Low cost business models - overview

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Low Cost Business Model
How to create no-frills low cost business model and kill the competition

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Successful companies after achieving the product-market fit manage
to start growing almost exponentially
 Well executed...

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One of such business hack was the low
cost business model that required total
change of approach to specific industry

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Low cost model has been quite successful in many
industries
Airlines
Furniture
Buses
Retail
Hotels
Fitness Clubs

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In this presentation you will learn how low
cost business model works and how to
apply it to your business

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What I will show you in this presentation is a part of extensive on-line
course where you can f...

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Low Cost Model-
introduction

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In low cost model you have important pillars that fuel the
model
Simplified product and
services
1 type of assets
Better...

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Low Cost Business Model -
examples

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IKEA

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IKEA has been very successful in implementing low cost
model in furniture
Model „big box” built outside the city
center...

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Raynair

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Raynair is an example of a great execution of the low cost
model in airlines
B2C Services
Acquisition
Activation
Retent...

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They have used 1 type of aircrafts and increased their capacity
B2C Services
Acquisition
Activation
Retention
Revenue
R...

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They do only point-to-point and use cheap airports
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Point...

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Raynair is also master of operational excellence
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Shortes...

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Raynair has been also very creative on the revenue side
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
...

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Biedronka

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Biedronka keeps it simple on the operational side
Retail
Acquisition
Activation
Retention
Revenue
Referral
Narrow range...

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They went deep into product management
Retail
Acquisition
Activation
Retention
Revenue
Referral
Gradual move from disco...

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Fitness clubs

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There are plenty of examples of successful low cost fitness clubs
B2C Services
Acquisition
Activation
Retention
Revenue...

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Hotels

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There are plenty of examples of successful low cost hotels
B2C Services
Acquisition
Activation
Retention
Revenue
Referr...

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Math behind the Low Cost
Business Model

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What drives the profitability
of low cost model?

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Just let’s have a quick look at the pillars of low cost model
Simplified product and
services
1 type of assets
Better a...

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Low Cost Models are great at optimizing the Profit to Assets Ratio
Better and longer
usage of assets
1 type of assets
O...

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Compound effect

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There are 2 types of compounding effect. The first one is related to
time
Time related
 Even if the growth is small ap...

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Even if the start is modest with time you have the snowball effect. If you
grow 10% every period after 10 periods you h...

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Second type of compounding is related to operations. By having small
improvements in many areas you are generating big ...

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Have a look for example on the effect you would have in retail if you
improved number of customers by 15% and the avera...

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In low cost model you use both effects extensively
Time related Operations related
 Even if the growth is small applie...

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