week 3 - digital business models and advertising Flashcards
what is a business model?
a description of an org and how it functions in achieving its goals.
what are the interpretations of a business model?
an observable attribute of a real firm, a mental framework that helps individuals interpret info based on prior knowledge held by managers, describes the activities of a firm.
what is an example of a simple business model?
producing a good or service and selling it directly to customers, if sales revenue exceeds costs, the company has a profit.
what is an example of a complex business model?
distribution of revenue is not straightforward, media broadcasting (broadcaster is part of a network of distributors, advertisers, viewers and content creators.
what is value creation?
how to create and capture value, supply side and demand side, value can be created not only by producers but by customers + other members of value creation ecosystems.
what are the different types of value capture common revenue models and what are they?
sales model: revenue from sales of goods and services.
transaction fees model: commissions paid on volume of transactions.
subscription model: fixed amounts are charged, usually monthly.
advertisement model: payments from ads.
affiliate model: commission for referring customers.
what does it mean by new digital business models being disruptive?
disruptive models force established companies who have a large leadership role in the industry to rethink their business models.
what is the business model canvas?
tool allowing businesses to design, describe, challenge, invent and pivot their business model.
what does the business model canvas allow businesses to do?
it allows businesses to visualise + communicate a story of an existing model, design new models and juggle between “explore” and “exploit” business models.
what are the categories of a business model canvas and what do they mean?
key partnerships: who can help you leverage your business model since not owning all key resources ourselves or performing all key activities.
key activities: which things really needed to be able to perform well.
key resources: infrastructure to create, deliver and capture value, which assets are indispensable.
value propositions: products and services that create value for the customers
customer relationships: the type of relationship you’re establishing with your customers.
channels: which touch points you’re interacting with customers and delivering value.
customer segments: the people or orgs for which you are creating value, including paying customers.
cost structure: this is once you know the business’ infrastructure will you know this.
revenue streams: how and which price mechanisms your business is capturing value.
what does it mean when we classify business models and what are examples of classifications?
it is an attempt to look for common patterns or put them into different categories such as brokerage, referral, subscription, rental and freemium.
what is the brokerage business model category?
brokers are market makers and act as a middleman, they bring buyers and sellers together and facilitate transactions, usually charging a fee or commissions for each transaction it enables.
it has many forms: b2b e-marketplaces, online auctions, price comparison websites, travel booking websites, third party payment mechanisms for buyers to settle a transaction (paypal).
what are online auction sites?
they match sellers and buyers through bidding processes, auction brokers may charge listing fees and commission scaled with the value of the transaction.
what are forward auctions?
sellers place items for auction and buyers bid for the items, going to the highest bidder.
what are reverse auctions?
they have 1 buyer, usually an org, that wants to buy a product/service, suppliers are invited to submit bids.
what do auctions need in order to work online?
they need proxy bidding, bidder states a max bid for an items and places new bids without actually being in front of their computer.
what is a direct business model?
a company that produces a product or service reaching consumers directly and thereby compressing the distribution channel.
what is the content provider business model?
provides digital content (news service), advertising provides revenue, customer can be charged a periodic fee to subscribe to a service (premium).
what is the social media business model?
members upload and share content and may comment on each others entries, the value is in its users, the content they create, the time they spend on the platform not the software, creates opportunities for target advertising.
what are business models with freemium pricing models?
a product/service is provided free of charge to a large number of users but a premium is charged for advanced features (skype, dropbox).
what are multi sided platforms?
technologies, products or services that create value by enabling interactions between two or more customer or ppt groups, most successful businesses have this trait.
what is an example of a multi-sided platform?
sharing economy platforms (uber, airbnb), enables interactions between those willing to share an asset and those who want to make use of it.
what are the properties of multi-sided platforms?
- creates value by reducing search and/or transaction costs for ppts or even development costs.
- economies of scale
- cross side (indirect) network effects: value to ppts on one side increases with numbers on other side.
- high barriers to entry.
- high switching costs or high costs to belong to more than one competing network.
what are the challenges of multi-sided platforms?
More sides could mean greater cross-side network effects, larger scale and potentially diversified sources of revenues but there could be greater conflicts of interests and difficulty in the ability to bring in innovative features.
Decide on pricing structure: different prices for different sides depending on price sensitivity or value created.
Governance: whether/how to regulate third party actions, who can join and what are they allowed to do?
