Académique Documents
Professionnel Documents
Culture Documents
models for
Competitive
market"
Thesis Project
9/1/2013
Symbiosis International Business
Management
Semester V Exe MBA 2011-13
Table of Contents
1.
2.
3.
Team Members
profits. A second characteristic of the model was that the mark-up on the
secondary products were often disproportionate relative to their cost so were
highly profitable for the manufacturer. Anyone who has had to buy replacement
ink cartridges will bear witness to this!
A trend in recent years has however been the growth of companies with
uncertain business models. Twitter, for example:
Twitter has become an influencer in the way information is shared around the
world. But while its immediacy, transparency and simplicity offer answers about
all things both newsworthy and mundane, one big question about Twitter has
gone virtually unanswered: how it plans to turn a profit.
Of course, the big challenge for the likes of Twitter, Facebook and other social
media sites is that attempts to monetize come at a number of costs, often the
privacy of the user and their ability to use the service without interruptions from
third party advertisers. Monetizing a free service invariably degrades the
experience for the customer and hence companies need to walk a fine line as
Facebook found to its cost in recent months.
Thinking about your business model
If you are an entrepreneur starting a new business, it is very important that you
consider a number of different business models as it is possible to derive
revenues from a range of different sources at various stages of the products
lifecycle.
Businesses can also operate hybrid business models. For example, newspapers
make their money from a mix of advertising revenue and the price they obtain
for the newspaper. As we have seen in London, models can change over time as
the value of certain portions of the business increase in value; for example, the
Evening Standard newspaper is now given away free every evening (hence
relying solely on advertising income to sustain itself). As U.S. Cambridge, U.K.
-based entrepreneur Doug Richards proclaims:
One may start a business with the idea that one will sell a product to customers
only to discover that no one will pay for it, but they will accept it when it is
provided for free. When thats the case, advertisers may pay for the production
and distribution of the product.
In essence, business models are essentially dynamic as new opportunities can
emerge at various points on the value chain. Sticking to the newspaper industry,
the dominant online business model for many years was free online content
supported by advertising. However, the commercial viability of such a model is
not sustainable (most sites lose money) and this tactic also results in lost sales
as some people substitute a free digital copy for a physical paid one. The Times
in the U.K. has recently changed its model to a paid for access one whether
they can make it a success is debatable, given the fact so many free substitutes
are over the Internet.
Uses of a business models
Starting a new business: If you are starting a new business (particularly an
Internet-based one) and are seeking investment, the business model will
be an important element of your business plan. Any prospective investor
will be very keen to understand your business model clearly i.e. how you
intend to generate cash, and whether it appears that you can do so
profitably.
Innovation and product design: Business model innovation enables you to take a
holistic view of the business to assess unique opportunities that exist
outside of innovation solely on the product side. Business models also jump
industry so it is a good idea to keep abreast of innovative business models
you come across (regardless of the context). One simple (yet common)
form of innovation is deploying business models from another industry in
your own. As Mark Johnson claimed in Reinventing your Business
Model:
Business
model
innovations
have
reshaped
entire
10
most
savvy
investors
ignore
vanity
metrics
such
as
Page
11
12
that consumers have to pay hundreds of pounds for the phone and in many
instances minimum contracts are 18 months.
The Direct Sales model
While direct selling was initially the primary route to market, production
efficiencies coupled with improvements in transportation meant producers could
reach a much bigger market and this resulted in the pre-eminence of the retail
distribution model for many years. However the emergence of the Internet as a
distribution channel meant that producers could dis-intermediate costly resellers
and sell direct to customers themselves, in effect going the full circle. The PC
manufacturer Dell is a great example of a company who is very focused on the
direct sales business model.
The Franchise model
Opening a franchise is essentially buying a working business model in a
particular industry. You pay royalties for the privilege but get access to a winning
recipe, a support network and an established brand. Two famous franchise
business models are McDonalds and Subway.
The Freemium model
This is where the business gives away something for free in return for your
personal details so they can then market to you and hope to build up a
relationship so that you buy from them in the future. It is typically used in
service-based businesses where the lifetime value of the average customer is
high and is increasingly popular with Internet services such as Spotify, Skype, or
Flickr. Many of these offerings have similar cost structures where the marginal
cost of serving an additional customer tends towards zero. The core free offering
then acts as a gateway to the paid service. For example, with Spotify, the free
version comes with adverts, the paid does not.
13
At one point, unique visitor numbers to a site had a large perceived value. Many
businesses offered free Internet services and businesses were valued on the
basis of potential rather than underlying profit and loss metrics. There are still
remnants of this today, and some spectacular examples like Twitter.com, where
the notional valuation of the company is considerable even though existing
revenue streams are negligible. The actual business model is in effect getting
lost in the media hype and proliferating user numbers, and it is more a case of
figuring the business model out at a later stage than up front. Naturally this is a
highly flawed strategy and rarely works.
