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Business model marketing session 1

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First session of the advanced course Business model marketing of the Fontys Academy for Creative Industries

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Business model marketing session 1

  1. 1. business model marketing
  2. 2. bmm, an advanced course
  3. 3. today introduction, definitions, the goal, getting to know each other, planning, the importance and relevance, looking at business models, searching for business models, changing markets, changing people
  4. 4. me? -John Verhoeven, 34 -Dutch -lecturer marketing & branding -development group CE IEMES -researcher lectureship -freelance marketing advisor -musician
  5. 5. hello, is there somebody out there? -J.Verhoeven@fontys.nl -room 1.02 -Monday, Tuesday & Thursday
  6. 6. and you? -name? -background? -passions? -work experience? -expectations?
  7. 7. goal -to recognize new business models -to learn more about the industry -to discover new marketing tools -to fire up entrepreneurship -to create a holistic view -to stimulate creativity -to cooperate -to inspire
  8. 8. TO INSPIRE L L 571.00
  9. 9. Are you changing the rules of the game...
  10. 10. and changing the game...
  11. 11. but.. has this game got rules anyway?
  12. 12. How did this happen? Did Mark Zuckerberg do some.. • Extensive market research? • Use an intensive segmenting, targeting and positioning process? • Attend a lot of marketing conferences? Please watch the movie: ‘The Social Network’.. for the answer
  13. 13. When you thought that marketing is only about numbers and rational decisions... It is not! marketing is NOT an exact science
  14. 14. Marketing is looking around you and learning from the successes and mistakes of others and of yourself!
  15. 15. about the book.. -Alexander Osterwalder & Yves Pigneur -5 chapters -1 method -lots of examples -real life!
  16. 16. overview advanced course -2: business model patterns -3: business model design -4: business model strategy + process -5: business model presentation techniques
  17. 17. DIY Assignment ‘Act different’: -in groups -deadline January 13th -businessplan + …? -a new or existing organisation -making use of the models from ‘BMG’ -read the hand-out thoroughly
  18. 18. act different.. - exercise “act different” - go through the business model design process - stay within the creative industry (pick an existing organisation) - or come up with a new organisation - you will create a total business plan - making use of several BMG figures - working in groups - more info later
  19. 19. why this course?..
  20. 20. “…the present economical, ecological and technological changes are so big and also so fundamental, that you cannot deny that we are in the middle of a system shift. No matter how you look at it, fact is that many structures are rapidly eroding. Big organisations are busy looking for new markets and alternative ways to keep existing markets profitable. And smaller organisations question themselves how to react on the fast changing environment..” Source: Businessmodellen.. Houtgraaf en Bekkers
  21. 21. which leads to.. -”branding and brand activation” -”blue ocean strategy” -”the long tail” -”the experience economy” -”the challenge economy” -”the conversation manager” Lots of theories… But what does really happen?
  22. 22. business changes.. (that’s nothing new..)
  23. 23. .. the traditional model.. Competitors: Sony, Microsoft Target group: hardcore-gamers Buying criteria: graphics, game quality and processor speed Average price: console: €400 game: € 88 Result: production of expensive consoles, which are sold with a loss, earnings from their own games and licences sold to third parties (e.g. EA-games)
  24. 24. .. the traditional model.. New game console attracting game players attract new game developers  offer of games  attractiveness of console increases  attracting game players etc. Result: heavy competition and Nintendo almost bankrupt
  25. 25. .. the Wii-model.. Target group: very big group casual gamers Buying criteria: fun, simple, family Average price: console €135 game €30 Competitors: ? Result: production of cheap consoles, selling consoles with profit, also earnings from their own games and licences sold to third parties, also motion controlled technology to third parties
  26. 26. “…Wii doesn’t intend to be a best-ofbreed videogame console. Nintendo is trying to bring non core gamers back to gaming with the Wii. Wii is not just a video game, Wii aims at meaning fun. Nintendo focuses on the consumer’s feeling rather than its product…” (source: Nintendo)
  27. 27. organisations change, because business models change..
  28. 28. totally new organisations emerge..
  29. 29. a group coupon “…Groupon negotiates huge discounts— usually 50-90% off, with popular businesses. We send the deals to thousands of subscribers in our free daily email, and we send the businesses a ton of new customers. That's the Groupon magic…” L
  30. 30. but how does it work?..
  31. 31. free music? “..Spotify launched in Europe four years ago. The basic idea behind the company isn't brand new. Music streaming services — sites where you pay a monthly fee for access to zillions of songs — have been around for a decade. But they've never broken through to a mass market..” L
  32. 32. how does it work?..
  33. 33. how does it work?..
  34. 34. new organisations with totally new business models emerge
  35. 35. Forming of the groups... • Form groups of 5/6 people • Try to find people that share the same interests (passion, industry, etc.) • Don’t choose the most easy solution • Foreign students must mix-up • Exchange contact information
