Rahman
5. Impact on the vendor
Businesses benefit because they are assured a constant revenue
stream. This greatly reduces uncertainty and the risky ness of the
enterprise
Also, in many cases (such as integrated software solutions), the
subscription pricing structure is designed so that the revenue stream
from the recurring subscription is considerably greater than the
revenue from simple one time purchases.
In some subscription schemes (like magazines), it also increases
sales, by not giving subscribers the option to accept or reject any
specific issue.
This reduces customer acquisition costs, and allows personalized
marketing or database marketing.
Subscription business models also have their drawbacks. The
business must commit to a large infrastructure to manage and track
subscription.
By: Nor Aida Abdul Rahman
6. Impact on the customers
Consumer can also benefit. If they were going to purchase the
product regularly any way, they will benefit from the convenience.
They only have to make one purchase decision. Then sit back and
wait for the product to arrive.
It is also useful for those people that are looking for structure and
constancy in their otherwise hectic lives.
There are also many people that use regular subscriptions to fulfill a
need for belonging. Subscription can do this by presenting
themselves as clubs. Example; Computer Science Book Club.
Subscription pricing can blunt the sting of paying for expensive
items. By spreading the cost over a period of time, the purchase
seems more affordable.
By: Nor Aida Abdul Rahman
7. 2. Razor and Blades Business Models
The razor and blades business model (also called the “bait and
hook model” or the “tied products model” works by selling a “master”
product at a subsidized price, and making the profit on high margin
‘consumables’ that are essential to the use of the master product.
The master product may actually be sold at a loss, in order to
‘capture’ the customer into using the consumable product.
In effect, this is the same as offering a high interest loan to the
customer to offset the price of the master product, which is to be
paid off in installments as they use the consumables
The business model can be dated to King C. Gilette, who used this
business model for his sales of razor handles and disposable razor
blades. This business model continues to be used in the disposable
razor blade business to this day.
By: Nor Aida Abdul Rahman
8. Cont..
o
o
o
This model may be threatened if the price of the high margin
consumables is in question. For example, computer printer
manufacturers have gone through extensive efforts to make sure
that printer ink cartridges are not interchangeable.
In markets where all the major competitors follow this business
model, there may be suspicions of the existence of cartels and
violation of antitrust legislation. In some cases, notably auto parts
in the United States, legislation exist specifically to prevent this
business model from existing.
Other example include:
- computer printers and their ink cartridges
- games consoles and the games they play
- cell phones and air time costs
- inexpensive cameras and prints
By: Nor Aida Abdul Rahman
9. 3. Pyramid Scheme Business Model
A pyramid is a business model that involves the exchange of money
primarily for enrolling other people into the scheme, without any
product or service being delivered
Pyramid schemes have been in existence for at least a century. The
method of conducting business known as multi level marketing
(MLM) often closely resembles pyramid schemes.
Although pyramid schemes have been declared illegal, they still
persist in many forms. While schemes simply involving the blatant
exchange of money have generally disappeared, many schemes
persist that purportedly ‘sell’ a product to mask the primary intention
of simply enrolling new members.
The key identifiers of a pyramid scheme are:
- A highly excited sales pitch
- Vaguely phrased promises of limitless income potential
By: Nor Aida Abdul Rahman
10. Cont..
No product, or a product being sold at a price ridiculously in
excess of its real market value.
An income stream that chiefly depend on the commissions
earned by enrolling new members
A tendency for only the early investors/joiners to make any
real income
The key distinction between these schemes and “legitimate” MLM
businesses (e.g. Excel Communications is that in the latter cases a
meaningful income can be earned solely from the sales of the
associated product or service. While these MLM businesses also
offer commissions from recruiting new members, this is not
essential to successful operation of the business by any individual
member.
By: Nor Aida Abdul Rahman
11. 4. Multi-level Marketing Business Model
MLM also called Network Marketing (NM)
MLM exhibits a business model which exemplifies direct marketing.
Typically, independent business owner (IBOs) become associated
with a parent company in a contractor-like relationship.
IBOs receive remuneration for shopping within their own business,
for selling products and for expanding their network of people
(“down line”) doing the same.