The Low-Cost model
The low-cost model can be summed up in one word: Ryanair. This is an
extremely well established business model, where the aim is to drive significant
volumes of customers (at a low customer acquisition cost) and by charging a
very low price. In return, revenue is earned from a whole host of ancillary
sources these include:
Advertising on seats
Flight insurance
Priority seating
The model is not simply about trying to extract a whole myriad of extra cash
from consumers, but also configuring every single aspect of their business model
so as to drive out cost. Examples include buying oil futures to manage oil price
fluctuations, having destination tourist boards pay for newspaper advertising,
having staff pay for their own uniforms and training, and so on.
14
1. INTRODUCTION
E-Commerce is a huge domain on conducting business over internet and eretailing is part of it. When we discuss on digitally / Internet enabled commercial
transactions between organizations and individuals using latest web technologies
as per the policies of the Organization it takes the form of e-business. Nowadays,
'e' is gaining momentum and most of the things if not everything is getting
digitally enabled. Thus, it becomes very important to clearly understand different
types of commerce or business commonly called as e-Commerce.
15
16
their utility payments viz., Insurance premium, Telephone bills, Income taxes
etc., Transfer money to anybody in this world via mobile banking (e.g. ICICI
Bank iMobile) opens up the new technology of ecommerce as Mobile commerce.
Further the regular online stores were also optimizing their site user interface
design in order to make consumers shop from their mobile devices viz., iPad,
iPhone, Android enabled phones, and Microsoft windows mobile 6.x enabled
devices.
There are other types of e-commerce business models too like Business to
Employee (B2E), Government to Business (G2B) and Government to Citizen
(G2C) but in essence they are similar to the above mentioned types. Moreover, it
is not necessary that these models are dedicatedly followed in all the online
business types. It may be the case that a business is using all the models or only
one of them or some of them as per its needs
17
18
19
Successful business model and eBay and the reasoning behind its
success.
20
Yard Sales
Buying quality, unique or rare products at yard sales and flea markets is a
common next step for many eBay beginners. If you live in a large town, you may
be able to find items that are free for the pick up, and there may be regular
estate sales or auctions advertised in the newspaper. Visiting these sales can be
fun, and finding excellent deals or rare items is exciting. In the beginning you
may pay more for an item than you can auction it for on eBay, but with time and
specialization you will learn how to spot the best deals or haggle sellers down on
prices.
Consignment
The eBay consignment business model brings products to you instead of you
having to go out and hunt for them. With this business model, you advertise
locally for quality products that people want to sell. They bring the items to you
and you decide whether they will sell well on eBay. If you determine they have
potential, then you work out a consignment agreement with the seller. The
consignment agreement states that you will pay them a percentage of the
21
auction price if and when the item sells. You take the photos, create the auction
listing, and handle the payments and delivery, so your portion of the selling price
needs to be high enough to cover those services.
eBay Stores
Ebay Stores allows you to set up an online store that sells products at a set
price, instead of allowing people to bid in auction format. This business model is
preferred by many eBay entrepreneurs because they can determine how much
profit each product they sell will make. Many eBayers combine eBay store sales
with auction sales because many buyers prefer the thrill of "winning" an auction.
Drop shipping
The dropshipping eBay business model is often used with eBay stores, to
provide products for direct sale. This business model doesn't require that you
stock products in your home or business location though. Instead, you find a
drop shipping partner that carries the items you want to sell and you set up a
business account with them. Then each time an item is sold at eBay, you provide
the drop shipper with the order details. You pay a lower, wholesale price to the
drop shipping company, and the difference between your cost and the price your
customer paid is your profit. This model is popular because you can set the profit
margins without having to handle packaging and shipping.
Wholesaling
Wholesaling is sometimes referred to as lot sales or bulk sales. This eBay
business model focuses on selling products in bulk instead of individually, and
the products are usually sold to other eBay business owners. You may find estate
sales or auctions in your area tend to sell certain items in bulk for example, such
as 1,000 books at a penny apiece. Instead of creating 1,000 separate auctions,
it's simpler and faster to sell the entire lot for an extremely low price, such as 5
cents each plus shipping.
22
As we begin the second decade of the 21st centurya decade that is likely to be
turbulent and uncertain for the association communitythe strategic imperative
for innovation in all forms is becoming ever more insistent. Among all of the
possible areas of focus for our pursuit of innovation, there is an especially urgent
need to devote greater attention and energy to the complicated work of
business-model innovation so we can ensure our organizations are able to thrive
over the next decade and beyond.
Last year I wrote for Associations Now about the profound leadership challenges
of imagining, designing, and implementing new business models ("Leading the
Way With Business-Model Innovation," August 2010). Since then, I have
23
reflected on a critical question: What are the underlying principles of businessmodel innovation for organizations seeking new success in the business of
associating? My hope is that the six principles presented here will provide
association leaders with the right kind of strategic guidance to seize the initiative
on business-model innovation. It is clear, however, that if associations are going
be successful in this effort, they will need to embrace a genuinely different point
of view on the nature of value creation in a more digital, more social, and more
interconnected world
Design Principles for Innovative Business modelIt is important to keep in mind that Business model are offered as principles, not
absolutes. Design is at the heart of business-model innovation, and association
leaders will benefit if they are able to actively experiment with these principles in
ways that will create space for unexpected business-model concepts to unfold.
