Advanced course Business model marketing, session 2

1. business
model
marketing

2. bmm,
an
advanced
course
session 2

3. last session
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. business model canvas

5. homework last
week..
Literature/theory/background
-study today‟s slides
-study BMG page 1- 51

6. 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?

7. shifting your
perspective..
From „you‟ to „them‟:
- What does he/she see?
- What does he/she hear?
- What does he/she really think and feel?
- What does he/she say and do?
- What is the customer‟s pain
- What does the customer gain

8. understanding your target group

9. today
Business model definition, different business
model patterns, working on the assignment!

10. business model canvas

11. 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

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

13. 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

14. 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

15. A business model
Osterwalder & Pigeur:
“.. A business model describes the rationale
of how an organisation creates, delivers and
captures value..”

16. business model canvas

21. 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?

22. 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
Unbundeled
Insurance
models
model
platform
Long tail
management
model
Sources: Interactieve marketing, Businessmodellen, Business model generation

23. Subscription and consumption model
The aim of this model is to generate money with subscriptions. It guarantees the
organisation a steady stream of earnings. It guarantees the consumer a steady delivery
of products and service. The consumption 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 attractive, often extremely cheap
product (bait), after which the organisation makes great profit with selling
complementary parts or repeating purchases (hook). The organisation has a guarantee
that the customer does return. By making use of a vender lock-in an organisation often
tries to make it even harder to switch to a competitor. Examples are patents, licences
and other switching costs.
Examples: Gillette, HP-printers

24. Freemium model
The freemium model resembles the bait-and-hook model. The product is given away for
free. A better version of the product is only accessible after buying an updated version.
There are also freemium models used that have a connection with annoying
advertising. After a paid update you don’t get this advertising anymore.
…(earning model)…
Examples: Spotify, Skype, Dropbox
Package deal
The aim of the package deal is to sell less interesting products or by-products with the
successful product. These supplements are much less interesting than the stand-alone
product. The organisation often tries to get rid of stock or to get higher margins on
specific parts. …(earning model)…
Examples: 3 for 1 magazines, Bank of Scotland

25. Service model
The thought behind the service model is the fact that the organisation earns money
with the service provided to the product. Sometimes this service income is even
bigger than the initial purchase. Consumers feel psychological pressure to service the
product at the place where they bought it. Often this pressure is increased by a
specific service deal or other agreements. …(earning model)…
Examples: Remeha, BMW
Advertising model
The aim of this model is to gain money by all means of advertising. Very often the
organisations offers the product for free in exchange for showing all these
advertisements. This way the advertiser takes advantage of the attractive power of the
organization. …(earning model)…
Examples: Facebook, Metro

26. Auction model
The aim of the auction model is to maximise profit by means of an (online) auction.
The price of the products is determined by demand and offer. An online auction
enlarges the playground of an offering organization. This organization earns money by
placement fees and sometimes by asking a part of the actual transaction.
…(earning model)…
Examples: Vakantieveiling.nl, e-bay
Brokerage model
The aim of the brokerage model is to gather demand and offer. The broker however
offers extra information and / or knowledge. The added value of the broker is the fact
that he organises the money transaction. This model is also used by so called
information brokers. They make money by selling information about search and
buying behaviour. …(earning model)…
Examples: Independer.nl

27. Yield management
The yield management model makes use of very accurate market information and
statistics in order to continually 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 traditional model which makes use of some top bestselling
products. …(earning model)…
Examples: Amazon.com, iTunes, Netflix

28. Unbundled models
The concept of an unbundled organization focuses on three fundamental types of
business: Customer relation, product innovation and infrastructure. These three types
can go along eacht other in one single organization but it’s better when they are
unbundled in separate entities (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

29. distribution
models..

30. Tupperware model
The aim of the tupperware model is to gather a small group of interested buyers in a
home setting. The one who organises a so called ‘party’ earns money by means of a
storage rate. Distribution costs are low and there is a social pressure to buy.
…(distribution model)…
Examples: Tupperware, Aloë Vera, Upperdare..
Online sales model
With the internet a company can easily get around wholesalers and retailers. Often
the saving of costs are in favour of the consumer. This way it’s cheaper to buy online. A
disadvantage is the fact that markets have become much more transparent.
…(distribution model)…

