S Business models midterm Flashcards
Customer Segment
The heart of the business model. The groups of people an enterprise aims to reach and serve.
Answer the questions: For whom are we creating value?
Who are our more important customers?
Value proposition
The bundle of services and products that creates value for a specific customer segment. The reason why customer choose one company over another.
Answer the questions: What value do we deliver to the customers?
Which one of our customer’s problem are we helping to solve?
Which customer need are we satisfying?
What bundle of product and services are we offering to each customer segment?
Channels
Describes how a company communicates with and reaches its customer segments to deliver a value proposition.
It’s all about communication, distribution and sales.
Channel phases: awareness, evaluation, purchase, delivery, after sales (post-purchase support).
Answer the questions: Through which channels do our customer segment want to be reached?
How are we reaching them now?
How are our channels integrated?
Which one work best and is more cost efficient?
How are we integrating them with customer routines?
Customer Relationship
The types of relationship a company establishes with specific customer segments.
Driven by following motivations:
Customer acquisition
Customer retention
Boosting sales
Answer the questions:
What type of relationship does each customer segment expect us to establish and maintain with them?
Which ones have we established?
How costly are they?
How are they integrated with the rest of our business model?
Revenue streams
The cash a company generates from each customer segment.
Transaction revenues from one-time payments.
Recurring revenues from ongoing payments to either deliver a value proposition to customers or provide post-purchase customer support.
Key Resources
The most important assets required to make the business model work.
Key resources can be owned or leased by the company or acquired from key partners.
Can be categorised: physical, intellectual (brand, algorithm, recipe etc), human and/ or financial.
Key activities
The most important things a company must do to make its business model work.
Can be categorised: production, problem solving, platform/ network.
Key partners
The network of suppliers and partners that makes the business model work.
Four types of partnership:
Strategic alliances between non-competitors (ex Star Alliance), Coopetition; between competitors, joint ventures to develop new businesses, Buyer-supplier relationship to assure reliable supplies.
Answer the questions:
Who are our key partners?
Who are our key suppliers?
Which key resources are we acquiring from partners and what key activities do they perform?
Cost structure
The most important costs incurred while operating under a particular business model.
Creating and delivering value, maintaining customer relationships and generating revenue all incur costs.
Blue ocean strategy
A method for questioning value proposition and exploring new customer segments.
“A market for a product where there is no or very limited competition”
To capture the non-user or underusers 4 key questions:
Which of the factors that the industry takes for granted should be eliminated?
Which factors should be reduced well below industry standard?
Which factor should be raised well above industry standard?
Which factors should be created that the industry has never offered?
Red vs Blue strategy
Red: compete in existing market. Beat the competition. Exploit the existing demand. Make the value/ cost trade-off. Differentiation or low cost.
Blue: Create uncontested market space. Make the competition irrelevant. Create and capture new demand. Break the value/ cost trade-off. Differentiation and low cost.
Interaction cost
The money and time that are expended whenever people and companies exchange goods, services and ideas.
When interaction costs of performing an activity internally are lower than the costs of performing externally, a company will tend to incorporate that activity into its own organisation. The opposite is also true.
Change in interaction costs can cause entire industries to reorganise rapidly and dramatically its business model.
Three different core business types
Customer relationship business
Product innovation business
Infrastructure business
Unbundling these three types is preferable. It creates space for new business model development.
