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lecture two- business models.doc

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Wilfrid Laurier University
Roopa Reddy

Business Models Monday, January 14, 2013 1:01 PM GEL Factor Analysis GREAT Characteristics Number High CUSTOMERS Ease of Finding Easy Spending Patterns Prolific Value to You $ Value of Sale High Repeat Sales Many Ongoing Sales Support Low EASY SALES Value to Customer How Important Important Competitive Advantage High Price/Value Relationship Low - Perception of price relative to value from product Customer Entry Points Many Acquisition Cost - (how many different ways to sell/purchase product) Sales Support Required Little Promotional Activities Low LONG LIFE Profit per Sale Margins High ‒ Price vs. Costs Up-Selling and Cross-Selling Much ‒ Up your purchase (combo etc.) and complementary products that could be sold Low Ongoing Product Costs Investment To Enter Business Low Required To Keep Market Share Low To Stay on the Cutting Edge Low What is a Business Model? •"a business model describes the rationale of how an organization creates, delivers, and captures value" ‒ How company intends to make money ‒ How idea actually becomes a business that makes money Different companies can have similar offerings buy different business models • •Model affects strategy/ways of operating •Ex. consumer reports vs. time magazines ‒ subscription based vs. advertising based ‒ Focus on content that readers are willing to pay for vs. content to attract readers advertisers want to sell to Ex. movie theatres -> sell tickets at cost, profits from refreshments ('up sell') • The Business Model Generation Customer Which customers and users are you serving? Mass market Segments Which jobs do they really want to get done? Niche market Segmented Diversified multisided Value What are you offering them? Newness Propositio What is getting done for them? Do they care? Performance ns Customization "getting the job done" Design Brand/status Price/cost red
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