Download - Create and develop Business model
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