Business Models –

Patterns & Examples

Part I


 Agenda

 Business Model
 Descriptions

 Business Model
Patterns
 Business Model

 Definition:

 A business model describes the rationale of

how an organization creates, delivers, and captures
value

 It is the way a business or a product monetize

the value it creates
Business Model Canvas
Apples business Model Canvas

https://www.youtube.com/watch?v=keCwRdbwNQY
Business Model Patterns
 Business Model Patterns

 There is no right or wrong. Just make sure your offer or

product fit the business model.
 You can invent your own pattern.

 Famous Patterns
 Unbundling business models
 Long tail
 Multi-Sided Platform
 Free Business Model
 Open Business Model
Unbundling business models

 Divide business into separate entities to focus and

avoid
conflicts.

 Business entities can be

 Product Innovation department
 Innovation and Employee centered
 Infrastructure Management
 Cost mentality
 Customer relationship management
 Customer comes first.
 Example

 Swiss Private Banking Mentality

 Focus on the wealthy, giving them advice. (relationship based
business)
 They want to keep everything in house for secrecy.

 Today Environment
 Outsourcing is attractive, cheaper
 Laws against total banking secrecy
 Clients are interested in best offer regardless of origin
 Product Innovation is driven by speed and quick market
entry
 Example

 Maerki Baumann
 Unbundle its core business
 Customer relationship and advisory
 Incore Bank, offer banking services to other
banks

 Geneva-based Pictet
 Largest swiss private bank
 200 years old
 Remains integrated
 Mock exam

Based on the above Unbundling business model

1) Customer relationship Business
2) Product innovation Business
3) Infrastructure business

Work Task- Select 3 local companies which follow

the above business model and justify why they follow
this business model ?
 Long Tail

 Offering a large number of niche products.

 Selling less of more.

 Long Tail – Example 1

 Book Publishing Mentality

 Work only with known authors
 Print and publish well known best sellers with hg
ih
estimated demand.
https://www.youtube.com/watch?v=sNzPlcmgTpk

 Lulu.com
 Anyone can publish
 Printing is done after book order
Long Tail – Example 1
 Long Tail – Example 2

 Lego interlocking bricks

 Variety of themes
 Competitions becomes tough with new entries

 Lego started user-generated content

 Users can use Lego Digital designer to create their own
theme.
Long Tail – Example 2
 Multi-Sided Platform

 Bring two distinct customer groups together

 Business has two segments A,B. The existence of

one segment without the other makes no profit.

 Both segments pay.

 Google- AdSense
 Website owners
 Advertisers
 Multi-Sided - Example

 PSP / XBOX/ Wii

 Segment A
 PSP / XBOX target hardcore
gamers
 Wii target causal gamers

 Multi-Sided - Example

PSP / XBOX Wii

Target gamers Hardcore gamers Casual Gamers
Revenue Stream Game players Both game players and
developers
Price Range High Low
Game quality Very sophisticated Motion controlled and
fun factor
Game developers Licensed game Royalty from game
manufacturers like EA- developers
sport.
 Multi-Sided - Example

 Apple – iTunes
 Songs and album
maker
 Song and music
listeners
 Free business Model

 Another form of Multi-sided Business

Model

 One segment is lured with the free service

 The other segment pay for the service

 Free business Model -
Example

 Google - Adwords
 Search users
 Advertisers

 Skype
 Free users online Voice calls
 Premium users pay for VOP though wholesale
carriers
 Bait and Hoot

 Bait and Hoot another form of free

business model
 Customers start as Free user and
then encourage to make
purchases

 Gillette sold razor handles at

steep discount or even for free, to
create demand on disposable
blades
 Bait and Hoot - Example

 Apple
 Offer Free iPhone
 Obligated with mobile operator o
fr
two years contract
 Open business Model

 Collaborating with external parties

 Using service from external companies

 Provide help to external parties

 Provide service to external companies
https://www.youtube.com/watch?v=pVGtuH1y7Xg
 Open business Model -
Example

 Procter and Gamble

 Instead of spending more on R&D
 “Connect and develop” strategy
 Exploiting research through external
partners
 Open business Model -
Example

 InnoCentive originally part of Eli Lilly

 Now InnoCentive is an independent business

that connects
 Organizations that need research
 resources With Researchers around the
world
 Assignment help

https://www.youtube.com/watch?v=avWVPaJFgFk