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Business Planning - day 2 cont'd.docx

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Roopa Reddy

Business Models – Week 2 GEL - G-Great Customers o Characteristics of that customer  Number of customers – you want a lot  Ease of finding  Spending pattern – you don’t want them to be cheap, understand spending patterns (young mothers are good targets) o The Value that the customer brings you  High dollar value of sale – you want a higher value  Repeat sales – you want to build and relationship and loyalty with your customers  Ongoing sales support – cuts into costs sometimes - E – Easy Slides o Value to the customer  How important is your product to your customers  Competitive advantage  Price/Value Relationship – when customers buy your product they should feel the price is low for what they are getting – relative to the benefit that they are perceived to get o Customer acquisitions costs – time resources you are using to make the potential customer your customer  Entry Points – have many entry points –being able to get your product in many different ways  Sales Support Required – little  Promotional Activities – little – it is very expensive but you want to try to keep it low - L – Long Life o Profit per sale  Margins – the difference between the price you sell your product and how much it cost you to make the product – profit basically  Up-Selling and Cross-Selling – e.g. fast food, retail stores, banks, movies  Up-Selling – when you try to get someone to buy the bigger more expensive product  Cross-selling – when they try to sell you another product to go with your other product e.g. you go buy a washer and they sell you a dryer to match  Ongoing Product Costs – you want low o Investment Required – how much money you need up front, how much to stay ahead of others, etc.  To enter business  To keep market share  To stay on the cutting edge There will be a few of these that will be flags of worry – but there are a few that you truly need to be successful Must have winners - Customer – ease of finding - Values to customer – Price – Value Relationship -> relative to what they get for how much they pay - Profit per sale – margins Must not be large concern - Customers – spending patterns - Customer value to company – ongoing sales support - Investment required – to keep market share - Winners vs. concerns **winners need to outnumber concerns by three to one in order to proceed What is a business model? – how a company intends to make money and how your business actually makes money - Business Model Generation – Book * related to throughout the course 9 Building Blocks: - Customer Segments (Who are you serving? & What are your customers looking for from your product?) o Mass markets o Nich
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