Design principles function as both inspiration for novel possibilities and
generative constraints on what is possible. It is from within this creative tension
that the most powerful ideas will emerge.
In crafting these principles, I have tried to make a distinction between the
association as we understand it todaya formally constituted organization with
well-established ways of being, thinking, and actingand the experience of
"associating," which is itself a way of being human. As we have learned in recent
years, associations can make associating possible, but not all associating occurs
because of associations. Our thinking about future business models needs to
focus on maximizing the value of better outcomes for our stakeholders, not
preserving the traditional structures and inputs we often regard as most
important.
Purpose and profit are interdependent.
Associations must resolve to end the fruitless and counterproductive clash
between dedication to a larger sense of purpose and the pursuit of profit. The
24
25
inspiration into which our organizations must tap to connect with stakeholders in
a deeper, richer, and more enduring manner.
The social layer is digital. Over the last decade, we have witnessed the
creation of a robust public social layer of interaction, conversation, and sharing
in the form of blogs, wikis, and most recently, near real-time information flows
(Twitter) and global social networking sites (Facebook). The explosive growth of
smart mobile devices over the last four years has amplified the impact of the
social layer on the experience of associating, and in the decade ahead, the
continued implementation of the "game layer"the application of game
dynamics to shape human behaviour in every contextwill take that experience
to yet another level.
For as long as there have been associations, the social layer has existed almost
entirely in the physical dimension. Throughout our history, creating sustained
relationships required regular face-to-face contact among participants
at
26
Moves, Smartly Made, Can Set Big Things in Motion. According to the authors,
"pull allows each of us to find and access people and resources when we need
them, while attracting to us the people and resources that are relevant and
valuable, even if we were not even aware before that they existed."
Associations have traditionally enjoyed a sense of ownership over the networks
they have helped to create, but those networks are now fully within the control
of their participants. Today's fluid networks operate at a speed much closer to
the real-world pace of our stakeholders' work, and they enable the free flow of
rivers of information and content filtered and curated by network participants. In
this context, the presence of trust within networks is crucial. As part of new
thinking about business models, association leaders should consider what unique
contributions their organizations may be able to make to nurturing social capital
that can bridge across and between formal and informal stakeholder networks of
associating to unleash serendipity, imagination, and innovation.
Collaboration is the new content. In a world of technology-enabled
knowledge work, content creation is a continuous and increasingly collaborative
process. But even more critical than the specific outputs of those collaborations
is the residual impact of collaboration itself as an essential outcome for our
personal, organizational, and societal well-being. The ability to pursue significant
and sustained collaboration makes it possible for stakeholders to unite to meet
their current needs, as well as tackle the deeper problems facing the industries,
professions, and fields in which they work. What makes Wikipedia a worldchanging resource is not merely the content it provides but the on-going global
collaboration that sustains it.
Associations today are quite focused on figuring out how to support greater
member engagement. Unfortunately, in far too many organizations, this still
means "buy stuff from us or give up your valuable time to work on trivial
matters." True collaboration is not about asking stakeholders to sit together
27
chief
scientist
for
Salesforce.com.
Leberecht
argues
that
organizations may find value in intentionally designing their work to narrow the
extent of their control. As he writes, "A deliberately designed loss of control
grants companies the only remaining and arguably most critical competitive
advantage: access. As long as they enable and facilitate knowledge flows, ideas,
passions, skills, and experiences, they have access to them." For most
association leaders, this is a hugely radical, even dangerous, idea. And yet it is
quite possibly the most important design principle for all new business-model
concepts of associating. In very practical terms, business models designed for
the loss of control may well deliver greater value while incurring lower costs.
After all, among other problems, control is expensive. In strategic terms,
28
business models observing this design principle can help energize stakeholders
with a renewed sense of purpose. Among other opportunities, the loss of control
encourages new self-organized forms of associating.
These six design principles are not a panacea for associations struggling with the
challenges of a world in upheaval. They do not provide easy answers and readymade solutions. Instead, they force us to confront the limitations of association
orthodoxy and hopefully inspire us to be bold in designing business models that
will make it possible for our organizations to thrive over the next decade and
beyond. Now is the time for all of us who care deeply about the future of
associations to display the necessary courage, determination, and imagination to
make it happen. Let's get started.
Jeff De Cagna, FRSA, an ASAE Fellow, is chief strategist and founder of
Principled Innovation LLC, located in Reston, Virginia.
29
Few Innovative BusinessesWith so much focus on tech startups and the newest apps, we sometimes forget
that some of the most innovative businesses are the ones that put a new spin on
something familiar.
