RammohanPallav Barah

Burn your Business Plan

No Business Plan Survives First Contact With A Customer

Business Model

Describes the rational of how an organization creates, delivers and captures value

Value PropositionWhat Are You Building and For Who?

Value Proposition It’s about solving a need or a problem Distinct mix of elements catering to the segments need Type of Value Prop (non-exhaustive list)

Newness – Cell phones Performance – Mostly Technology “Getting the job done” – Airlines pays Rolls-Royce fee for

every hour engine runs Design – Mostly Fashion & consumer electronics Brand – Rolex watch Price – Southwest , Deccan, Nano Cost reduction – SalesForce – CRM app Risk reduction – Used cars buyers receives 1-year guarantee Accessibility – Mutual funds , NetJets(rental private jets,

fractional ownership) Convenience/Usability – iPod, iTunes

Customer SegmentsWho Are They?Why Would They Buy?

Customer SegmentsWho are they

Demography Age etc.,

Types of Segment Mass Market – Consumer electronics Niche market – Supplier/Buyer relationship Segmented – Retail Arm of Credit Suisse for

assets <100k USD, and >500K USD Diversified – Amazon retail diversification

w/cloud Multi-Sided – Media companies, Credit Card

companies

ChannelsHow does your deliver your product to your Customers?

ChannelsWebMobilePhysical

Customer RelationshipsHow do you Get, Keep and Grow Customers?

Customer Relationships

Customer relationshipPersonal assistance - POS, call

centerDedicated – Relationship managerSelf-Service – ATMAutomated Services – Online profileCommunities – Sears social Co-creation – Amazon encourages

reviews

Revenue StreamsHow do you Make Money?

Revenue StreamsHow do you make money from

each customer segmentSome Revenue Streams (non-

exhaustive) Subscription fee – World of Warcraft Leasing / renting – Zipcar (rent cars by

hour) Licensing – Netflix Brokerage fee – Credit card providers Usage fee – Telecom operators

Fixed Menu Pricing vs Dynamic Pricing

Key ResourcesWhat are your most important Assets required to make the business model work?

Key ResourcesPhysicalIntellectualHumanFinancial

Key PartnersWho are your Partners and Suppliers?

Key PartnersWhat key resources are we

acquiring from partnersWhat key activities do they

performStrategic alliance

Key ActivitiesWhat’s Most Important for the Business?

Key ActivitiesProductionProblem solvingPlatform/Networks

Cost StructureWhat are the Costs and Expenses

CostsFixed costsVariable costsWhat are the most important

costs

Example BMCsDisclaimer : We had no inside information in creation of these BMCs. The BMCs have been created with publicly available information available on websites, reports, personal experience etc.,

Competitive BMCs - FlipKart

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES

• Convenience• Wide selection• Cheaper• Trust (CoD)

• Urban Indian book lovers

• Internet-connected people with no credit cards

• First-time online shoppers

Book sales

Publishers

• Delivery staff• Technology

capability

Through email, online chat and database marketing

Web

• Supply chain optimisation

• Delivery optimisation

• SEO• Auto

recommendations

Technology, warehouses, deep discounts

Vision : Online Value-Shopping

Competitive BMCs - CrosswordVision : Leisure book browsing

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES• Urban

Indian book lovers

• Companies

• Stationery buyers

• Casual mall visitors

• Book sales

• Advertising

• Publishers• Franchisees• Shopper’s

Stop (parent co)

• Real estate

In store, Crossword club

• Store• Phone• Web• Institutional

• Sourcing• Visual

merchandising• Book reading

sessions• Crossword Literary

Award

Real estate, cost of inventory • Coffee• Trinkets

• Browsing experience

• Instant gratification

Multi Sided BMCs – “Mid-Day”Vision : Evening Gossip

VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES• Mumbai

English-speaking mass market

• Office-goers• Commuters

• Corporates for advertising

Advertisers + Agencies:• Mass

market• Mumbai• Classified• Discount

• Retail offtake (5%)

• Advertising (95%)

• PTI, AP etc.

• Journalists

• Salespeople with media-planning knowhow

• Transactional• Deep multi-year

high-touch relationships

• Railway platforms

• Kirana shops

• Direct

• Brand building• Distribution• Newsgathering• Improving ABC

numbers in key demographics

Newsroom, newsprint

• Light entertainment after/during a busy day

• “2nd newspaper”

• Mumbai-wide reach of readers in a relaxed context in a unique time window

2 or more distinct but interdependent customers – usually subsidized on one end to attract “other” side

Evolving BMC – Makemytrip in 2000

Vision : Online travel for NRI VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES• NRIs

Advertisers + Agencies:• Mass

market• Mumbai• Classified• Discount

• Travel Ad network• Customer Retention rate 30%

• OTA• Internationa

l Airlines• Travel

editors

• Technology• People

• Online chat• Email

marketing

• Online

• Brand building• OTA/Airline

Partnership• Indian community

advertising• Travel content

• Technology• Deep Discounts/Offers

Cheap tickets to India online

3 months into Oct 2000 (launch of MMT) realized there is no market for online-travel, so focus NRI

Evolving BMC – Makemytrip in 2005

Vision : “One”-stop travel stop VALUE

PROPOSITION

CHANNELS

CUSTOMER

RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMS COST STRUCTURE

KEY

PARTNERS

KEY

RESOURCES

KEY

ACTIVITIES• Indian

business travelers

• Indian tirth yatra travelers

• Indian holidayers

Advertisers + Agencies:• Mass

market• Mumbai• Classified• Discount• MMT developed product in travel+hotel

(no Ads)• Marketing done for airlines• Hotels finders fee

• LCC• Hotels• Travel

agents and tour operators

• Proprietary Tech to link all supplier sites to check inventory

• Domain-experts

• Call center• Retail shops• 24*7 support

• Online

• Supplier relations• Develop domain-

specific skills to offer best product

• Advertising - Media

• Technology• Ticket and hotel consolidators

• Instant booking with real-time purchase

• Search provided Lowest Price

• Customized products for social/religious trips, weekend package

• One-stop for air/rail/bus/hotel

• Money-back guarantee

India Market ready (external factors – IRTC online so Indians get comfortable with online CC, Deccan needed to sell tickets online

Google Business Model

Other types of Business Models ?(Un)bundled business – Bharti

Airtel, Long Tail – Lego Custom Factory,

Lulu Freemium – Flickr, RedHat

(supports every release for 7 years over open source using subscription), Skype

Bait & Hook – Cell phones for free in US

What after BMC ?Create MVP Validate BMC with MVP (customer

dev)

Reference