An IBOs receives a percentage of the profits generated by the
network of all IBOs introduced to the system by him or her, and also
of the profits generated by the people introduced by those IBOs, and
so on.
A point system, where the points represent the volume of products
sold through the IBO network, track rewards.
By: Nor Aida Abdul Rahman
12.
MLM has a recognized image problem because of difficulties in
making a clear distinction between legitimate network marketing and
illegal “pyramid schemes” or Ponzi schemes.
Nonetheless, many NM/MLM businesses operate legitimately in
various parts of the world.
E.g.; Amway (the world’s leading company in network marketing,
with annual turnover exceeding USD $1 billion) in particular often
receives criticism for generating considerable revenue from selling
instructional and motivational materials to its participants. The United
States Department of Justice indicted the company, but Amway
secured an acquittal.
By: Nor Aida Abdul Rahman
13. 5. Network Effect Business Model
The network effect means that a good or service is such that the
value of the good or service to a potential customer is dependent on
the number of customers already owning that good or using that
service.
Equivalently, it means that the total value of a good or service that
possesses network effects is roughly proportional to the square of
the number of customers already owning that good or using that
service.
One consequence of a network effect is that the purchase of a good
by one individual indirectly benefits others who own the good – for
example by purchasing a telephone a person makes other people’s
telephones more useful. This type of side effect in a transaction is
known as an externality in economics, and externalities arising from
network effects are known as ‘network externalities’.
By: Nor Aida Abdul Rahman
14. Cont..
Network effects were used as justification for some of the business
models for dot-coms in the late 1990s. These firms operated under
the belief that when a new market comes into being which contains
strong network effects, firms should care more about growing their
market share than about becoming profitable.
This was believed to be rational because market share will determine
which firm can set technical and marketing standards and thus
determine the basis of future competition.
A good example of this strategy was that deployed by Mirabilis, the
Israeli start up which pioneered instant messaging and was boughtout by
By: Nor Aida Abdul Rahman
15. Cont…
Example: There are very strong network effects operating in the market
for widely-used computer software. Take for example Microsoft Office.
For many people choosing an office suite, a prime consideration is how
valuable having learned that office suite will prove to potential
employers. That is, since learning to use an office suite takes many
hours, they want to invest that time learning the office suite that will
make them most attractive to potential employers (or consulting clients,
etc)
Network effects and technology lifecycle
If an existing technology or company whose benefits are largely based
on network effects starts to lose market share against a challenger
such as disruptive technology or open standards based competition,
the benefits of network effects will reduce for the incumbent, and
increase for the challenger
In this model, a tipping point is eventually reached at which the network
effects of the challenger dominate those of the former incumbent, and
the incumbent is forced into an accelerating decline, whilst the
challenger takes over the incumbent’s former position.
By: Nor Aida Abdul Rahman
16. 6. Monopoly Business Model
In economics, a monopoly (from the Greek monos, one + polein, to
sell) is defined as a market situation where there is only one provider
of a product or service.
Monopoly should be distinguished from “monopsony”, in which there is
only one buyer of the product or service.
It should also strictly, be distinguished from the (closely related)
phenomenon of a cartel (whish is a type of oligopoly), in which a
centralized institution is set up to (partially) coordinate the actions of
several independent providers – as opposed to monopoly, in which
there is one sole provider – although in some cases, that sole provider
may have been created by consolidating several formerly independent
firms.
Monopolies are characterized by a lack of economic competition for
the good or service that they provide (and a lack of viable substitute
goods), as well as high barriers to entry for potential competitors in the
market
By: Nor Aida Abdul Rahman
17. Cont….
Large corporation often attempt to monopolize markets through
horizontal integration, in which a parent company controls
consolidates control over several small, seemingly diverse companies
(sometimes even using different branding to create the illusion of
marketplace competition).
A magazine publishing firm, for example, might publish many different
magazines on many different subjects, but it would still be considered
to engage in monopolistic practices if the intent of doing this was to
control the entire magazine-reader market, and prevent the
emergence of competitors.