In New York City, companies have taken everything from the gym to restaurants
to dry cleaning and reinvented them, building rabid followings and creating
amazing products.
We've found the 25 most innovative businesses in New York City. Whether
they're
startups,
brick-and-mortar
shops,
or
pop-up
restaurants,
these
30
Amor y Amargo
What it is: A cool new concept for a bar that focuses exclusively on bitters.
Why it's innovative: Amor y Amargo is a bar that brings a new appreciation to
bitters. But it's more than just a bar. In addition to the house-made vermouth
available on tap, the space includes a retail shop and classroom so that novice
bartenders can purchase barware and participate in weekly mixology classes.
Blue Apron
What it is: A website that delivers all the ingredients you need to cook a meal at
home.
Why it's innovative: Blue Apron is a new concept in grocery shopping that
delivers all the ingredients you need to cook a meal right to your apartment.
Members can sign up for a weekly subscription service and have fresh
ingredients delivered (for free!) that will make three meals in just the right
proportions. The company also promises that each meal takes 35 minutes or less
to prepare.
Brooklyn Boulders
What it is: New York City's only indoor climbing gym.
Why it's innovative: Besides indoor rock climbing, Brooklyn Boulders offers a
wide variety of classes; from basic climbing to slacklining (a type of tightrope
walking that is popular with climbers). The gym also offers other fitness classes
like Pilates and yoga. Climbers can try to scale different courses, including a
model of the Brooklyn Bridge or a giant stalactite. Courses change daily to keep
things fresh.
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Chloe + Isabel
What it is: A jewelry website that turns its users into mini entrepreneurs.
Why
it's
innovative:
Chloe
Isabel
empowers
women
to
become
entrepreneurs by selling and buying jewelry both online and in person. Women
who become merchandisers receive a digital workplace where they can create
their own online boutique and earn a commission. They receive training,
marketing tools, and recommendations to help them build e-boutiques.
Culture
What it is: A homemade yogurt shop.
Why it's innovative: Culture is a shop that sells fresh and frozen homemade
yogurt, giving yogurt a cult following. It's so good that the authors of Park Slope
blog F'd in Park Slope even said they "wanted to have sex with this yogurt." The
shop strains its product and sells the yogurt on site either frozen or fresh. It
also features local up-and-coming artists' work on the walls of the shop.
DashLocker
What it is: A 24/7 dry cleaner that has fully automated the dry cleaning
process.
Why it's innovative: With DashLocker, you'll never miss your dry cleaning
again. Customers drop off clothes in secure lockers at any hour of the day or
night. DashLocker then picks up the clothes from the lockers within 24 hours,
and returns the cleaned clothing back to the lockers within another 24 hours
after that. Clothing dropped off by 10pm will be ready by that time the next day.
You can sign up for email or text message notifications.
Do or Dine
32
ab.com
What it is: A website that sells carefully-curated designer pieces and local goods
at great prices.
Why it's innovative: Fab.com is an online retailer that emphasizes design and
unique local goods at great prices. The website features "daily design
inspirations" and killer sales that can save members up to 70 percent off retail.
It raised $40 million in 2011, and sells art, furniture, home decor, paper goods,
toys, gadgets, and more.
KiwiSweat
What it is: A pop-up fitness company that finds unique NYC destinations to work
out in.
Why it's innovative: KiwiSweat brings the pop-up shop model to the gym,
offering truly unique classes in unusual places. Think yoga underneath the
Brooklyn Bridge, or spinning at MoMA. Classes can be one-time events or up to
four-week-long sessions. Schedule, location, and details are all kept secret until
a few weeks before the event begins. There are no memberships, and every
class is treated individually.
33
Kurrenci
What it is: A currency platform that is changing the way people spend money
online.
Why it's innovative: Kurrenci is an online currency platform that makes it easy
and safe for people to spend and earn money online. Kurrenci is partnering up
with local, national, and global e-commerce sites to make money more valuable,
safer and more convenient by using kurrenci almost like points as money.
You can use it to buy things, give gifts, and donate to charity.
patrons
name reflects
the
opportunity
the pop-up
to
try
different
restaurant's rotating
cuisines.
chef
The
restaurant's
culture. LTO
features
celebrity chefs and obscure culinary names who occupy the kitchen for anywhere
from a week to a month.
34
My.Suit
What it is: A custom suit shop that allows men to choose suits either in person
or online.
Why it's innovative: The company custom tailors made-to-measure suits for
men in New York. Once you're measured, you can either choose to go into the
store to build the suit from hundreds of fabrics and cut options, or use an
innovative online tool to tweak it to your specifications. They take even more
measurements than a typical tailor, making sure the suit is perfect and ready to
wear in two weeks.
Nitehawk Cinema
What it is: An independent movie theater that offers carefully curated films,
food, and drinks.
Why it's innovative: Nitehawk shows both first-run and repertory films, and
makes the experience unique by offering table side food and drink service,
including
handcrafted
cocktails
and
local
beer. Nitehawk
single-handedly
managed to overturn a prohibition era law that prohibited alcohol from being
served in movie theaters.
