DEVELOPING

BUSINESS MODEL
By: Loren Jane Campo
What is Business Model?
O A business model is a
company's plan for making a
profit. It identifies the
products or services the
business will sell, the target
market it has identified, and
the expenses it anticipates.
 Types of Business Model
O Manufacturer O Subscription
O Distributor O Aggregator
O Retailer O Online Marketplace
O Franchise O Advertisement
O Brick-and-mortar O Data
O E-commerce Liscensing/Data
O Bricks-and-clicks
Selling
O Agency-Based
O Nickel-and-dime
O Freemium
 Types of Business Model
O Affiliate Catalyst/Platform
Marketing O Blockchain
O Dropshipping O SAAS, IAAS, PAAS
O Network O High Touch
Marketing O Low Touch
O Crowdsourcing
O Peer 2 Peer
Manufacturer
O A manufacturer makes finished
products from raw materials. It
may sell directly to the customers
or sell it to a middleman i.e
another business that sells it
finally to the customer. Examples
are Ford, 3M, General Electric.
 Distributor
O A distributor buys
products from
manufacturers and resells
them to the retailers or the
public. Example is Auto
Dealerships.
 Retailer
O A retailer sells directly to
the public after purchasing
the products from a
distributor or wholesaler.
Examples are Amazon,
Tesco.
 Franchise
O A franchise can be a
manufacturer, distributor or
retailer. Instead of creating a new
product, the franchisee uses the
parent business’s model and
brand while paying royalties to it.
Examples are McDonald’s, Pizza
Hut.
Brick-and-mortar
O Brick and Mortar refers to
traditional businesses that have
a physical presence in the form
of storefronts, warehouses,
factories, etc. Examples are
Grocery stores, dentists, gas
stations, and walk-in banks
 E-Commerce
O E-Commerce is an
upgradation of the traditional
brick-and-mortar business
model. It focuses on selling
products by creating a web-
store on the internet.
Bricks-and-clicks
O This model gives flexibility to the
business since it is present
online for customers who live in
areas where they do not have
brick-and-mortar stores.
Examples are Penshoppe,
Gingersnap, Folded and Hung,
Kultura
 Freemium
O Freemium is one of the most
common business models on the
Internet. It is a pricing strategy by
which a product or service is provided
free of charge, but money is charged
for additional features, services, or
virtual or physical goods. Examples
are Dropbox, YouTube, OfficeDrop,
Skype and etc.
 Subscription
O Subscription The subscription
business model lets you keep
customers over a long-term
contract and get recurring
revenues from them through
repeat purchases. Examples
are Netflix, Dollar Shave Club.
 Aggregator
O Aggregator business model is a
recently developed model where the
company various service providers of
a niche and sell their services under
its own brand. The money is earned
as commissions. Examples are Uber
(taxis), Oyo (hotels), Munchery, Food
Panda, Swiggy (foods), or Make My
Trip (travel).
Online Marketplace
O Online marketplaces
aggregate different sellers into
one platform who then
compete with each other to
provide the same
product/service at competitive
prices. Examples are Amazon,
Alibaba.
 Advertisement
O Advertisement business models are
evolving even more with the rise of the
demand for free products and services on
the internet. Just like the earlier times,
these business models are popular with
media publishers like Youtube, Forbes,
etc. where the information is provided for
free but are accompanied with
advertisements which are paid for by
identified sponsors.
 Data Licensing/
Data Selling
O Data Licencing /Data Selling With the
advent of the internet, there has been an
increase in the amount of data generated
upon the users’ activities over the internet.
This has led to the advent of a new business
model – the data licencing business model.
Many companies like Twitter and Onesignal
sell or licence the data of its users or users
of users to third parties which then use the
same for analysis, advertising, and other
purposes.
 Agency-Based
O Agency-Based An agency can be considered
as a partner company which specializes in
handling the non-core business activities like
advertising, digital marketing, PR, ORM, etc.
This company partners with several other
companies that outsource their non-core tasks
to them and is responsible to maintain privacy
and efficiency in their work. Examples of such
agencies are Ogilvy & Mathers, Dentsu Aegis
Network, etc.
Affiliate Marketing
O Affiliate Marketing business model is
a commission-based model where the
affiliate builds its business around
promoting a partner’s product and
directs all its efforts to convince its
followers and users to buy the same.
An example of a business operating
on affiliate marketing business model
is lifewire.com.
 Dropshipping
O Dropshipping is a type of e-
commerce business model where the
business owns no product or inventory
but just a store. The actual product is
sold by partner sellers who receive
the order as soon as the store
receives an order from the ultimate
customer. Examples are Inspire Uplift,
and BlueCrate.
Network Marketing
O Network marketing or multi-level
marketing involves a pyramid
structured network of people who sell
a company’s products.
O Amway is been in business for
around 57 years now, this company is
one of the biggest examples of a
successful MLM/network marketing
company.
Crowdsourcing
O Crowdsourcing business model
involves the users to contribute to the
value provided. This business model
is often combined with other business
and revenue models to create an
ultimate solution for the user and to
earn money. Examples of businesses
using the crowdsourcing business
model are Wikipedia, reCAPTCHA,
Duolingo, etc.
 Peer 2 Peer
Catalyst/Platform
O A P2P economy is a decentralized
internet-based economy where two
parties interact directly with each other to
buy or sell goods or to conduct a
transaction without the intervention of
any third party. A P2P catalyst is a
platform where these users meet.
Examples of P2P platforms are Craigslist,
OLX, Airbnb etc.
 Blockchain
O The Blockchain is an immutable, decentralized,
digital ledger. It is a digital database that no one
owns but anyone can contribute to. Models
based on blockchain are not owned or
monitored by a single entity. Rather, they work
on peer-to-peer interactions and record
everything on a digital decentralized ledger.
Examples are Cloud Storage, Supply-Chain
Communications & Proof-of-Provenance, Paying
Employees and Electronic Voting.
SAAS, IAAS, PAAS
O SAAS, IAAS, PAAS Many companies
have started offering their software,
platform, and infrastructure as a
service. The ‘as a service’ business
model works on the principle of pay
as you go where the customer pays
for his usage of such software,
platform, and infrastructure; he pays
for what and how many features he
has used and not for what he hasn’t.
 SAAS, IAAS, PAAS
O SAAS examples: BigCommerce, Google Apps,
Salesforce, Dropbox, MailChimp, ZenDesk,
DocuSign, Slack, Hubspot

