Business model marketing course 2

advanced course

business model
marketing

homework..
Literature/theory/background
-study today’s slides

Act different:
-read the hand-out
-pick your industry and search for
articles about trends that may
lead to opportunities and threats
(1 a4 + min. 3 articles)

last session
introduction, definitions, the goal,
getting to know each other,
planning, het importance and
relevance, looking at business
models, searching for business
models, changing markets,
changing people

today
Theory, different business model
patterns, business model canvas,
business model building blocks,
real life examples, working on the
assignment!

a business model..
- earning model: how does the
organisation make money?

-distribution model: how does the
organisation deliver the product?

-(co-) creation model: how do the
products originate?

-user model: what about the power of
the customers?

Business

models

Earning

Distribu4on
(Co-‐)crea4on
User

model
models
models
models

Subscrip4on
Bait
and
hook
Tupperware

Online
sales
Mass
Mass-‐eﬀect

model
model
model
model
customiza4on
model

Freemium

Package

Clicks
&
bricks
Franchise

Open
source
Community

model
deal
model
model
model
model

Service
Adver4sing
Labeling
Mul4-‐channel
User-‐generated
Mul4-‐sided

model
model
model
model
content
plaNorm

Auc4on
based
Brokerage
Aﬃliate
Open
business

model
model
model
model

Yield

Long
tail

management
model

Unbundeled
Insurance

Sources:
Interac4eve
marke4ng,
Business-‐
models
model
modellen,
Business
model
genera4on

Subscrip)on
and
consump)on
model

The
aim
of
this
model
is
to
generate
money
with
subscrip4ons.
It
guarantees
the

organisa4on
a
steady
stream
of
earnings.
It
guarantees
the
consumer
a
steady
delivery

of
products
and
service.
The
consump4on
model
also
charges
money
for
the
density
of

use
of
a
product.
…(earning
model)…

Example:
Vodafone

Bait
and
hook

The
aim
of
this
model
is
to
lure
consumers
with
an
aUrac4ve,
oVen
extremely
cheap

product
(bait),
aVer
which
the
organisa4on
makes
great
proﬁt
with
selling

complementary
parts
or
repea4ng
purchases
(hook).
The
organisa4on
has
a
guarantee

that
the
customer
does
return.
By
making
use
of
a
vender
lock-‐in
an
organisa4on
oVen

tries
to
make
it
even
harder
to
switch
to
a
compe4tor.
Examples
are
patents,
licences

and
other
switching
costs.

Examples:
GilleUe,
HP-‐printers

Freemium
model

The
freemium
model
resembles
the
bait-‐and-‐hook
model.
The
product
is
given
away
for

free.
A
beUer
version
of
the
product
is
only
accessible
aVer
buying
an
updated
version.

There
are
also
freemium
models
used
that
have
a
connec4on
with
annoying

adver4sing.
AVer
a
paid
update
you
don’t
get
this
adver4sing
anymore.

…(earning
model)…

Examples:
Spo4fy,
Skype,
Dropbox

Package
deal

The
aim
of
the
package
deal
is
to
sell
less
interes4ng
products
or
by-‐products
with
the

successful
product.
These
supplements
are
much
less
interes4ng
than
the
stand-‐alone

product.
The
organisa4on
oVen
tries
to
get
rid
of
stock
or
to
get
higher
margins
on

speciﬁc
parts.
…(earning
model)…

Examples:
3
for
1
magazines,
Bank
of
Scotland

Service
model

The
thought
behind
the
service
model
is
the
fact
that
the
organisa4on
earns
money

with
the
service
provided
to
the
product.
Some4mes
this
service
income
is
even

bigger
than
the
ini4al
purchase.
Consumers
feel
psychological
pressure
to
service
the

product
at
the
place
where
they
bought
it.
OVen
this
pressure
is
increased
by
a

speciﬁc
service
deal
or
other
agreements.
…(earning
model)…

Examples:
Remeha,
BMW

Adver)sing
model

The
aim
of
this
model
is
to
gain
money
by
all
means
of
adver4sing.
Very
oVen
the

organisa4ons
oﬀers
the
product
for
free
in
exchange
for
showing
all
these

adver4sements.
This
way
the
adver4ser
takes
advantage
of
the
aUrac4ve
power
of

the
organiza4on.
…(earning
model)…

Examples:
Facebook,
Metro

Auc)on
model

The
aim
of
the
auc4on
model
is
to
maximise
profit
by
means
of
an
(online)
auc4on.

