The document discusses considerations for developing online business models. It outlines 6 steps to frame the market: 1) investigate opportunities by identifying unmet needs and where value can be added, 2) identify underserved markets, 3) determine target customer segments, 4) assess resource requirements, 5) evaluate the attractiveness of the opportunity, and 6) make a "go/no-go" decision. Each step provides guidance, such as mapping the customer decision process to reveal opportunities, defining target segments based on behaviors and benefits sought, and assessing competitive landscape and technology vulnerability. The goal is to develop a model that efficiently meets customer needs.

1. CHPT. 2CHPT. 2
Framing the (ONLINE)Framing the (ONLINE)
Market inMarket in 66 E-ZE-Z StepsSteps

2. SomeSome REALLYREALLY
Cool StuffCool Stuff

9. INTERNET
Biz Models
KEYKEY
Considerations

10. When
technological
advancement
meets
globalization, old
business models
disappear.

12. • Web-enabled business models are different
than traditional business models.
• Lack the constraints of physical product
manufacturing or service delivery.
• Advances in technology (Internet browsers,
hand-held devices, electronics, CRM,
telecommunications) force businesses to
develop models/make decisions rapidly.
• TECHNOLOGY IS A DISTRUPTIVE FORCE
• The “networked” Web enables partnerships for
business survival -> co-opetition (Novell
founder Ray Noorda)
Key ConsiderationsKey Considerations

13. WEBWEB Business ModelsBusiness Models

14. SuccessfulSuccessful Web BusinessesWeb Businesses

15. • Friend, or foe…or BOTH???
• When competitors partner.
• A business NECESSITY due to converging
technologies (Microsoft, IBM, Netscape, Sony,
Apple, etc. etc. etc.)
Co-opetitionCo-opetition

16. • Consumer behavior is not well established in
the online world YET due to constantly evolving
software and hardware innovations.
• Listen to consumers to define/solve needs:
– (Ex. File sharing services: Napster, Gnutella, KaZaA)
• Industry value chains are constantly being re-
defined due to 24 x 7 x 365 customer feedback.
Key ConsiderationsKey Considerations

17. ThoseThose 66 steps tosteps to
frame the marketframe the market

18.  Investigating opportunities in an existing or
new value system.
 Identifying unmet or underserved needs.
 Determining target segments.
 Assessing resource requirements to deliver the
offering.
 Assessing the attractiveness of the
opportunity.
 Making an educated “Go/No-Go” decision.
The 6-Step ProcessThe 6-Step Process

19. 1. Investigate
Opportunities

20. • The Value chain (playing field) contains all the
key stakeholders.
• Identify where the new company will compete.
• Where are the opportunities to add value:
– Where can you unlock value by creating more
efficient markets (ways of doing things.)
• New to the world value means creating new
benefits:
– Customize offerings: allow your customers to
personalize your products/services or removed
unwanted features (Yahoo! News)
– Build community: chat rooms, closed community
websites (MyFamily.com)
Investigate OpportunitiesInvestigate Opportunities

21. The customer customizes
their experience with you
ONLINE.

24. Online user communities

26. Which onlineWhich online
communities do youcommunities do you
spend time in?spend time in?
FOR DISCUSSIONFOR DISCUSSION

28. J&JJ&J Baby.comBaby.com

29. College ConfidentialCollege Confidential

30. College TipsCollege Tips

33. …and
then
there’s
The Chazin GroupThe Chazin Group

36. – Introduce new functionality/experience:
communications, computing, and entertainment
keep converging, to continuously offer new customer
experiences.
• Customers in controlCustomers in control: they have more
information than ever, thus greater negotiating
power (MySimon, BizRate)
• Ease of accessEase of access: connecting communication
points between partners.
• Radically extend reachRadically extend reach: extend the
boundaries of a market because people are
working together so efficiently.
Investigate OpportunitiesInvestigate Opportunities

39. • Organizations look for one of 3 things:
– Trapped value to be liberated: create more efficient
markets (BizBuyer.com) or value systems.
– New to the world: value that can be created.
– Hybrid of BOTH: unlocking trapped talent AND
adding new benefits (Amazon)
Investigate OpportunitiesInvestigate Opportunities

42. 2. Identify Unmet/
Under-Served Markets

43. • Map the customer decision process (Amazon’s
use of personal recommendations.)
– What steps does the customer go through?
– Where does the customer obtain their information?
– Where does the process take place?
• What opportunities exist online for customers to
enhance or entirely transform the customer’s
experience.
Revealing Unmet NeedsRevealing Unmet Needs