35
NoMad
What it is: A hotel and restaurant in the NoMad (North of Madison Square Park)
neighborhood thats playing a key role in revitalizing the area.
Why it's innovative: The innovative restaurant at NoMad has been called best
new restaurant in New York. NoMad lets people experience Chef Daniel Humm's
food without paying the steeper prices at his flagship 11 Madison Park, which is
considered one of the best restaurants in the city. One of the most popular
dishes at NoMad is the roast chicken for two stuffed with brioche, foie gras, and
truffles.
RedFarm
What it is: A cool upscale Chinese restaurant that serves innovative dishes.
Why it's innovative: Located in the West Village, RedFarm is an upscale
Chinese restaurant that presents its dishes in a very whimsical, playful manner.
Check out, for example, the Pac-Man ghost dumplings with the sesame seed
eyes or the Katz's pastrami egg roll. The restaurant is a collaboration between
dim sum master chef Joe Ng, who is Chinese by birth, and restaurateur Ed
Schoenfeld, who is Chinese by calling.
Rice to Riches
What it is: A rice pudding bar with over 20 flavors of pudding.
Why it's innovative: Rice to Riches is a rice pudding bar that serves over 20
flavors of rice pudding, such as coconut coma and espresso with chocolate chip.
They don't pretend that their products are healthy or good for you, but instead
emphasize that people should be able to indulge on occasion. And their rice
pudding is definitely indulgent. Beware your waistline, because they also make
overnight deliveries.
36
SoulCycle
What it is: A fitness program that has revolutionized indoor cycling.
Why it's innovative: SoulCycle has managed to build a rabid and evangelical
fanbase by offering incredibly intense bike workouts with blaring music,
choreography, and inspiration from instructors. It's not just biking; there's
dancing and weight lifting as well. The classes sell out in seconds, and the
company makes an effort to create a truly immersive and addictive experience.
Story
What it is: A permanent retail shop which completely changes every 4-6 weeks.
Why it's innovative: Story is a store in Chelsea that completely reinvents itself
every 4 to 6 weeks. The environment, merchandise, and story behind the store
will be completely different. Before they were STORY, they launched in beta as A
Startup Store featuring five New York startups Artspace, Birchbox, Baublebar,
Joor and Quirky who wanted to have a storefront presence and create an
innovative new way to present and market products.
Tre Truck
What it is: New York City's first mobile skateboard shop.
Why it's innovative: Tre Truck is the first mobile skateboard shop in New York.
The truck carries over 30 different brands of skateboards, and is staffed by avid
skaters who genuinely know about and use the products they sell. From
skateboards to board components, protective gear, and even snacks, the truck
has everything a skater could want. The truck moves from Skate Park to skate
park all around the city, and you can find them on Facebook or Twitter.
37
Vaute Couture
What it is: A shop that sells high-end and animal-friendly fashions.
Why it's innovative: Vaute Couture emphasizes fashion, sustainability and
ethics. All of the products that designer Leanne Mai-ly Hilgart creates are
completely vegan, using no leather, fur, wool, or animal products of any kind.
She uses cutting-edge fabrics and recyclable fibers to create winter coats that
are just as warm as their animal product-using counterparts, along with a variety
of other vegan apparel.
VenueBook
What it is: A website that can give anyone the ability to plan events like a pro.
Why it's innovative: Formerly known as InstEvent, Venue Book is a free
website that links party planners with their ideal venues. Planning a birthday
party? Just tell VenueBook what you're looking for and they will look through
their database of bars, restaurants, lofts, and other venues. The service
will collect all the necessary information about pricing, packaging and availability
for you so you don't have to.
YotelWhat it is: A modern, budget hotel thats leading the charge for small hotel
rooms at a decent price.
Why it's innovative: Yotel is all about maximizing space while retaining
comfort. The modern hotel, which offers tiny but moderately-priced pod-like
38
rooms, opened its flagship building in New York in 2011. Yotel also boasts the
Yobot: a giant crane that helps guests store their luggage in the communal TTech by Tumi Luggage Lounge.
As time goes on, one of the more interesting trends that continues to happen
with surprising regularity is how frequently new business model
As time goes on, one of the more interesting trends that continues to happen
with surprising regularity is how frequently new business models and ways of
doing business are emerging through social media and online tools. In many
cases, these trends are helping to reinvent how businesses sell and consumers
buy all kinds of products. For that reason alone, new sites are worth paying
attention to no matter what industry your business happens to be in.
The
benefit of that for your small business is that watching these new models may
also spark a new idea or method of selling that you can consider for your own
business:
1.
