6. Business Models

Question 1

Defintion: Business Model

Answer 1

abstract description of a business

Question 2

A business model consists of…? (3)

Answer 2

1. value proposition
2. value creation architecture
3. revenue model

Question 3

Definition: Value Proposition

Answer 3

description of what the benefit can be for customers or other partners by association with the respective business

Question 4

Definition: value creation architecture

Answer 4

= contains a description of the different stages of value creation (how the benefit can be generated for the customers)

Question 5

Two-tier determination of revenue

Answer 5

Revenue Model (determination of revenue sources) vs. Pricing Model (determination of pricing schema)

Question 6

Types of revenue

Answer 6

1. Volume based transactions (books, ring-tone downloads) & times based (calls)
2. One-time (installation fees) & recurring (subscriptions)
3. Reverse revenue streams – supplier specific (advertising, revenue participation)
4. Reverse revenue streams (advertising, listing fee)

Question 7

Pricing Target Decision

Answer 7

long-term maximization of skimmed consumer surplus

Question 8

M-Commerce Commonalities with E-Commerce

Answer 8

Network effects imply penetration strategy in order to build an installed base

• • High price transparency
• • little space for pricing decisions
• -Differences in Willingness-to-Pay encourage differential pricing
• -Low transaction costs facilitated flexible price adjustment & variable price mechanisms

Question 9

M-Commerce Differences to E-Commerce

Answer 9

Cooperation of equipment/terminal manufacturers & operators allow new revenue models

• • Very low WTP for internet services, higher for mobile services
• • Mobility, availability, localization & identification allow new forms of product & price differentiation
• • Services may be offered just-in-time on mobile phone
• • variable pricing mechanism

Question 10

Differential Pricing (def., requirements, precondition)

Answer 10

Offering same product to different consumer segments at different prices.

• • REQUIREMENT: Segmentation & different WTP among segments
• • PRECONDITION: different WTP segments, no arbitrage possible (personalization of product), no stock-keeping possible, legality (problem of self-selection)

Question 11

Classical Business Model 1 (CBM1)

Answer 11

Operator provides communication services & possibly contents to the customer – Possibly operator manufactures these contents himself but it’s not his core competence

Question 12

Classical Business Model 2 (CBM2)

Answer 12

Operator purchases content & passes it on customer, Content provision in not core competence of network operator

Question 13

New Business Models for Mobile Network Operators

Answer 13

disintegration of existing provider constellations through revenue-sharing & sponsoring – instead of charging the customer, the service provider contacts the customer and offers free access

Question 14

Classical BM vs. New BM

Answer 14

CLASSICAL:
direct revenue model (transaction-based, flatrate), pricing based on differential pricing model
—
NEW:
indirect revenue model (revenue via ads not through customer), static pricing for advertising party