The economic incentives for a monopoly make it likely that they will
sell a lower quantity of goods at a higher price than firms would in a
purely competitive market in order to secure monopoly profits. This
will typically lead to an outcome which is inefficient.
By: Nor Aida Abdul Rahman
18. Cont..
In economics, a company is said to have monopoly power if it faces a
downward sloping demand curve. This is in contrast to a price taker
that faces a horizontal demand curve.
A price taker cannot choose the price that they sell at, since if they
set it above the equilibrium price, they will sell none, and if they set it
below the equilibrium price, they will have an infinite number of
buyers (and be making less money than they could if they sold at the
equilibrium price). In contrast, a business with monopoly power can
choose the price they want to sell at. If they set it higher, they sell
less. If they sell it lower, they sell more.
In economics, a government-granted monopoly, also known as a
state monopoly or a coercive monopoly, is a monopoly which is
established and protected through the use of laws, regulations or
other mechanism of government enforcement to forbid competition in
providing a particular good or service.
By: Nor Aida Abdul Rahman
19. 7. Cutting Out The Middleman
Cutting out the middleman is a business model that involves
reducing costs by removing layers from a distribution network.
Cutting out the middleman may become possible as a result of
better technology or economies of scale.
In economics, the term ‘economies of scale’ refers to a situation
where the cost of producing one unit of a good or service decreases
as the volume of production increases.
The converse situation in which the cost of producing a good or
service increases as the volume of production increases is known
‘diseconomies of scale’.
Economies of scale tend to occur in industries with high capital
costs in which those costs can be distributed across a large number
of units of production.
By: Nor Aida Abdul Rahman
20. Cont…
The exploitation of economies of scale helps explain why
companies grow large in some industries, why
marketplaces with many participants are sometimes more
efficient, and how a natural monopoly can often occur. It
is also a justification for free trade policies, under the idea
that a large unified market presents more opportunities for
economies of scale.
By: Nor Aida Abdul Rahman
21. 8. The Auction Business Model
An auction is the process of buying and selling things by offering
them up for bid, taking bids, and then selling the item to the highest
bidder
In economic theory, an auction is a method for determining the value
of a commodity that has an undetermined or variable price.
In some cases, there is a minimum or reserve price; if the bidding
does not reach the minimum, there is no sale (but the person who
puts the item up for auction still owes a fee to the auctioneer). In the
context of auctions, a bid is an offered price.
Auctions are publicly seen in several contexts; in the antique, where
besides being an opportunity for trade they also serve as social
occasions and entertainment; in the sale of collectibles such as
stamps, coins, classic cars and fine art; in thoroughbred horseracing,
where yearling horses are commonly auctioned off; and in legal
contexts where forced auctions occur, as when one’s farm or house
is sold at auction on the courthouse steps.
By: Nor Aida Abdul Rahman
22. Types of Auctions
1.
2.
3.
English auction
: In this type of auction, participants bid openly
against one another, with each bid being higher than the previous
bid. The auction ends when no participant is willing to bid further, or
when a pre-determined “buy-out” price is reached, at which point
the highest bidder pays the price.
Dutch Auction
: In the traditional dutch auction the auctioneer
begins with a high asking price which is lowered until some
participant is willing to accept the auctioneer’s price. That
participant pays the last announced price. This term can also be
used to describe online auctions where several identical goods are
sold simultaneously to an equal number of high bidders
Sealed first-price auction : In this type of auction all bidders
simultaneously submit bids in such a way that no bidder knows the
bid of any other participant. The highest bidder pays the price he
submitted.
By: Nor Aida Abdul Rahman
23. 4.
Sealed Second-price auction : also known as a Vickrey auction:
This is identical to the sealed first-price auction, except the
winning bidder pays the second highest bid rather than his own.
Both the English and the second-price sealed-bid auctions will
theoretically lead to the bidder’s bidding up to (or submitting as a
sealed bid) their true valuation of the item. These two auctions are
theoretically equivalent, a result which has been verified in
practice as well.
By: Nor Aida Abdul Rahman
24. 9. Online Auction Business Model
The online auction business model is one in which participants bid
for products and services over the internet.
Strengths of the Online Business Model
No time constraint – Bids can be placed at any time. This
convenience increases the number of bidders.
