Building Sustainable Business

Empowering New Business

Building Sustainable Business
// About Marketing Strategy & Organization
Lecturer: Marian Dragt

Overview // Business Models
// Strategy // Customer Segments
// Direction, Future and // Value Propositions
Sustainability // Distribution Channels
// Advantage & Environment // Customer Relationships
// Understanding the Business // Partner Network
// Key Activities
// Key Resources
// Revenue Streams
// Cost Structure
// Example Business Model
// Try it yourself!
// References & Contact
Details

“Marketing is
building sustainable
business”
// Business: the objective of marketing is to realise
organisational goals, through the exchange of
‘offerings’ (goods and services) with customers;
// Sustainable: to ensure the survival of the
company as a going-concern, value must be
created for the company as well as for the
customer;
// Building: the results of a company are the result of
the integrated efforts of the whole organisation.
– Moenaert & Robben

“Visionary marketing relates to
the planning and the
implementation of marketing
activities in order to optimise the
company’s current and future
competitiveness”
// Where are you now?
// Where do you want to be?
// How do you get there

It’s all about
Strategy…
// “Strategy is the direction and
scope of an organization over
the long term: which achieves
advantage for the organization
through its configuration of
resources within a changing
environment, to meet the
needs of markets and to fulfill
stakeholder expectations.”
Source: Johnson and Scholes (2002)

Direction
//What’s your ambition and vision?

Long term
//And what about the future?

And what about Sustainability?

Advantage & Environment
//Please look outside…you’re not alone!


Product /
Service
The CODA (Customer’s
Outlook on Differentiating
Advantages)
// What do you offer?
Image // How and where do you offer it?
// What are the costs to the
customer?
Customer
Price // What do you represent?
Process

Source: Robben & Moenaert (2008)


Socio-cultural Technological
Environment Environment
Suppliers
Action Environment
Direct and Indirect

Competitors Company Complementors

Customers
Political Economic
Environment Environment
Source: Robben & Moenaert (2008)

Industrial
structure
// Subsistence economies Economic
// Raw material exporting
economies Environment
// Industrializing economies
// Industrial economies Economic
Income
factors reflect
distribution a country’s
// Low-income households attractiveness
// Middle-income households
// High-income households as a market
©2012 Pearson Education

Political-Legal
Environment
// Country’s attitude toward
international buying
// Government bureaucracy
// Political stability
// Monetary regulations


Your Environment
if you are a Global
Company
// You operate in more than one country
// You gain marketing, production, R&D,
and financial advantages not available to
purely domestic competitors
// You see the world as one market

Why go
Global?
// Global competitors might
attack the home market
// More growth in foreign
markets
// Customers might be
expanding abroad
But…
// Difficult to understand foreign
buyers
// Making products competitive
// Adapting to foreign business
conditions
// International experience of
managers
// International regulations

Questions for Global Companies
// What market position should you try to establish in your own country, in
your economic region, and globally?
// Who will your global competitors be, and what are their strategies and
resources?
// Where should you produce or source your product?
// What strategic alliances should you form with other firms around the
world?

Understanding
the Business
// What do you offer?
// How and where do you offer it?
// What are the costs to the
customer?
// What do you represent?
…How do you
do that?

Business Models
“Stories that explain
how enterprises
work”
// A good business model begins
with an insight into human
motivations and ends in a rich
stream of profits.
Source: Magretta (2002)

Partner Key Activities Value Customer Customer
Network The most Proposition Relationships Segments
The partners and important The bundles of The types of Your group of
suppliers you activities products and relationships you customers with
work with performed to services that entertain with distinct
implement your satisfy your each customer characteristics
business model customer segment
Distribution
segment’s needs
Key Channels
Resources The channels
The key resources through which you
on which your communicate with
business model is your customers
built and offer your
value proposition
Cost structure Revenue streams
The costs you incur to run your business model The streams through which you earn your
revenues from your customers for value creation
and customer facing activities

The Business Model Canvas
// Which story are you telling?
Source: Osterwalder & Pigneur: Business Model Generation (2010)

The Business Model Canvas
// The building blocks

Partner Customer
Network Relationships

Key Value Customer
Resources Proposition Segments

Distribution
Key Activities
Channels

Cost Revenue
structure streams


Customer Segments
// For whom are you creating value?
// Who are your most important customers?
// Who pays?