The
price
of
the
products
is
determined
by
demand
and
offer.
An
online
auc4on

enlarges
the
playground
of
an
offering
organiza4on.
This
organiza4on
earns
money
by

placement
fees
and
some4mes
by
asking
a
part
of
the
actual
transac4on.

…(earning
model)…

Examples:
Vakan4eveiling.nl,
e-‐bay

Brokerage
model

The
aim
of
the
brokerage
model
is
to
gather
demand
and
offer.
The
broker
however

offers
extra
informa4on
and
/
or
knowledge.

The
added
value
of
the
broker
is
the
fact

that
he
organises
the
money
transac4on.
This
model
is
also
used
by
so
called

informa4on
brokers.
They
make
money
by
selling
informa4on
about
search
and

buying
behaviour.
…(earning
model)…

Examples:
Independer.nl

Yield
management

The
yield
management
model
makes
use
of
very
accurate
market
informa4on
and

sta4s4cs
in
order
to
con4nually
change
the
price.
This
means
there
is
no
fixed
price.

The
model
is
aimed
primarely
at
maximising
profit.
Yield
management
cannot
go

without
ICT
techniques
and
the
internet.
…(earning
model)…

Examples:
KLM,
Hertz,
Carré
Theatre

Long
tail
model

Long
tail
models
are
about
selling
less
from
more
different
products.
The
long
tail

focuses
on
selling
a
large
amount
of
niche
products.
All
together
these
sales
are

equally
profitable
as
the
tradi4onal
model
which
makes
use
of
some
top
bestselling

products.
…(earning
model)…

Examples:
Amazon.com,
iTunes,
NeNlix

Unbundled
models

The
concept
of
an
unbundled
organiza4on
focuses
on
three
fundamental
types
of

business:
Customer
rela4on,
product
innova4on
and
infrastructure.
These
three
types

can
go
along
eacht
other
in
one
single
organiza4on
but
it’s
beUer
when
they
are

unbundled
in
separate
en44es
(SBU’s).
…(earning
model)…

Examples:
NS/prorail,
Sony/Ericsson

Insurance
model

The
insurance
model
is
the
opposite
of
the
freemium
model.
A
large
customer
base

pays
a
regularly
fee
in
order
to
protect
itself
from
unlikely,
but
ﬁnancially
disastrous

happenings.
…(earning
model)…

Examples:
Rega,
Allianz

read..
-  Read the article “Apps shake up video
game industry”
-  Ask yourself: how do mobile games earn
money?

How do we make money?..
1.
Premium
games.
Tradi4onal
payment
of
a
download.

2.
In-‐app
sales.
Most
popular
model.
Gamers
are
asked
to
invest
as
they
are
playing

the
game.
In
2011
the
average
sales
were
11.40
euro
per
customer.

3.
Freemium.
Giving
away
free
games.
Gamers
have
to
pay
for
a
beUer
update
(or

ad
free).

4.
Subscrip4ons.
A
monthly
or
weekly
fee.
Not
very
popular,
but
perhaps
aVer
the

success
of
World
of
WarcraV
this
can
become
reality.

5.
Ads.
As
men4oned
above.
But
it’s
also
possible
to
cooperate
with
an
adver4ser

so
you
can
make
a
game
together.

