Midterm Flashcards
What is the definition of a business model
A business model describes the rationale of how an organization creates, delivers and captures value
- a story that explains how an enterprise works
What is the impact of a business model
It is a design of a blueprint that makes work easier
-your strategy and way of operating
How do you deliver value
Through a value network and community of partners, suppliers and such
How do you create value
By differentiating yourself from competitors and by meeting an unserved need in the market
How do you capture value
By monetizing/ converting your offerings and ensuring your revenue streams can support your cost structure
Why is it important to understand your business model
Because it provides and visual and tangible way to understand your company’s benefits that you offer and how they fit with the customer characteristics that you aim for
What are the 4 reasons why business models fail
1) flawed logic
2) limited market/ strategic choices
3) incorrect assumptions about value chain
4) imperfect value creation and capture assumptions
What does flawed logic mean
When assumptions about the environment are not correct, you end up facing challenges in executing the business model
What does limited market or strategic choices mean
When a business model does not address both creating value and capturing value
Ex. Disruptive technology can have a lot of value but has a hard time capturing value because their is no market who needs the value
What does incorrect assumptions about the value chain mean
Entrepreneurs often think the value chain is static- which means they think nothing will change
What does imperfect value creation and capture assumptions mean
If a business model has a weak/ non existent value it will not be able to capture value/ make money
What are the 2 main types of business model patterns
Multi sided and freemium
What is a multi sided platform
Value is created by facilitating interactions between 2 distinct but interdependent groups of customers
- network effect- value created as more users join
- ex. Social media, visa, Uber
What is a free business model pattern and what 3 types are there?
At least one substantial customer segment is able to continuously benefit from a free of charge service, financed by another part of the model or another customer segment
1) freemium
2) advertising
3) bait and hook
4) others
What is a freemium
Someone getting something for free but would have to upgrade at a cost
What is a bait and hook
Offering an initial purchase at a cheaper price but making future required purchases more expensive
What is advertising mean in the free business model pattern
Social media users for free but paid through advertising companies
What other business model patterns are there
Memberships and crowdsourcing
What are the differences between a social BMC and normal BMC
Surplus in revenues
Your solution
People instead of customer Relationships (stakeholders, beneficiaries, customers)
What is a problem- solution fit
A solution that solves/ addresses a problem- how you create value
- from customer Segments to value proposition
- creates value
What are the 4 steps in the business model process
1) understand contexts and resulting implications- pull from research
2) gain customer insights- talk to them
3) prototype different canvases
4) tell the story
What is the value proposition statement
For (target customer) who (need/ opportunity). The (product) is a/an (product category) that (statement of benefits), unlike (competitors)
Definition of marketing
An integrated system of activities designed to plan, price, promote and distribute, want- satisfying goods to present and potential customers
- works internally with finance, Human Resources and operations
What are the 2 keys to successful marketing
1) provide a unique benefit- something the customer wants or needs- a solution that fits with a problem
2) convince the customer that you provide a unique benefit through consistent product, pricing, promotion and place
What is a target market and what are the 2 steps to determine it
A group who has wants or needs that have not been met who you wish to direct your product toward
1) market segmentation
2) market selection: perceptual mapping and preference analysis
What are the 4 groups that you divide your market segmentation
1) state of being
2) state of mind
3) product usage
4) benefits sought
What is the benefits sought of market segmentation
Identifying the pains, gains, price, design and ways to differentiate
What is the state of being of market segmentation
Demographics and geographic
What is the state of mind of market segmentation
Psychographics- how do they think? Lifestyles? Values?
What is the product usage of market segmentation
How much do they actually use the product, behaviours with the product
What is perceptual mapping and how do you do it
Are their needs being met by competition
- place the competition names on the axes
What is preference analysis and how do you do it
What they really want
You put the Segments on the axes
When you put both the perceptual map and preference analysis together what do you do
Draw lines from competitors to segments and choose your target market based on the longest line
What are the 5 other factors to consider when choosing a position in the market
Ability to design and conceive Ability to finance Ability to manage and execute Ability to produce Ability to market Your competitors reaction
What does positioning mean
Finding a distinct position for your product in your customers mind, be able to communicate your unique benefit and position on mind (perceptual) as close to your ideal (preference)
What are the 2 approaches to positioning and what do they mean
Consumer approach: put your product in their mind on what currently matters to that customer through communication
Competitive approach; position yourself in your targets mind and compare the benefits you provide vs others (perception)