Unit 11.10 Flashcards
Economic Model (Revenue Model)
How the firm captures value
Common Revenue Models
- Retail
- Transaction
- Rental/Lease
- Usage (Utility bill)
- Advertising and Sponsorships
Industries that have traditionally relied on retail, rental, usage, and licensing models, have started to trend towards using
subscription and membership models
One of the fastest growing business model categories is…
data driven business models
Data driven business models-
a firm that would not be able to exist without its core underlying data asset
What happens in a data driven business model?
data is collected and sold directly to a consumer or business customer (facebook, linkdin)
Freemium business strategy
- Service or base product is provided free to the consumer
Ecommerce
Using home computers to market to consumers directly in a low cost method
Types of Ecommerce
- Sharing economy (Airbnb)
- Aggregators (amazon)
- Virtual goods (Zynga)
- In-App Purchases
- Longtailed product assortments (Netflix)
The long tail
no physical limit to the number of items that can be carried
The long tail has lead to a business model that…
has allowed companies to realize significant profits by selling low volumes of hard to find items to customers.
The underlying assumption of the long tail approach is that…
the overall demand for less popular goods as a whole can rival the demand for the more popular mainstream goods
Economic Model 2 components:
- Expenses
- Revenue
Cost structure
the most important cost inherent in the business model
- Determine most significant cost drivers and how the costs behave (fixed, variable or combination)
Cost leadership strategy ->
Lean cost structure
