Customer needs Flashcards
Showrooming
Best Buy of USA, with lots of customer comes, but “With a few clicks, users made purchases online and arranged to have items delivered directly to their doorsteps.
“Birchbox came along, it disrupted Sephora using a “subscription box” model.
For a fee, Birchbox sent customers monthly boxes of beauty products to sample. Yet customers didn’t get to decide what went into their boxes—Birchbox did that for them. In this way, Birchbox made it unnecessary for customers to visit Sephora to test makeup, lipstick, perfume, and skincare products—they could now do this in the convenience of their own homes. ”
Ryanair earned money by charging for incidentals. From the minute passengers booked their tickets, the company offered them additional services, levying fees they often found hard to avoid or resist.
Ryanair charged debit and credit card fees for buying tickets, airport fees for checking in, fees for checked bags, and, obviously, fees for “luxuries” like priority boarding.7 Ryanair also acted as a travel agent, selling access to airport parking, airport lounges, bus and train transfers, car rental, hotel bookings, theme park tickets, tours, and activities. It sold financial services, exchanged foreign currencies for its passengers, and sold travel, home, and even life insurance. On board, it offered streaming movies and TV shows, access to online bingo, and tickets for theater, concerts, and sports events. Passengers could also buy watches, Bluetooth headsets, pocket lights, and so on.”
A business model
Specifies how the firm creates value (and for whom), and how it captures value (and from whom).
“Founded in 2012, Trov has been trying to disrupt the insurance industry with its mobile app
Allows users to insure single products for a specific amount of time.*6 No longer do users need to sign a yearly contract covering all of their possessions, as traditional insurance companies required.”
Technology, as Jim Collins put it more than a decade and a half ago in his bestselling book Good to Great, “is an accelerator, never a creator of momentum and growth.
After researching twenty-eight very successful companies, he concluded that technology “is not by itself the primary source of greatness or decline.
Customer value chain
Your customer’s value chain consists of all the activities they do to satisfy their needs and wants
Decoupling helps entrepreneurs
to hone in on one activity in the customer value chain that is currently being poorly delivered by the leading companies in the market.
Startups do one of three things by decoupling:
- Add value to value-creating activities (i.e., manage pill intake).
- Reduce value-charging activities (i.e., pay insurance only for the days you need it).
- Eliminate value-eroding activities (i.e., no need to visit a store to sample beauty products)
3 great waves of Business Model Innovation
Phase 1 — Unbundling: The separation of products and services from one giant bundle to a single offering. Customers get to buy only those products and services that they wanted
Phase 2 — Disintermediation
This phase resulted in the elimination of middle men as as Companies could reach out to their customers directly.
Phase 3 — Decoupling: identify the activities that customers perform while buying a product or a service. Once identified, these Startups kept some of these activities for themselves while allowing incumbents to retain those activities that were difficult to replicate or had a high cost to setup.
