module 13 - business model canvas - ut
TRANSCRIPT
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Software Economics
Business Model Canvas
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Template
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Canvas for iPod
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Business Model Patterns
Similarities between different Business Models – categorizing them for simplicity.
¤ Unbundling Business Models
¤ The Long Tail
¤ Multi-Sided Platforms
¤ FREE as a Business Model
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Unbundling
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Product Innovation Customer Relationship Management
Infrastructure Management
Eco
nom
ics
Cul
ture
C
om
pe
titio
n
Early Market Entry, premium
price, large market share
Low entry cost Many small
players
Knowledge and skill of “stars”
High cost of new customers so get bigger share of
their money (scope)
Few dominate, consolidate
Customer/service oriented
High fixed costs so need volume
(scale)
Few big players dominate, need volume (scale)
Cost focused, standardize, efficiency
Hagel and Singer, 1999
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Example of Banking
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The Long Tail Model
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Business Models based on having high number of of products that sell in low volumes.
Profitable as few “bestsellers” account for dominant part of the revenue.
¤ Requires low inventory but capability to make niche content/product quickly available to buyers.
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The Long Tail Model
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Thanks to
Democratization of Production Tools
¤ Online publishing (books, music, videos)
Democratization of Distribution
¤ New platforms (Amazon, Youtube)
Drastic lower costs of search (connect demand to supply)
¤ Search and recommendation engines
¤ User ratings
Compare traditional publishing and new model of publishing
The Long Tail: Why the Future of Business Is Selling Less of More. Anderson, Chris. 2006.
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The Multi-Side Platforms
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Business Model based on bringing together two or more distinct but independent groups of customers and create value therefrom.
¤ Works on the basis that both groups are present.
¤ The platform (company product/service) creates value by facilitating this interaction.
¤ Such a business model needs “network effect”.
Consider Facebook, Visa Card, iPhone (apps)
"Strategies for Two-Sided Markets." Harvard Business Review. Eisenmann, Parker, Van Alstyne. October 2006
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The Free Business Model
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Offer something for free to certain customer segments.
Works on low cost of reproduction and distribution
Three types:
¤ Free offer based on multi-sided platforms (advertisement)
¤ Free basic services with optional premium services (freemium)
¤ Bait and hook – inexpensive initial offer luring to repeat purchases.
'Tree! Why $0.00 is the Future of Business.” Wired Magazine. Anderson, Chris.
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The Free Business Model
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Free offer based on multi-sided platforms (advertisement)
Metro (free magazine)
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The Free Business Model
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Free basic services with optional premium services (freemium)
Skype
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The Free Business Model
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Bait and hook – inexpensive initial offer luring to repeat purchases.
Examples
¤ Free mobile phones with subscriptions
¤ Gilette, razor blade model.
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Exercise
Which “type” of business model does your selected company fall under?
Motivate please.
About 10 min.
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