31. Clicks-and-bricks model
When an organization uses the online sales model all sales are based on making use of the
internet. However for some organizations the shop in the street is still very important
because its customers demand a place where they can meet the physical product. This is
why lots of organizations combine internet sales (clicks) and retail (bricks). Despite of the
fact that this leads to higher costs. Organizations are always searching for the perfect
internet/retail proportion. …(distribution model)…
Examples: Bjorn Borg, IKEA
Franchise model
The franchise model aims at spreading a successful retail formula by independent entrepreneurs.
These entrepreneurs have to follow strict rules in order the keep the formula clear. This business
model is an example of spreading risk for both formula as the entrepreneurs.
…(distribution model)…
Examples: KFC, supermarkets

32. Labelling
The labelling model is a special kind of franchising. Using the labelling model means
that products that are labelled with a specific strong brand are distributed by other
organizations who earn money with a storage rate. The labelling model is often used
for luxury brands for which the brand is more important than the product itself
…(distribution model)…
Examples: Disney
Multi – channel model
Multi channel management means optimizing the number of communication and
distribution channels an organization has. Past years big organizations have become
more aware of the fact that a good multi-channel strategy can lead to cost reduction
and customer retention. …(distribution model)…
Examples: G-star, Apple

33. Affiliate model
The aim of the affiliate model is offering a product on a large number of places by
making use of a network of partners. These partners get a comission for every new
customer they deliver the organization. Often the affiliate uses a button, banner or
webpage in order to persuade consumers to buy a product. The difference between
the affiliate model and the advertising model is the fact that the offering organization
doesn’t have to pay for the tools the affiliate uses. They only have to pay the affiliate
for the leads he delivers. …(distribution model)…
Examples: cheapinsurance.com, mortgage.tv

34. (co) creation
models..

35. Mass customization
The mass customization model is a good example of a model that lets
organizations and consumers work together when it comes to product
development. The organization has divided its product in several components
that can be altered by the consumer. The consumer can make combinations
with these components and this way make its one ‘personalized’ product..
…((co) creation model)…
Examples: Nike, Lego
Open source model
The open source model is often used in the software industry. It leads to
important but free software. Software companies develop great free software
that can be used by a lot of customers. After they start using it they often
discover they want some customized solutions. This way the customer
becomes a paid customer. …((co) creation model)…
Examples: OpenOffice, Android

36. User – generated content
User-generated content is a co-creation model that is often designed as a
social network. The organization behind it is facilitating the service. The
product itself emerges by the energy invested by volunteers. The organization
makes money by donations and advertising. And sometimes also by selling a
premium service. …((co) creation model)…
Examples: Wikipedia.org, IMDB.com
Open – business model
Open business models can be used by organizations in order to create value
through sustainable partnerships with other organizations. This can be done
outside-in (ideas from outside the company are exploited inside the
company) or inside-out (ideas from the company are exploited elsewhere).
…((co) creation model)…
Examples: Mercedes & Swatch, Philips & DE

37. user models..

38. Mass effect model
The mass effect model applies to certain products of which the amount of
users determines the success immediately. Because of more and more people
become users the product becomes an industry standard and that’s why
other consumers don’t have an actual choice anymore. (user model)…
Examples: Microsoft Word, Whats app
Community model
The community model is special kind of mass effectmodel. The product /
platform originates from a community of users. The platform often makes
money with advertising or a freemium business model …(user model)…
Examples: Runkeeper, iphoneclub

39. Multi – sided platform
Multi-sided platforms bring together two or more independent customer
groups or segments (often suppliers and consumers). These multi-sided
platform are only interesting for a customer group when the other group is
also using the platform. The platform creates value by facilitating interactions
and transaction between the groups. The value of a multi-sided platform
grows when it attracts more users, after which it will automatically attract a
new group of suppliers. …(user model)…
Examples: Apple appstore, Sony Playstation

40. 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
Unbundled
Insurance
models
model
platform
Long tail
management
model
Sources: Interactieve marketing, Businessmodellen, Business model generation

41. assignment
-look at the business model patterns on the screen
-make an overview of the Google products
-write down which business model patterns Google uses
the most

42. 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
Unbundeled
Insurance
models
model
platform
Long tail
management
model
Sources: Interactieve marketing, Businessmodellen, Business model generation

43. so..
-sometimes it‟s hard to find out the
differences between patterns… -an
organization always uses different patterns
at the same time…
-organizations are constantly changing there
strategy that‟s why they always develop new
patterns

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

46. How do we make
money?..
1. Premium games. Traditional 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 better update (or
ad free).
4. Subscriptions. A monthly or weekly fee. Not very popular, but perhaps after the
success of World of Warcraft this can become reality.
5. Ads. As mentioned above. But it’s also possible to cooperate with an advertiser
so you can make a game together.

47. homework..
Literature/theory/background:
-read BMG page 52 till 194
Work on the assignment!

48. till
next week!