Professional Documents
Culture Documents
8
Two Problems
O.B. Winters
14
Value
Proposition
Revenue Business
Model Model
Value
Proposition
Revenue Business
Model Model
Value
Proposition
Revenue Business
Model Model
Value
Proposition
Revenue Business
Model Model
Mind the Difference .
Revenue Business
Model Model
App Monetization
Mobile is a big deal, but that doesnt mean it
will magically lead to a big deal for you. You
need to build a sustainable mobile business,
not just a one-hit wonder.
Think about this statistic: 2% of app
developers claim about 54% of all app
revenues. So, how do you join that alluring
2%? Have a well-thought out plan to profit
from your app. And hash this out before your
app launches.
Approach mobile app business model with
the dual mindset of building an awesome
app and an eventual business
Answer the Followings
What problem is your app trying to solve and how would
you do that (in the best way possible) ?
What is unique about your app and would people pay for
this?
What else do you think your app users would be willing to
pay for?
What business models do competing apps use and how
well have they worked?
A Good Place to Start
Business Modeling
From an economics perspective, a large number of successful
business models these days are built on two-sided networks
and even multi-sided networks.
Number Type
Customer
Analysis
Customer
Value
Base
Drivers
Products
#1 Cross-promotion
#3 Do some PR
Question No. 5
Will you be able to pay for third-party API calls utilized in your app?
If not, what may have been initially a great service, will fail due to poor
customer experience or you may run out of money.
The downside is that by the time you do it, others will probably be trying to do
it too, so there will be more competition.
You dont just need a better app, you also need better execution, i.e. a
better business model and marketing, in order to topple the leader.
On the other hand,
a new, innovative
idea can take you a
long way before the
competition catches
up (although never
at a safe distance)
but it is more
difficult to create a
niche and then
expand it.
In the app economy innovation is not
limited to technology but extends to
business models, strategies and business
functions too.
END OF PART I
BUSINESS MODELING
BUSINESS MODEL CANVAS
Why do I (Technologist) need (to waste time
developing) a business model?
Because technologists think like technologists
TECHNICAL SENSE =
COMMON SENSE
Common Sense =
Value
Opportunities
Segmentation
Capabilities
and Market- /Segment
Match
Driven
Strategy Targets
Positioning
Strategy
Illustrative Segmentation Variables
Consumer Industrial/
Markets Organizational
Markets
Characteristics Age, gender, income, Type of industry , size, geographic
of people/ family size, lifecycle stage, location, corporate culture, stage of
organizations geographic development, producer/
location, lifestyle intermediary
Use situation
Occasion, importance of purchase, Application, Purchasing procedure
prior experience with (new task, modified
product, user status rebuy, straight rebuy
Response
Actionable
Differences
Segmentation Customer
Requirements Segment
Stability over
Favorable
time
Are you serving ??
Mass market
one large group of customers with broadly similar needs and problems.
Niche market
Business models targeting niche markets cater to specific, specialized Customer Segments.
Multi- Segmented
Market segments with slightly different needs and problems
Segments have similar but varying needs and problems.
Diversified (unrelated)
Two unrelated Customer Segments with very different needs and problems. For example, in 2006 Amazon.com
decided to diversify its retail business by selling cloud computing services: online storage space and on-demand
server usage.
Thus it started catering to a totally different Customer SegmentWeb companieswith a totally different Value
Proposition
Multi-sided platforms (or multi-sided markets)
Two or more interdependent Customer Segments. A credit card company, for example, needs a large base of credit
card holders and a large base of merchants who accept those credit cards.
What value do we deliver to the customer?
Which one of our customers problems are we helping to solve? Which customer needs are we satisfying?
What bundles of products and services are we offering to each Customer Segment?
Value Propositions
The Value Proposition is the reason why customers turn
to one company over another.
It solves a customer problem or satisfies a customer
need.
Value Proposition is an aggregation, or bundle, of
benefits that a company offers customers.
A Value Proposition creates value for a
Customer Segment through a distinct mix of
elements catering to that segments needs.
Sohan B. Khatri
Feature Advantage Benefit
Wrinkle-free No need for ironing Saves time, energy and
electricity
Attached water bottle Can hold a water bottle Dont have to stop for drinking
holder water, hence time saved
Sohan B. Khatri
Through which Channels do our Customer Segments want to be reached?