A business model describes the basic
principle of how the organization
creates, delivers and retains value.
Source: Business model generation, Osterwalder & Pigneur

9 building blocks...
(in order to explain this basic principle)

customer segments..
-  Customers are the heart and soul of
the business model
-  Different groups of people or
organisations on which the
organisations focuses its effort
-  After segmentation a decision about
the right segment(s) is made
-  After that the needs of these
segments are researched

customer segments..
-  Mass market: no difference between
segments
-  Niche market: a small specialized
market
-  Segmented: different segments are
chosen
-  Diversified: two segments with totally
different needs and problems
-  Multi-sided markets: earning money
on two different sides (example:
advertisers & readers)

value propositions..
-  Bundle of products that creates
value for a particular customer
segment
-  What is the reason the customer
choses you?
-  Which customer problem does your
organization solve?

value proposition..
Mix of distinctive elements:
-  Newness (mobile phones)
-  Performance (cars)
-  Customization (Factory 121 horloges)
-  ‘Getting the job done’ (aircraft engines)
-  Design (Apple)
-  Brand (Ferrari)
-  Price (Ryan air)
-  Cost reduction (Independer.nl)
-  Risk reduction (Bovag label)
-  Accessibility (Netjets)
-  Convenience / Usability (iTunes, ipod, ipad)

channels..
-  How does the organization
communicate with its customers?
-  How does the organization deliver its
value? (distribution)
-  Which channels are effective?
-  Which channels are efficient?

channels..

1.
2.
3.
4.

5.

Awareness
Evalua4on
Purchase
Delivery
AVer
sales

customer relationships..
-  What kind of relationship with the
customer does the organization want?
-  Is the contact personal or automated?
-  Am I focussing on acquisition, retention
or upselling?
-  What kind of relationship does the
customer expect?
-  How expensive are the relationships we
got?

customer relationships..
-  Dedicated personal assistance (Private
bankers)
-  Personal assistance (Mc Donalds)
-  Self-service (Albert Heijn)
-  Automated services (Amazon.com)
-  Communities (Runkeeper)
-  Co-creation (Nike, Lays)

revenue streams..
-  How much money does the
organization earn from a particular
segment?
-  For which value is a particular
segment willing to pay?
-  An insight into the earning model

revenue streams..
Different kinds of earnings:
-  Sales of goods
-  User fee
-  Subscriptions
-  Renting / leasen
-  Licensing
-  Brokerage fees
-  Advertising

key resources..
-  What are the most important assets
of the organization?
-  Which make delivering the value
proposition possible?
-  Assets can be owned, leased or
obtained by making use of key
partners

key resources..
Key resources can be:
-  Physical (buildings, machines)
-  Intellectual (brands, partnerships)
-  Human resources (knowledge, experience)
-  Financial (cash, stocks)

key activities..
-  What are the most important
activities an organization has to
carry out in order to make the
business model work?
-  Which key activities result from our
distribution channels, customer
relationships and revenue streams?

key activities..
Examples of key activities:
-  Design
-  Innovation
-  Problem solving /advice
-  Knowledge management
-  Database management
-  Platform management
-  Service
-  Promotion
-  Cost reduction

key partnerships..
-  Description of the network of
suppliers and partners that make the
business model possible
-  That can be:
-  Strategic alliances between non-
competitors,
-  Joint ventures between organizations
from different industries
-  Buyer-supplier relationships
-  Coopetition: strategic partnerships
between competitors

key partnerships..
Three motivations to start
partnerships:
-  Optimization and economy of scale (in
order to reduce costs)
-  Reduction of risk and uncertainty
(splitting risk of innovation: Blu-ray)
-  Acquisition of particular resources
and activities

cost structure..
-  Description of the most important
costs that are made in order to
make the business model possible?
-  Some businesses are more focused on
cost reduction, others more on value
creation

DIY..
-  Take a large piece of paper
-  Think of your chosen industry and
choose an organization, company,
platform or brand from that one
-  Sketch the business model canvas
grit
-  Visualize every building block in order
to create an image of the business
model of that organization, company,
platform or brand
-  Prepare a short presentation in
which you can explain how the
business model you have sketched
out works.

homework..
Literature/theory/background:
-read BMG page 1 till 50

Work on the assignment:

act different..
-  Dive deep into your future customer
segment (s)
-  Use the empathy-map (page 126 till
133) to get the right customer
perspective
-  Figure out (do some research):
-  What does the segment want to change?
-  What does attract the segment to the product?
-  What does the segment hate/love?
-  Which problems do the segments stumble upon?

-  Go on building your new business
model and writing the business plan!

Business model marketing course 2

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