Customer Segment
Examples
// Mass Market
// Niche Market
// Segmented
// Diversified
// Multi-sided Platform

Customer Segment
Examples
// Mass market

// Niche markets // Diversified

// Segmented // Multi-sided platform

Customer Segment
Questions
// Do you know your customers and
their needs good enough?
// Are some customer groups likely
to defect soon?
// Do you regroup different
customer segments well enough?

Global Market
Segmentation
// Demographics
// Psychographics
// Behavioral characteristics
// Benefits sought

Skiing became a sport in Norway
where it was invented 4,000 years
ago.

Demographic
Segmentation
// Income
// Population
// Age distribution
// Gender
// Education
// Occupation


Communication
is about perception

Global Consumer
Culture
// Culture–ways of living, built up by a
group of human beings, that are
transmitted from one generation to
another
// Culture has both conscious and
unconscious values, ideas, attitudes,
and symbols
// Culture is acted out in social institutions
// Culture is both physical (clothing and
tools) and nonphysical (religion,
attitudes, beliefs, and values)


Cultural
Environment
“The need to adapt
Culture Marketing to local cultural
values and traditions
rather than
imposing their own”

Value Propositions
// What value do you deliver to the customer?
// Which one of your customer’s problems are
you helping to solve?
// What bundles of products and services are
you offering to each Customer Segment?
// Which customer needs are you satisfying?

Value
Proposition
Characteristics
// Newness
// Performance
// Customization
// “Getting the Job Done”
// Design
// Brand/Status
// Price
// Cost Reduction
// Risk Reduction
// Accessibility
// Convenience/Usability

Aesthetics
“Aesthetic elements that are
// The sense of what is beautiful
and what is not beautiful seen as attractive in one
// What represents good taste as country may be viewed
opposed to tastelessness or differently in another.”
even obscenity
// Visual–embodied in the color or
shape of a product, label, or
package
// Styles–various degrees of
complexity, for example, are
perceived differently around
the world

Value Propositions
Questions
// Does your value proposition still cater well
enough to your clients’ needs?
// Do you know how your customers perceive
your value proposition?
// Are your competitors offering similar value
propositions at similar or better prices?
// How well are your customers served by
other competitors?

Distribution Channels
// Through which Channels do your Customer Segments want to be reached?
// How are you reaching them now?
// How are your Channels integrated?
// Which ones work best?
// Which ones are most cost-efficient?
// How are you integrating them with customer routines?

1. Awareness 2. Evaluation
3. Purchase 4. Delivery 5. After sales

// How do you // How do you // How do you // How do you // How do you
raise help allow deliver a provide post-
awareness customers customers to Value purchase
about your evaluate your purchase Proposition to customer
company’s organization’s specific customers? support?
products and Value products and
services? Proposition? services?

Distribution Channel
Phases

Distribution
Channels Questions
// Do you have a well thought-through
communication and distribution channel
design?
// How well do you reach your clients?
// Do you know how successful your channels
are in terms of customer acquisition?
// How well are your different channels
integrated?
// Do you know how cost efficient are your
channels are?
// Do you use the right channels for the right
clients (e.g. in terms of profitability)?

Customer
Relationships
// What type of relationship does
each of your Customer Segments
expect us to establish and
maintain with them?
// Which ones have you
established?
// How are they integrated with the
rest of your business model?
// How costly are they?

Customer
Relationships
Examples
// Personal assistance
// Dedicated Personal Assistance
// Self-Service
// Automated Services
// Communities
// Co-creation

Customer Relationships Questions
// Do you have a customer relationship strategy?
// How good are your relationships with your best customers?
// Do you spend too much time and money in relationships with unprofitable
clients?
// How well are you doing in managing your customer relationships (e.g.
follow-up, etc.)