No Geographical constraint – Seller and bidders can participate from
anywhere that has internet access. This make them more accessible
and reduces the cost of attending an auction. This increases the
number of listed items (i.e..: number of sellers) and the number of
bids for each item (i.e..: number of bidders). The items do not need
to be shipped to a central location, reducing costs, and reducing the
seller's minimum acceptable price.
By: Nor Aida Abdul Rahman
25. Cont..
Intensity of social interactions . The social interactions involved
in the bidding process are very similar to gambling. The bidders wait
in anticipation hoping they will ?win?
Large number of bidders . Because of the potential for a
relatively low price, the broad scope of products and services
available, the ease of access, and the social benefits of the auction
process, there are a large numbers of bidders.
Large number of sellers . Because of the large number of
bidders, the potential for a relatively high price, reduced selling costs,
and ease of access, there are a large number of sellers.
Network economies . The large number of bidders will encourage
more sellers, which, in turn, will encourage more bidders, which will
encourage more sellers, etc., in a virtuous spiral. The more the spiral
operates, the larger the system becomes, and the more valuable the
business model becomes for all participants.
By: Nor Aida Abdul Rahman
26. 10. Bricks and Clicks Business Model
Bricks and clicks is a business strategy or business model in
e-commerce by which a company attempts to integrate both
online and physical presences. It is also known as Click-andmortar or clicks-and-bricks.
For example, an electronics store may allow the user to order
online, but pick up their order immediately at a local store.
Conversely, a furniture store may have displays at a local store
from which a customer can order an item electronically for
delivery.
The bricks and clicks strategy has typically been used by
traditional retailers who have extensive logistical and supply
chains. Part of the reason for its success is that it is far easier for
a traditional retailer to establish an online presence than it is for a
start-up company to employ a successful pure dot.com strategy,
or an online retailer to establish a traditional presence. This
strategy has contradicted analysts who believed that the internet
would render traditional retailers obsolete through
disintermediation.
By: Nor Aida Abdul Rahman
27. Cont..
Advantages of the model:1.
2.
3.
4.
5.
6.
7.
8.
Leveraging their core competency
Leveraging existing supplier networks
Leveraging existing distribution channels
Leveraging brand equity
Leveraging stability
Leveraging existing customer base
Leveraging a lower cost of capital
Leveraging learning curve advantages
By: Nor Aida Abdul Rahman
28. 11. Loyalty Business Model
The loyalty business model is a business model used
in strategic management in which company resources
are employed so as to increase the loyalty of customers
and other stakeholders in the expectation that corporate
objectives will be met or surpassed. A typical example of
this type of model is: quality of product or service leads
to customer satisfaction, which leads to customer loyalty,
which leads to profitability.
By: Nor Aida Abdul Rahman
29. 12. Collective Business Model
A collective business system is a business organization or
association typically comprised of relatively large numbers of
businesses, tradespersons or professionals in the same or related
fields of endeavor, which pools resources, shares information or
provides other benefits for their members.
In the past, collective business systems such as the trade
association, the cooperative and the franchise were created to allow
groups of independently owned businesses with common interests
to successfully compete in the marketplace.
The following is a brief synopsis of those traditional collective
business systems.
i. Trade Association
ii. Cooperative
iii. Franchise
By: Nor Aida Abdul Rahman
30. Cont..
1.
Trade Association
Trade associations are non-profit organizations in which the
individual members are companies or individuals engaged in a
common business pursuit.
Competitors join together to create a platform format in which they
deal with common problems of their industry. Any applicant meeting
the standards of the association must be accepted as a member.
Anti-trust law prohibits a member trade association from denying an
otherwise qualified applicant's membership based upon a
geographical proximity to an existing member.
Trade associations commonly offer their members educational
programs, the opportunity to come together at meetings to discuss
common problems, and marketing materials designed to be imprinted
by each member with its relevant information.
By: Nor Aida Abdul Rahman
31. Cont..
2.
Cooperative
A cooperative is a non-profit organization somewhat similar to a
trade association.