How are we reaching them now?
How are our Channels integrated? Which ones work best?
Which ones are most cost-efficient? How are we integrating them with customer routines?
.
Finding the right mix of Channels to satisfy how customers want to
be reached is crucial in bringing a Value Proposition to market.
Own Channels, through partner Channels, or through a mix of
both.
Partner Channels lead to lower margins, but they allow an
organization to expand its reach and benefit from partner
strengths.
Owned Channels and particularly direct ones have higher margins,
but can be costly to put in place and to operate.
The trick is to find the right balance between the different types of
Channels, to integrate them in a way to create a great customer
experience, and to maximize revenues.
What type of relationship does each of our Customer
Segments 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?
Can be driven by following motivations
Customer acquisition
Customer retention
Boosting sales (upselling)
Style Structure
Shared
Values
Skills Strategy
Staffs
Who are our Key Partners? Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
Modes of Partnerships
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between
competitors
3. Joint ventures to develop new businesses
4. Buyer-supplier relationships to assure reliable
supplies
Motivations for Partnerships
Optimization and economy of scale
usually formed to reduce costs, and often involve outsourcing or sharing infrastructure..
Reduction of risk and uncertainty
Blu-ray, for example, is an optical disc format jointly developed by a group of the worlds leading
consumer electronics, personal computer, and media manufacturers. The group cooperated to
bring Blu-ray technology to market, yet individual members compete in selling their own Blu-ray
products.
Acquisition of particular resources and activities
Some extend their own capabilities by relying on other firms to furnish particular resources or
perform certain activities. Such partnerships can be motivated by needs to acquire knowledge,
licenses, or access to customers. A mobile phone manufacturer, for example, may license an
operating system for its handsets rather than developing one in-house. An insurer may choose
to rely on independent brokers to sell its policies rather than develop its own sales force.
What are the most important costs inherent in our
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Two Models
Naturally enough, costs should be minimized in every
business model. But low Cost Structures are more
important to some business models than to others.
Therefore it can be useful to distinguish between two
broad classes of business model Cost Structures: cost-
driven and value-driven (many business models fall in
between these two extremes)
Cost Driven Business Model
Cost-driven business models focus on minimizing
costs wherever possible.
Initiator The person who first suggests or thinks of the idea of buying a particular product or service
Decider The individual with the power and/or financial authority to make the ultimate choice regarding
which product to buy
User The person (or persons) who actually uses the product or service
Sohan B. Khatri
Buyer Decision-making Process
Problem Recognition [Awareness of Need]
Desired State Actual State
Information Search
Internal Search External Search
Evaluation of Alternatives
Criteria for Evaluation Rank Alternatives or Resume Search
Purchase Decision
Choosing Alternative Product Features
Actual Purchase
Time , Access and Reference
Information Search
Impress consumers intensely Be present in all sources of information
Evaluation of Alternatives
Help consumers with information Influence by framing alternatives
Purchase Decision
Communicate Product Features Design easy process
Actual Purchase
Design moment of truth
Transformative business
model innovations affect multiple building
blocks.
Epicenters of Business Model Innovation
1. Resource-driven
Resource-driven innovations originate from an
organizations existing infrastructure or partnerships to
expand or transform the business model.
Strategic alliance
Partnerships
Joint Ventures
Diversification (horizontal / vertical)
Design Innovation
Bring to Improve
Satisfy Market
Market Market
Create
Be Reactive Be Adaptive
Market
Be Pro-active/
Be Expansive
Explorative
Note the followings carefully
Critical Success Factors
Key Performance Indicators
Metrics and Measurements to be used
Feedback Loop
Incremental Improvements
Total Quality Management
APP MARKETING STRATEGIES
7Ps of Marketing
In a market that is estimated to be worth $ 25
billion by 2015, discoverability is the key and this is
reliant on a clear app marketing strategy and
timely execution.
Study Consumer Behavior Patterns
Some prescriptions
Identify Your Target Persona First
Consider Pricing Carefully
Cast a Wide Net With Your Elevator Pitch
Continuously Promote Retention
Dont Overlook the International Market