business model

marketing

bmm,an

advanced course

todayintroduction, 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

me? -John Verhoeven, 34-Dutch-lecturer marketing & branding-development group CE IEMES-researcher lectureship-freelance marketing advisor-musician

hello, is there somebody out

there? -J.Verhoeven@fontys.nl-room 1.02-Monday, Tuesday & Thursday

and you? -name?-background?-passions?-work experience?-expectations?

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

TO INSPIRE

L L 57-1.00

Are you changing the rules

of the game...

and changing the game...

but.. has this game got rules anyway?

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

When you thought that marketing is only about

numbers and rational decisions...

It is not!marketing is NOTan exact science

Marketing is looking around you and learning from the successes and

mistakes of others and of yourself!

about the book..

-Alexander Osterwalder & Yves Pigneur

-5 chapters-1 method-lots of examples-real life!

overview advanced course

-2: business model patterns

-3: business model design

-4: business model strategy + process

-5: business model presentationtechniques

DIYAssignment ‘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

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

why this course?..

“…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

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?

businesschanges..(that’s nothing

new..)

.. the traditional model..

Competitors: Sony, MicrosoftTarget group: hardcore-gamersBuying 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)

.. 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

.. the Wii-model..Target group: very big group casual gamersBuying criteria: fun, simple, familyAverage 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

“…Wii doesn’t intend to be a best-of-breed 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)

organisations change, because business models

change..

totally new organisations

emerge..

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…”

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but how does it work?..

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..” 

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how does it work?..

how does it work?..

new organisations with totally

new business models emerge

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

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”

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

definitions..- Earning model- Organisation model- Selling model- Publishing model- Advertising model - Branding model- Creation model- User model

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

bodystorming..

Find a new way of:

- organizing a music event/festival- organizing a corporate event

- spreading literature- showing a movie- exposing art

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.

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)

bodystorming..

- What results did you get?- Where these results useful?- What do you think about this

technique?

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

so what is a business model

exactly?

the business model canvas

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

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?

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)

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

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)

channels..- How does the organization deliver its

value? (distribution)- How does the organization communicate

with its customers?

channels..

1. Awareness

2. Evaluation

3. Purchase

4. Delivery

5. After sales

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?

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 assets 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

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

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

business model canvas

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

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 model

Subscriptionmodel

Bait and hookmodel

Freemium model

Package deal

Servicemodel

Advertisingmodel

Auction basedmodel

Brokeragemodel

Yield management

Long tail model

Unbundlingmodels

Insurancemodel

Distributionmodels

Tupperware model

Online salesmodel

Clicks & bricksmodel

Franchise model

Labelingmodel

Multi-channelmodel

Affiliatemodel

(Co-)creationmodels

Mass customization

Open sourcemodel

User-generated content

Open businessmodel

Usermodels

Mass-effectmodel

Community model

Multi-sided platform

Bronnen: Interactieve marketing, Business-modellen, Business model generation

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-study today’s slides-study BMG page 1- 51

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?

till next week!