Partner Network
// Who are your Key Partners?
// Who are your Key Suppliers?
// Which Key Resources are you acquiring from partners?
// Which Key Activities do partners perform?

Partner Network
Motivations
// Optimization and economy
// Reduction of risk and uncertainty
// Acquisition of particular resources
and activities

Partner Network Questions
// Do you use partners enough?
// How well do you work with your existing partners and suppliers?
// How dependent are you on your existing partners and suppliers?

Key Activities
// What Key Activities do your Value
Propositions require?
// Our Distribution Channels?
// Customer Relationships?
// Revenue Streams?

Key Activities
Categories
// Production
// Problem Solving
// Platform/Network

Key Activities Questions
// How efficient are you in performing your activities?
// Do you perform too many activities ourselves, leading to a lack of focus?

Key Resources
// What Key Resources do your Value
Propositions require?
// Our Distribution Channels?
// Customer Relationships?
// Revenue Streams?

Key Resources Types
// Physical
// Intellectual (brand patents, copyrights, data)
// Human
// Financial

International Trade



Restrictions
to trade
// Tariffs
// Quotas
// Exchange controls
// Non-tariff trade barriers


Facilitators of
trade
// WTO and GATT
// Region free trade zones
// EU and NAFTA

Countertrade
// Barter
// Compensation
// Counterpurchase

Key Resources Questions
// Do you dispose of the right key resources in terms of
quality and quantity?
// Do you dispose off too many resources internally,
leading to a lack of focus?

Revenue Streams
// For what value are your customers really
willing to pay?
// For what do they currently pay?
// How are they currently paying?
// How would they prefer to pay?
// How much does each Revenue Stream
contribute to overall revenues?

Revenue
Streams Types
// Asset sale
// Usage fee
// Subscription Fees
// Lending/Renting/Leasing
// Licensing
// Brokerage fees
// Advertising

Revenue Streams Pricing
Fixed pricing
// List Price
// Product feature dependent
// Customer segment dependent
// Volume dependent
Dynamic pricing
// Negotiation (bargaining)
// Yield Management
// Real-time-Market
// Auctions

Revenue Streams
Questions
// How sustainable are your current revenue streams?
// How diversified are your revenue streams?
// Are you dependent on too few revenue sources (e.g.
from some big clients or one single business)?
// How well do you price your value proposition?

Cost Structure
// What are the most important costs inherent in your
business model?
// Which Key Resources are most expensive?
// Which Key Activities are most expensive?

Is your business more:
// Cost Driven (leanest cost structure, low price value
proposition, maximum automation, extensive
outsourcing)
// Value Driven ( focused on value creation, premium
value proposition)

Cost Structure
Characteristics
// Fixed Costs (salaries, rents,
utilities)
// Variable costs
// Economies of scale
// Economies of scope

Cost Structure Questions
// Is your cost structure appropriate (e.g. low cost business model = low cost
structure)?
// Do you clearly understand which parts of your business model have the
highest costs?
// How lean is your cost structure?

Partner Key Value Customer Customer
Network Activities Proposition Relationships Segments

Key Distribution
High-end
Resources Restaurant Channels
quality
espresso at
home


The Business Model Example
// Nespresso


Key Distribution
Resources Channels


// Charles den Tex (writer)


Key Distribution
Resources Channels


// YOU!

References
// Gulati, R. (2009). Reorganize for Resilience. Boston:
Harvard Business School Publishing.
// Johnson, G., & Scholes, K. (2002). Exploring corporate
strategy. Harlow: Financial Times Prentice Hall.
// Moenaert, R., Robben, H., & Gouw, P. (2009). Marketing,
strategy & organization (4th ed.). Leuven:
LannooCampus.
// Osterwalder, A., & Pigneur, Y. (2009). Business Model
Generation. Deventer: Kluwer.
// ©2012 Pearson Education
// http://www.businessmodelgeneration.com
// Image courtesy of FreeDigitalPhotos.net

Contact Details
// Website: www.md2consultancy.com
// Email: mdragt@md2consultancy.com

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