A significant difference between the cooperative and the trade
association, however, is that with a trade association, the members
have a non-equity position in the association, whereas in the typical
cooperative the members will have an equity interest as all
members of the cooperative own a portion of the cooperative.
Generally, a cooperative only addresses one facet of business
operation needs of interest to its members, e.g., purchasing of
goods and services at advantageous prices.
A purchasing cooperative is at risk in that it holds considerable
assets in the form of inventory and provides credit to the
businesses in the cooperative.
In addition, the members of the cooperative risk loss of invested
capital if the cooperative proves unsuccessful.
By: Nor Aida Abdul Rahman
32. Cont..
Franchise
The franchise is a for-profit collective business system wherein
the franchiser offers proprietary products or services to its
franchisees.
The franchiser generally gives considerable marketing support to
its franchisees.
In exchange, the franchisees are subject to a substantial amount
of control by the franchiser concerning its operations and
marketing including the use of the franchisor's trade names,
trademarks and copyrighted materials.
A franchisee's employees typically are required to wear uniforms
and to dress as specified by the franchisor.
By: Nor Aida Abdul Rahman
33. Cont..
Franchises can be offered by the franchisor on a territorial basis
without violating antitrust laws. Ordinarily, the franchisee owns the
non-real estate assets of a franchise. There is generally a substantial
fee paid by the franchisee for the privilege of becoming a franchisee.
This is followed by a period of training that is offered on an ongoing
basis throughout the franchise.
Most states have laws highly protective of franchisees in prohibiting
the franchisor from terminating the franchise so long as the
franchisee meets predetermined business requirements and does not
otherwise violate the terms of the franchise agreement.
The franchisor derives income from the initial franchise fees and
products and services, which are offered to the franchisees on either
a mandatory or optional purchase basis. The franchisor generally
derives additional income based upon a percentage of the volume of
business conducted by the franchisee. The franchise agreement also
usually provides that the franchisee can only sell products supplied or
approved by the franchisor.
By: Nor Aida Abdul Rahman
34. Cont..
Among the traditional collective business systems only the
franchise can create exclusive trade territories. Conversely,
however, the franchise structure severely inhibits the
independence of the franchisee and the success of the franchisee
is inextricably tied to the success of the franchisor. The franchisee
is not free to introduce non-approved products or services and is
generally precluded from introducing innovative business or
marketing strategies by the extensive control imposed by the
franchisor.
By: Nor Aida Abdul Rahman
35. 13. The Industrialization of Service Business
Models
•
The industrialization of services business model is a
business model used in strategic management and
services marketing that treats service provision as an
industrial process, subject to industrial optimization
procedures. It originated in the early 1970s at a time when
various quality control techniques were being successfully
implemented on production assembly lines.
By: Nor Aida Abdul Rahman
36. 14. Service Economy (Servitization of
products business model)
Service economy can refer to one or both of two recent
economic developments. One is the increased
importance of the service sector in industrialized
economies. Services account for a higher percentage of
US GDP than 20 years ago. The current list of
Fortune 500 companies contains more service
companies and fewer manufacturers than in previous
decades.
The term is also used to refer to the relative importance
of service in a product offering. That is, products today
have a higher service component than in previous
decades. In the management literature this is referred to
as the servitization of products.
By: Nor Aida Abdul Rahman
37. 15. Low Cost Carrier Business Model
A low-cost carrier (also known as a no-frills or discount carrier) is
an airline that offers low fares but eliminates all unnecessary
services. The typical low-cost carrier business model is based on:
a single passenger class
a single type of airplane (reducing training and servicing costs)
a simple fare scheme (typically fares increase as the plane fills up,
which rewards early reservations)
free seating (which encourages passengers to board early)
direct, point to point flights with no transfers
flying to cheaper, less congested secondary airports
short flights and fast turnaround times (allowing maximum utilization
of planes)
By: Nor Aida Abdul Rahman
38. Cont..
"Free" in-flight catering and other "complimentary"
services are eliminated, and replaced by optional paid-for
in-flight food and drink.