45. Facebook User ExperienceFacebook User Experience

46. Let Customers Set Their
Own Prices…Really?

52. The theory of The Long TailThe Long Tail ((Chris AndersonChris Anderson)) is that our culture
and economy is increasingly shifting away from a focus on a
relatively small # of “hits” (mainstream products and markets) at
the head of the demand curve, and towards a huge # of niches in
the tail. As the costs of production and distribution fall, esp.
online, there is now less need to lump products and consumers
into one size fits all containers. In an era without the constraints
of physical shelf space and other bottlenecks of distribution,
narrowly targeted goods and services can be as economically
attractive as mainstream fare.
David Meerman Scott. “The New Rules of Marketing & PR.” p. 17.

53. • A book by David Meerman Scott. His rules:
– NOBODY cares about your products except you.
– No coercion is required.
– You should lose control.
– Put down roots.
– Create triggers that encourage people to share.
– Point the world to your (virtual) doorstep.
The “World Wide Rave”The “World Wide Rave”

54. Determine your
Target Segments – who are
you gonna sell your stuff to?

55. What’s A Target MarketWhat’s A Target Market

56. • A marketmarket is the set of all actual and potential
buyers who have sufficient interest in, income for,
and access to your products/services.
• Market segmentationMarket segmentation divides your market into
distinct groups of homogenous consumers who all
have similar needs and consumer behavior, and thus
require similar marketing mixes.
• Segmentation bases for B2C & B2B markets:
– Behavioral
– Demographic
– Psychographic
– Geographic
– Occasion
– Benefits
Target Markets

57. Behavioral Segmentation

58. Psychographic Segmentation

59. • Activities of the target segment
• Interests…
• Opinions…
• Attitudes…
• Values…
Psychographic Segmentation

60. • Segmentation bases for B2C & B2B markets:
– Nature of good or service
– Buying condition of the consumer
– Demographic details
• DescriptiveDescriptive or consumer-basedconsumer-based are related to
what kind of person or organization the customer
is.
• BehavioralBehavioral or product-orientedproduct-oriented are related to
how the customer thinks of or uses the brand,
product, or service. Behavioral segmentation bases
are often most valuable in understanding branding
issues, because they have clearer strategic
implications.
Target Markets

62. For behavioral or product-
oriented target segments
think “INSURANCEINSURANCE”

63. Think InsuranceThink Insurance

65. It’s REALLY tricky.

68. Want to Attract MenMen
Ages 18-50?

69. FantasyFantasy
SportsSports
LeagueLeague
WebsitesWebsites
$2-3B$2-3B

70. There’s even a TV series…There’s even a TV series…

71. • Identify who you want to sell your products to
and offer your services to.
• ActionableActionable segmentation:
– The segments are easy to identify.
– Segments can be easily reached.
– Segments can be defined in terms of their growth,
size, profile and attractiveness.
• MeaningfulMeaningful segmentation: explains why
customers act the way they do:
– Customers in a segment behave in similar ways.
– Sheds light into customer motivations.
– Correlates to differences in profitability or cost to
serve
Find Your Target MarketsFind Your Target Markets

72. • Specify the benefits you will deliver to specific
target segments:
– Volvo (safety)
– Nordstrom’s (customer care)
– Southwest Airlines (convenience)
Focus on Customer BenefitsFocus on Customer Benefits

74. Assess Your Resource
Requirements

75. • What capabilities do you need, to deliver a new
offering.
• Company defines what experience and benefits
the product will provide.
• Define the the capabilities and technology
required to deliver the benefits of the offering.
• Develop a resource system, the collection of
individual and organizational activities and
assets.
• For online marketing, shift the focus from
activities and capabilities in the “physical” world
to a mix of marketplace and virtual assets.
Assess Required ResourcesAssess Required Resources

76. Assess the Attractiveness of
the Opportunity

77. • What’s the competitive landscape like?
• Customer dynamics: level of unmet need,
interaction between customer segments, and
likely growth rate of target segment.
• Technology vulnerability: how vulnerable is the
new product/service to technology
trends/advancements.
• Microeconomics: the size/volume of the market
and the projected profitability.
Assess the OpportunityAssess the Opportunity

78. Technology Vulnerability

79. Make Go/No Go Decision