Woot - This online retailer takes the unique approach of only selling a
single product each day. Around each daily product is a dedicated
conversation stream, live commentary and a detailed description. By
focusing on a single product, not only do they add a layer of conversation
and description to the product, but they also give their users the
perception that each daily deal is special and only available for a limited
time. This focus allows them to add urgency to their site and convert
browsers to buyers quickly. While you may not be able to convert your
entire business to just selling one product at a time, this model may be
the next evolution of the long-standing "deal of the day" model that many
businesses have used at one time or another in the past.
2.
Groupon - How much would you lower your standard prices if I could
guarantee you 100 customers? Or how about 1,000? The premise behind
Groupon is to offer customers "collective buying power" - which
39
essentially means that you can offer a great deal and it will only kick in if
a set number of consumers take you up on it. Go on the site and you will
see deals sorted by region and many of them have been redeemed by
thousands of people. What Groupon shows you is that sometimes you
CAN actually count on volume to compensate for lowering your prices.
The nicest thing about the site is that instead of trying to recreate this
model on your own site, you can add a special offer for your business to
Groupon.
3.
Hotwire - By now most people are familiar with the new auction based
pricing model that Priceline introduced into the travel industry. Letting
consumers set the price for what they are willing to pay was a revolution
in the travel industry at the time when Priceline was introduced. Hotwire
used the slightly adapted model of offering exact prices, but not letting
you know the details of what you booked until after you pay. If you have
your own e-retail site, this model can be a good way to get rid of excess
inventory in a different and more fun way.
4.
Blippy - If you don't live your life in social media, the idea behind
Blippy will likely confuse you. It is a social site that lets people
automatically share the latest things they have purchased (and how much
they paid for them) by linking the site to a single credit card. This level of
transparency and sharing may seem crazy to many people, but the site
represents a social experiment that points to an interesting opportunity
for businesses whose customers may be used to sharing every small
detail of their lives. It may be an outlier in this list of business models as
they admittedly dont have a revenue model for the site as yet but the
shift in what people are willing to share online is the real trend worth
watching.
40
5.
Dubli- This site offers some of the most creative pricing models you can
find online - and models that have not yet been duplicated across many
others sites. The first is what they call a "reverse auction" where products
have a starting price and you use credits that you purchase on the site to
reveal the current price. Each time a member of the site uses a credit to
reveal the price, the price goes lower until someone decides to make the
purchase. The second model is based on a "unique price auction" which
means you need to have the lowest bid that no one else chooses to have
in order to win.
41
Procter & Gamble is credited with many business innovations including brand
management, the soap opera, and now recently sourcing 50% of its product
innovations externally. P&G has been licensing its technologies, trademarks and
other innovation assets to other companies for a long time extracting value from
non-customers. When P&G realized the potential in using a newly discovered
technology during a diaper project, to enhance the performance of trash bags
and food wraps, P&G didnt take it to market. Instead, the company decided to
create a joint venture with Clorox, a rival firm in the cleaning category that
owned Glad, a leading bag and food wrapping brand. The collaboration turned
out to be highly successful, leveraging P&Gs assets and capabilities within R&D
and branding, as well as Cloroxs products and established brand Glad. The total
sales doubled in four years, turning Glad into a billion dollar brand.
Amazon.com, a firm which started as an online bookstore, diversified into
selling DVDs, CDs, MP3 downloads, video games, electronics, apparel, furniture,
food, and toys. Realizing that its processes and IT infrastructure could be used
by other companies and individuals, Amazon.com created another path of
growth. Being able to guarantee a 99.9% monthly uptime, it started to offer a
number of services such as storage, computer capacity leasing, end-to-end
product sales and a full logistics platform handling orders, payments and
shipments. Today Amazon.com powers and operates retail web sites for
companies such as Target, Mark & Spencer, Lacoste and CDNOW. Amazon S3
(Simple Storage Service) reportedly stores more than 102 billion objects as of
March 2010.
You have to create value for non-customers
The rapid pace of technology and business change raises serious questions for
executives on how to continuously innovate and find new ways to create and
capture value, what resources and capabilities to develop in-house and how to
use collaborative or distributed value creation. The need for organizations to
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Philips is selecting and sharing assets that are potentially valuable for noncustomers to the extent that the side-business is becoming substantial. Does
your organization even know what you have that could be potentially valuable for
others?
You throw away things that are valuable to non-customers
Companies depend on customers for revenues which drive decision making and
how companies prioritize resource expenditure. The importance of deeply
understanding your customer at both the rational and the emotional level cannot
be stressed enough. However, by always seeing things through the lens of
customer value creation, companies constantly waste unique and valuable assets
and capabilities.
Unique and potentially disruptive ideas, inventions, or business models that dont
fit neatly into planned products or innovation initiatives are sometimes forgotten
if at all seen. Customer priorities directly affect decision making, internal project
prioritization, ability to attract attention within the company, identification of
value within a project or organization, the definition of what a valuable invention
is, collaboration decisions, deciding which inventions to patent or abandon, etc.
Companies are designed to execute the existing business model efficiently for a
linear world. When organizations start using external resources and capabilities
for various purposes, things are no longer as linear.