O PAAS examples: AWS Elastic Beanstalk, Heroku,

Windows Azure, Force.com, OpenShift, Apache
Stratos, Magento Commerce Cloud

O IAAS examples: AWS EC2, Rackspace, Google

Compute Engine (GCE), Digital Ocean, Magento 1
Enterprise Edition*
 High Touch
O The High Touch model is one which
requires lots of human interaction.
The relationship between the
salesperson and the customer has a
huge impact on the overall revenues
of the company. The companies with
this business model operate on trust
and credibility. Examples are Hair
salons, consulting firms.
 Low Touch
O Low Touch The opposite of the High Touch
model. The Low Touch model requires
minimal human assistance or intervention in
selling a product or service. Since as a
company, you do not have to maintain a
huge sales force, your costs decrease,
though such companies also focus on
improving technology to further reduce
human intervention while making the
customer experience better at the same
time. Examples are Ikea, SurveyMonkey.
Seatwork: Entrepreneurship
O True or False
O 1. A business model is a company's plan for
making a profit.
O 2. Examples of Manufacturer are Ford, 3M,
General Electric.
O 3. A manufacturer sells directly to the public
after purchasing the products from a
distributor or wholesaler.
O 4. The Low Touch model is one which
requires lots of human interaction.
Seatwork: Entrepreneurship
O True or False
O 5. An example of low touch is Ikea.
O 6. Examples of SAAS are BigCommerce,
Google Apps, Salesforce, Dropbox.
O 7. A wholesaler buys products from
manufacturers and resells them to the
retailers or the public.
O 8. A Blockchain is a platform where these
users meet. Examples of P2P platforms are
Craigslist, OLX, Airbnb etc.
Seatwork: Entrepreneurship
O True or False
O 9. Crowdsourcing business model
involves the users to contribute to the
value provided.
O 10. Amway is been in business for
around 57 years now, this company is
one of the biggest examples of a
successful MLM/network marketing
company.