The first successful low-cost carrier is generally
acknowledged to be Southwest Airlines in the
United States, which pioneered the concept when
founded in 1971 and has been profitable every year since
1973. With the advent of aviation deregulation the model
spread to Europe as well, the most notable success
being the Irish Ryanair, founded in 1985. As of 2004, low
cost carriers are now edging into Asia, lead by operators
such as Malaysia's Air Asia.
By: Nor Aida Abdul Rahman
39. Cont..
Low-cost carriers pose a serious threat to traditional 'full
service' airlines, since full-service carriers cannot compete
on price and, when given a choice, most consumers will
opt for low price over other amenities. From 2001 to 2003,
when the aviation industry was rocked by terrorism, war
and SARS, the large majority of traditional airlines
suffered heavy losses while low-cost carriers generally
stayed profitable.
Many carriers have opted to launch their own no-frills
airlines, such as KLM's Buzz and United's Ted, but have
found it difficult to avoid cannibalizing their core business.
By: Nor Aida Abdul Rahman
40. Cont…
In Canada, Air Canada has found it difficult to compete with new lowcost rivals such as Westjet and Canjet despite their previously
dominant position in the Canadian market: Air Canada declared
bankruptcy in 2003.
A low-cost carrier or low cost airline (also known as a no-frills or
discount carrier / airline) is an airline that offers generally low fares in
exchange for eliminating many traditional passenger services. The
concept originated in the United States before spreading to Europe in
the early 1990s and subsequently to much of the rest of the world.
The term originated within the airline industry referring to airlines with
a low - or lower - operating cost structure than their competitors.
Through popular media the term has since come to define any carrier
with low ticket prices and limited services regardless of their
operating costs.
By: Nor Aida Abdul Rahman
41. Cont..
Typical low-cost carrier business model practices include:
a single passenger class
a single type of airplane, commonly the Airbus A320 or
Boeing 737 (reducing training and servicing costs)
except for Song (airline) Boeing 757 and Kingfisher
Airlines order of the A380.
a simple fare scheme (typically fares increase as the
plane fills up, which rewards early reservations)
unreserved seating (encouraging passengers to board
early and quickly)
flying to cheaper, less congested secondary airports
(avoiding air traffic delays and taking advantage of lower
landing fees)
short flights and fast turnaround times (allowing
maximum utilization of planes)
By: Nor Aida Abdul Rahman
42. Cont.
simplified routes, emphasizing point-to-point transit instead of transfers at
hubs (again enhancing aircraft utilization and eliminating disruption due to
delayed passengers or luggage missing connecting flights)
emphasis on direct sales of tickets, especially over the Internet (avoiding
fees and commissions paid to travel agents and Computer Reservations
Systems)
employees working in multiple roles, for instance flight attendants also
cleaning the aircraft or working as gate agents (limiting personnel costs)
"Free" in-flight catering and other "complimentary" services are eliminated,
and replaced by optional paid-for in-flight food and drink (which represent an
additional profit source for the airline).
Aggressive fuel hedging programs.
"Unbundling" of ancillary charges (showing airport fees, taxes as separate
charges rather than as part of the advertised fare) to make the "headline
fare" appear lower.
Low or lower operating costs relative to their competitors.
By: Nor Aida Abdul Rahman
43. Cont..
Not every low-cost carrier implements all of the above
points (for example, some try to differentiate themselves
with allocated seating, while others operate more than
one aircraft type, still others will have relatively high
operating costs but lower fares). Nonetheless these are
general characteristics, most of which apply to any given
low-cost carrier.
By: Nor Aida Abdul Rahman
44. 16. Online Content Business Model
In general, something is said to be online if it is connected to some
larger network or system (which is implicitly the "line", though this
interpretation is often useless). Several more specific meanings exist:
In common parlance, the larger network in question is usually the
Internet, so that 'online' describes information that is accessible
through the Internet.
In a system for the performance of a particular task, an element of the
system is said to be online if it is operational. For instance, a power
plant is online if it is supplying power to the power grid. Alternatively,
a section of road may be said to be online if it is open to traffic.
In telecommunication, the term has another very specific meaning. A
device associated with a larger system is online if it is under the direct
control of the system. It it is available for immediate use by the
system, on demand, without human intervention, but may not be
operated independently of the system.
By: Nor Aida Abdul Rahman