Isnt this taking focus from the core business?
It is known that companies with a few highly focused core businesses historically
have accounted for the majority of sustained growth companies. Spin-offs
usually create more focus and value, something private equity companies know,
often achieving their greatest success by buying orphan businesses from
scattered conglomerates. Also, an undeniable lesson from observed transactions
in the past is the higher success rate of acquisitions made for the purpose of
expanding scale, than acquisitions to diversify and expand scope.
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But what is your core business? Perhaps its not what you deliver but how you
deliver it that makes people buy? Perhaps you should deliver something else as
well given your superior way of delivering things? Perhaps its not the gadget
you sell but the software interface that people like? Could other gadget
manufacturers need your superior software interfaces? Perhaps the reason
someone wants to collaborate with you is not your own qualities, but your
existing customer relationships? Could other companies be interested in
getting access to the same customers?
My point here is not to diffuse company activities and focus, but to illustrate
hidden value within your existing organization that is often overlooked, and
which could be a source for business model innovation. What you choose do with
the new insights, with newly identified valuable assets and capabilities, is
something completely different. You may choose to do nothing, change your core
business model, spin-out new companies, create external business development
groups, out-license technology and patents, have visitors on your webpage
browse and access your assets to find areas for collaborations, create joint
ventures in new business areas, etc. What I ask you to do is to consider
available options and make informed decisions.
Business model innovation based on value for non-customers
There are many great concepts and tools for business model innovation starting
from existing or potential customers such as analyzing the jobs to be done, the
outliers using products and services in unintended ways, customers who use the
non-premium market offerings in search of better solutions, potential customers
who find the offerings unacceptable or beyond their means. Although analyzing
existing and potential customers is often a great way to gain a focused
competitive advantage and increase the share of the existing market, it is not
the only starting point for business model innovation.
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Business model innovation can take its starting point in external factors such as
trends in technology, society, culture, or from responses to actions by suppliers,
partners, customers, or competitors. It can begin in the existing business model,
starting with what-if questions such as: what if we segmented our customers
in this way, what if we offered this for free, or what if we delivered our products
and services in this way instead? However, as Ive demonstrated here, business
model innovation can also take its starting point in looking at creating value for
non-customers, and in this way your firm can uncover hidden value, enter new
markets, or simply support and maintain your existing core business.
IKEA realized the value of its customers to non-customers. P&G created a jointventure with a rival firm based on their new technology, R&D and branding
capabilities. Amazon realized it could provide the backbone for other companies
activities on the Internet.
Is there something your company should realize?
Innovative
and Cost-Effective
Ways
to Market
a New
Business
There are many distinct, inventive, and inexpensive ways that many new
business
owners
use
to
promote
their
companies.
Compared
to
the
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advertise a product or service. Often times, small business owners will resort
to this form of marketing because it is cheaper and sometimes more successful
than traditional marketing strategies. The purpose is to creatively attract
customers to buy a given product or service. An example of guerilla marketing
can be found in most restaurants. Many restaurant pagers will advertise their
drink and/or meal special on the devise. People become more aware of the
restaurants special deals as they are waiting to be seated and because of the
ad, they will often buy the foods that are advertised.
Another example of guerilla marketing is hot air balloon ads. During county fairs,
marathons, and other outdoor social gatherings fast food chains, telephone
companies, gas and electric companies, and automobile dealerships will
advertise their logo on hot air balloons that appear in the sky overhead. The
purpose is to simply raise awareness to their business. Many companies have
found this type of advertisement effective since everyone is able to view their
logo.
Subliminal advertising
subliminal advertising is a form of marketing where a message is deliberately
embedded within an image or sound. Many people may not be consciously aware
they are being exposed to such implications, but will often change their actions
and attitudes after viewing or listening to the advertisement. A successful
subliminal advertisement is one that inconspicuously entices consumers to buy
and use various products and services. For example, in the 1980s, Camel
Cigarettes were known to use hidden sexual images within their campaign ads.
What may look like a regular cigarette advertisement actually contained
embedded phallic images. The ads implication was that it was sexy to smoke;
therefore, many people were prompted to smoke the Camel brand because they
were unconsciously affected by the advertisement.
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advertisements
are
not
limited
to
just
visual
and
auditory
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suffer from hypercholesterolemia can post inquiries regarding the medication and
learn more information based on the feedback of other readers. If promising,
they may ask their physicians to write a prescription for the new medication if
they have been unsuccessful with their previous regimen. This consumer can
easily tell their friends, especially if they have had positive results. The
pharmaceutical company, in turn, can easily distribute this medication to
physician offices and medical facilities when requested.