  36. 36. looking for the‘three’! “..leave this room and start searching for three new organisations with a totally new business model..” “..try to find out how these organisations earn their money and in which way they distinguish themselves from other competitors..” “..make a drawing of the business model (like the spotify example), prepare a presentation”
  37. 37. A business model.. - Is about how money is earned About how business is done About how the company is organized About how the products are sold About how products are created About how customers gain value About what the brand stands for
  38. 38. definitions.. - Earning model Organisation model Selling model Publishing model Advertising model Branding model Creation model User model
  39. 39. new business models.. - In every part of the world In every industry In big and small organisations Profit and non-profit Totally new business models are created With a totally new shape or By simply altering the current model
  40. 40. bodystorming.. Find a new way of: - organizing a music event/festival - organizing a corporate event - spreading literature - showing a movie - exposing art
  41. 41. bodystorming.. • Bodystorming is a technique sometimes used in interaction design or as a creativity technique. • The idea is to imagine what it would be like if the product existed, and act as though it exists, ideally in the place it would be used. • Its going through an idea with improvised artifacts and physical activities to envision a solution.
  42. 42. bodystorming.. - Identify different roles/products to play - Assign roles/products to group members - 1 member doesn’t play, he/she observes (makes notes!) - Set the stage, act out your idea - Prepare your role, use labels, thought bubbles, a narrator - Turn your thoughts into actions - Use each others contribution (use ‘Yes, and..’-thinking) - Play the experience (start at the very beginning)
  43. 43. bodystorming.. - What results did you get? - Where these results useful? - What do you think about this technique?
  44. 44. A business model, huh? “.. the definitions in management science confuse entrepreneurs and marketeers. How often don’t we use the definition ‘business model’, hoping our listener understands us..” Source: Business modellen, focus en samenhang in organisaties, D. Houtgraaf en M. Bekkers
  45. 45. so what is a business model exactly?
  46. 46. the business model canvas
  47. 47. 9 building blocks... (in order to explain this basic principle)
  48. 48. value proposition.. - Bundle of products that creates value for a particular customer segment - What is the reason the customer choses you? And not a competitor - Which customer problem does your organization solve?
  49. 49. 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)
  50. 50. 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
  51. 51. - 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)
  52. 52. channels.. - How does the organization deliver its value? (distribution) - How does the organization communicate with its customers?
  53. 53. channels.. 1. Awareness 2. Evaluation 3. Purchase 4. 5. Delivery After sales
  54. 54. customer relationships.. - What kind of relationship with the customer does the organization want? - Is the contact personal or automated? - What kind of relationship does the customer expect?
  55. 55. 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)
  56. 56. 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
  57. 57. revenue streams.. Different kinds of earnings: - Sales of goods - User fee - Subscriptions - Renting / leasen - Licensing - Brokerage fees - Advertising
  58. 58. key resources.. - What are the most important assets of the organization? - Which assets make delivering the value proposition possible? - Assets can be owned, leased or obtained by making use of key partners
  59. 59. key resources.. Key resources can be: - Physical (buildings, machines) - Intellectual (brands, partnerships) - Human resources (knowledge, experience) - Financial (cash, stocks)
  60. 60. 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?
  61. 61. key activities.. Examples of key activities: - Design - Innovation - Problem solving /advice - Knowledge management - Database management - Platform management - Service - Promotion - Cost reduction
  62. 62. 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
  63. 63. 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
  64. 64. 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
  65. 65. business model canvas
  66. 66. revenue generation? “..a business model makes clear how an organisation generates its revenues in order to survive..” Bron: Interactieve marketing, H. Janssen, M. Van Reijsen & T. Zweers
  67. 67. 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?
  68. 68. Business models Earning Distribution (Co-)creation User model models models models Subscription Bait and hook Tupperware Online sales Mass-effect model Mass customization model model model Freemium Package Clicks & bricks Franchise Open source Community model deal model model model model Service Advertising Labeling Multi-channel Multi-sided model model model model User-generated content Auction based Brokerage Affiliate Open business model model model model Yield model Unbundling Insurance models model platform Long tail management model Bronnen: Interactieve marketing, Businessmodellen, Business model generation
  69. 69. 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.
  70. 70. homework.. Literature/theory/background -study today’s slides -study BMG page 1- 51
  71. 71. act different.. • Read the hand-out • Pick your industry and search at least three articles about trends that may lead to opportunities and threats for that industry • 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 among friends): What does the segment want to change? What attracts the segment to the product? What does the segment hate/love? Which problems do the segments stumble upon?
  72. 72. till next week!