Business Model Patterns Flashcards
Affiliation (3 bullets)
Your success is my success
● Support other parties to benefit from successful transactions
● Pay-per-sale or pay-per-display (e.g. buy from amazon.com after a book recommendation of your YouTube channel)
● You need a strong ecosystem and passionate customers to apply this pattern
Crowdfunding (5 bullets)
Taking finance by swarm (public finances your project)
● Mostly more about helping than maximizing your return
● Can be applied by companies and individuals
● Access to crucial zero-interest financial resources
● Investors in a crowdfunding project usually receive better rewards, the higher the amount of money they contribute.
● People behind a crowdfunding campaign normally only get the raised money if a specific critical mass is achieved.
Crowdsourcing (8 bullets)
Exploiting swarm intelligence
● Specific tasks are outsourced to external actors (experts)
● Allows for more innovation & knowledge sources
● Possibility to learn about new customer needs
● Crowdsourcing innovation competitions -> winning idea gets financed and put
into practice
● McDonalds -> create your own burger; Airbnb add videos
● The customer interaction and inclusion through a crowdsourcing can potentially
foster a positive relationship between a company and the customers
● Contributors that participate in a crowdsourcing often receive some kind of
reward, but sometimes no reward is offered at all and it is made possible solely
by the participant’s personal interest in the topic.
● Wikipedia (everyone can write) vs. Britannica (only a few trusted experts)
Digitisation (4 bullets)
Digitising physical products into a digital variant
● E.g. online versions of print magazines
● It can also create entirely new products
● Alternative payment options, advertising
● Some dark sides: copyright, digital rights management, pirating
E-Commerce (8 bullets)
Online business for transparency and savings
● Buying / selling products electronically (incl. Customer support and service)
● Goods are always available and easily accessible
● Improving cost efficiency and reducing transaction costs
● More transparency -> reviews (cannot completely solve the problem that
customers cannot directly test or evaluate the products)
● Amazon (42-50% market share of total E-commerce in USA/EU)
● One of the biggest advantages of the BMP is the increased reach with minimal
additional costs.
● The BMP allows companies to have a bigger offering of products because the
customers can search and filter the products more efficiently.
● Disintermediation: Producer can
directly sell / ship products to the
customer (and not first to the
wholesaler and retailer) and has a
direct customer link, challenge
for him = end consumer-marketing
and distribution, however, you
Freemium (7 bullets)
Choosing between free basic and paid premium versions
● Free basic = large initial customer base -> high chance that some change to
premium (conversion rate = ration of paying to non-paying customers)
● Framing of paying options is important (usually the middle one is the one they
want you to choose)
● marginal production cost = 0 (only possible in a online setting!)
● Cross-subsiding pf free customer by premium customers
● E.g. Hotmail (Outlook) free basic email account -> pay for additional storage,
Spotify, or YouTube premium, or in-app purchases
● Pattern is popular among internet-based businesses with marginal production
costs (close to 0) and the benefit of external network effects
● Good to test user acceptance of new software releases or BM
Hidden Revenue (7 bullets)
Seeking alternative sources
● Primary source of revenue is not sales of product or services but comes from a
third party, who cross-finances the attractive free or low-priced offerings made to
customers
● Ads! Ad-based funding
● JCDecaux offers advertising systems at bus stops, public toilets, etc.
● Free daily newspapers (entirely funded through advertising)
● “Targeted Advertising” -> used very often by social media
● Hidden revenue is still hard to assess today -> does not mean expanding the
firm’s portfolio
● Still very popular in advertising and customer data trading
Leverage Customer Data (7 bullets)
Making use of what you know
● “data is the new oil” -> profiling
● Companies that acquire and analyse data are thriving -> achieve competitive
advantage
● Big Data and AI
● Amazon: data used to analyse and cultivate customer relationships
● PatientsLikeMe: valuable information provided to researchers, medical
companies and device manufacturers.
● General privacy concerns and regulations hinder full potential
● The BMP “Leverage Customer Data” is not about selling the data but using it as
an aid for decision making to gain a competitive advantage. It can, however, be
combined with the BMP “Hidden Revenues” by using customer data to create
customer profiles that allow to show them targeted ads
Long Tail (7 bullets)
14
Little and often fills the purse
● Sell a small quantity of a very large range of products -> in contrast to
BLOCKBUSTER
● Disregards the classic 80/20 rule
● Enables to sell niche products -> customer has a lot of choice
● Distribution costs need be handled efficiently
● Storage of physical products can be a problem
● Amazon and eBay (or Netflix) -> sellers of niche products
● While a company can apply “Long Tail” and still offer mass products, mass
products are no longer the sole focus. Moreover, niche products should then
account for a large share of the revenue.
Open Source (3 bullets)
Working together to create a free solution
● Public community (and not a firm) develops a product
● Development does not come with supplier dependencies
● Not just in the software industry anymore –> Wikipedia
Peer to peer (5 bullets)
Dealing from person to person
● High value of the social network aspects of Peer to Peer models
● eBay: offers the possibility for transactions between people from all over the
world
● Uber: connects passengers & drivers
● AirBnB: offers hosts a platform to rent their private apartments
● Peer-to-Peer is most efficient in online communities
Subscription (5 bullets)
Taking a season ticket to services
● Customer needs to perceive the benefits and never feel like he has been tricked
● Pro: you don’t need to bother buying stuff regularly -> convenient
● Easier to forecast due to recurring revenue
● Pattern is ideal when customers need your product on a regular basis
● Subscription should always offer some additional value
Two-sided Market (2 bullets)
Attracting indirect network effects
● Facilitate interaction between two complementary groups for mutual benefit
● The more people from one group use the platform, the more attractive it
becomes for the other. = indirect network effects
User Design (4 bullets)
The customer as inventive entrepreneur
● Customers act as both designers and consumers
● Typically a company / online platform help customers to produce a product /
increase creativity and receive a fixed fee for future sales.
● E.g. Ponoko (online jewellery store)
● User Design is promising in industries with comparatively simple produts