Profiles on social networking sites
initially created for dating, peer-related activities, family reunions, and
communal announcements, social networking sites can also serve as a
professional platform in which entrepreneurs can advertise their small
businesses. It is an excellent way for business owners to find people, references,
and companies they may not otherwise have access to. And because most
membership is free of charge, many businesses take advantage of this
opportunity to build their online connections while advertising their products and
services. Many small businesses agree that social networking sites such as
MySpace and Facebook are beneficial in gaining recognition as well as customer
support. For example, a business owner can create an online profile of their local
diner on Facebook. In addition, they can post a menu and even showcase
frequent celebrity patrons. Many people who are familiar with this popular
establishment can simply dine there on a regular basis and even recruit new
members by word of mouth. Recognition of the diner can spread among the
network and is a good way to gain business.
Political candidates have also used social networking sites to gain campaign
support. For example, contenders of the upcoming 2008 U.S. Election all have
feature profiles for public view on many of the leading online social networks.
Their profiles usually feature a brief biography about themselves and up-to-date
information concerning their fundraising campaigns and political views. Many
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people who are not familiar with political figures and their crusades can merely
educate themselves by reading the candidates profile content and decide who
they should vote for based on the profile information. The popularity of social
networking sites, to gain support, is just one of many effective online tools used
by individuals, businesses, and political figures/campaigns who want publicity.
New enterprises, especially small establishments, have to continuously fight
among competitors to get the recognition they deserve. Over the past several
years, new business owners have used innovative tactics to improve the overall
market visibility and sales of their company with little or no risk to their existing
budgets. Guerilla marketing is the latest technique among new business
owners in which an advertisement is placed in unique locations such as
automobile doors or restaurant glassware. Subliminal advertising can be seen
anywhere,
from
billboards
to
magazine
ads,
which
convey
deliberate,
unconscious, messages that easily influence consumer spending. There are also
podcasts, which allow individuals to view anything from business proposals to
featured items to infomercials at their own convenience. In addition, blogs not
only help promote a new business but also encourages online community
conversation and feedback. Lastly, social networking sites have been proven to
raise the profile of an individual, company, or group. All of these mentioned
examples offer the entrepreneur new ways to successfully reach the target
audience effectively without the risk of spending money for traditional means of
advertising.
The service sector now accounts for more than 70% of economic activity in
developed economies. Many of these services are complex to design and deliver,
involving business-to-business collaborations and networks. Besides business-tobusiness services, we also see many manufacturing firms looking to services as a
way of increasing their product range.
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This Webinar will see Prof. Andy Neely, director of the Cambridge Service
Alliance, introduce new research from the alliance with the pending publication of
a new paper entitled Service Business Model Innovation in the 21st Century.
This upcoming white paper will present the latest findings from research
completed by the Cambridge Service Alliance, exploring the how, what, and why
of service business model innovation. Drawing on case studies from a wide range
of public and private sector organizations, the Cambridge Service Alliance
research team has been:
Identifying why and how firms are innovating their service business
models.
What are the key success factors for service business model innovation?
What are the key challenges that exist when implementing new business?
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53
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Future
r
#
Item Particulars
Previo
Presen
Forecastin
Potential
us bill
t amt
Savings
Power Bills
700
600
100
Mobile bills
1000
1100
100
D2H bills
400
400
CC Bills
2000
1500
1000
Gas/Petrol/Diesel
5
Refuelling
2000
2000
2500
500
car/bike maintenance
1000
1000
Driver Service
3000
3000
Car/bike Insurance
800
800
800
Personal Insurance
2000
2000
2000
55
1
0
Health Insurance
500
500
700
200
Groceries
3000
3500
3500
500
society maintainence
1000
1000
1000
800
800
800
50
50
7000
7000
7000
1000
1000
15000
15000
15000
2000
2000
1500
1500
1500
500
500
500
House keeping
500
500
500
1
1
1
2
1
3
Water Charges
1
4
security Service
1
5
Kids education
1
6
Kids Marriage
1
7
1
8
Festival/vacation/Holiday/
2
0
2
1
56
2
2
Cooking Services
Laundry Services
400
400
400
42100
40600
41750
6450
2
3
Total
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If all of the above needs are plotted into a graph would appear something like the way as
shown below.
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59
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Towards the beginning the accounting and other actions are also made easier with the
pricing model going inclined towards the end consumer. Else there are chances of failure in
the model as a whole.
There have been several failures in case of business model however it happens only towards
the beginning. A successful model rarely fails after successful execution.
The project Work doesnt show in particular the capital or the investment sources since this is
just in stage of conceptualization.
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The benefits are the fact that each one of the society member could be
not worried about any of their needs and requirements.
All of the needs, and worries and requirements are covered by just a SMS
or even a missed call.
The member or the end user just has to eat, sleep and rest of services
each of it gets taken care by the expertise and the staff of CS
There is no need for a physical space even with a small office or a cabin
this could get worked.
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Not even sure of customers or society would agree to this as a service even if agreed how
hard or how easy would it be with the available resources is not clear since there is no effort
estimation that is carried out on this.
With this as our detailed study we would conclude with the thesis we have made for the
Innovative business model of (CS)2
Hoping and praying success for this to be materialized for the sake of the
benefit of the society as a whole.
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