Strategy
Strategy
Strategy
We dare to lift you to a new level strategically
We dare to lift you to a new level strategically
Today, countless innovative business models are emerging. Entirely new industries are emerging, while old ones are collapsing. Start-ups are challenging the old guard, some of whom are feverishly struggling to reinvent themselves. How do you envision your company's business model in two, five or ten years? Will you be one of the dominant players? Will you face competitors who are developing impressive new business models?
1. Customer segment
The customer segment defines the different groups of people or organizations that a company wants to reach and serve. Customers are the heart of any business model. Without (profitable) customers, no company can survive for long. To better satisfy customers, a company can divide them into different segments with common needs, common behaviors, or other attributes. A business model can define one or more large or small customer segments. A company must make a conscious decision about which segments it will and will not serve. Once this decision is made, a business model can be carefully aligned with a deep understanding of specific customer needs. Customer groups represent separate segments:
- They are reached through different sales channels
- They require different types of relationships
- They have substantially different levels of profitability
- They are willing to pay for different aspects of the offering.
2. Value proposition
A value proposition describes the bundle of products and services that creates value for a specific customer segment. The value proposition is the reason why customers turn to a company. It solves a customer problem or fulfills a customer desire. Each value proposition consists of a selected bundle of products and/or services tailored to the needs of a specific customer segment. In this sense, the value proposition is a summary or bundle of benefits that a company offers to its customers. Some value propositions may be innovative and represent a new or disruptive offering. Others may be similar to existing market offerings, but with additional features and attributes.
3. Channels
A channel describes how a company communicates with and reaches its customer segments to deliver a value proposition. Communication, distribution, and sales channels form a company's interface with its customers. Channels are customer touchpoints that play an important role in the customer experience. Channels serve multiple functions, including:
- Helping customers evaluate a company's value proposition
- Enabling customers to purchase specific products and services
- Providing a value proposition to customers - Providing post-purchase customer service.
4. Customer relationship
The customer relationships building block describes the types of relationships a company builds with specific customer segments. A company should clarify what type of relationship it wants to build with each customer segment. Relationships can range from personal to automated. Customer relationships can be determined by the following motivations:
- Customer retention
- Increasing sales (upselling) Customer relations
In the early days of, for example, a mobile operator, customer relationships were driven by aggressive acquisition strategies with free handsets. As the market became saturated, operators focused on customer retention and increasing average revenue per customer. The customer relationships required by a company's business model have a major impact on the overall customer experience.
5. Revenue streams
The revenue streams building block represents the liquidity a company generates from each customer segment (costs must be deducted from sales to generate revenue). If customers are the heart of a business model, revenue streams are its arteries. A company must ask itself: what value is each customer segment really willing to pay for? Successfully answering this question enables the company to generate one or more revenue streams from each customer segment. Each revenue stream can have different pricing mechanisms, such as fixed list prices, negotiations, auctions, market-based, volume-based, or yield-based.
A business model can include two different types of revenue streams:
2. recurring revenue from ongoing payments to either deliver a value proposition to customers or provide after-sales service.
6. Key Resources
Key resources describe the most important assets required for a business model to function. Every business model requires key resources. These resources enable a company to create and oΩer a value proposition, reach markets, maintain relationships with customer segments, and generate revenue. Different key resources are needed depending on the type of business model. A microchip manufacturer requires capital-intensive production equipment, while a microchip manufacturer focuses more on human resources. Key resources can be physical, financial, intellectual, or human. Key resources can be owned by the company, leased by the company, or acquired from key partners.
7. Core activities
Every business model requires a set of core activities. These are the most important actions a company must take to operate successfully. Like key resources, they are required to create and deliver a value proposition, reach markets, maintain customer relationships, and generate revenue. And like key resources, core activities vary by business model type. For software manufacturer Microsoft, core activities are in software development. For PC manufacturer Dell, core activities include supply chain management. For a management consulting firm, core activities include problem solving.
8. Partnerships
Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies form alliances to optimize their business models, reduce risks or procure resources. We can distinguish between four different types of partnerships:
2. competition: strategic partnerships between competitors
3. joint ventures to develop new business areas
4. buyer-supplier relationships to ensure reliable supply.
9. Cost structure
This building block describes the most important costs incurred by operating a specific business model. Creating and providing added value, maintaining customer relationships and generating revenue all incur costs. Such costs are relatively easy to calculate after defining Key Resources, Key Activities and Key Partnerships. However, some business models are more cost-oriented than others. For example, so-called "no frills" airlines have developed business models that are fully oriented to low-cost structures.
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