Transcript Business Models and Model Businesses October 6, 2011

Business Models and Model
Businesses
October 6, 2011
Business Model defined (BMG)
• “A business model describes the rationale of
how an organization creates, delivers, and
captures value.”
9 Building Blocks
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Customer segments
Value propositions
Channels
Customer relationships
Revenue streams
Key resources
Key activities
Key partnerships
Cost structure
1. Customer segments
• No customers = no survival
• Customer groups represent several segments if:
– Their needs require and justify a distinct offer
– They are reached through different distribution
channels
– They require different types of relationships
– They have substantially different profitabilities
– They are willing to pay for different aspects of the offer
For whom are we creating value?
• Mass markets: value proposition, distribution
channels, and customer relationships all focus on
one large group of customers
• Niche market: cater to specific, specialized
customer segments
• Segmented: customers have slightly different
problems and needs
• Diversified: serve at least two unrelated customer
segments
2. Value propositions
• Solves a customer problem or satisfies a customer
need
• The reason why customers choose one company
over another
• How?
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Newness
Performance
Customization
Design
Price
Brand / status
Convenience
3. Channels
• Communication, distribution, and sales – the
“customer touch points” that influence the
customer experience
• Channels…
– Raise awareness about company’s products and
services
– Help customers evaluate value proposition
– Let customers buy specific products / services
– Let the business deliver its value proposition to
customers
– Provide post-purchase customer support
4. Customer relationships
• How the business interacts with each of its distinct
customer segments
• Examples:
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Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation
5. Revenue streams
• The cash a business generates from each
customer segment
• Two types:
• Transaction revenues from one-time
customer payments
• Recurring revenues from ongoing payments
(value proposition delivery or post-purchase
support)
6. Key resources
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Physical
Financial
Intellectual
Human
Can be owned, leased, or borrowed from
key partners
7. Key activities
• Most important things a business does to
make its business model work
• Categories
• Production
• Problem solving
• Platform / network
8. Key partnerships
• Network of suppliers and partners that make
the business model work
• Strategic alliances (partnerships with noncompetitors)
• Coopetition (partnerships with competitors)
• Joint ventures to develop new businesses
• Buyer-supplier relationships for reliable
supplies
9. Cost structure
• All costs incurred to operate the business
model
• Approaches:
– Cost-driven
– Value-driven
• Characteristics
– Fixed versus variable costs
– Economies of scale and scope