Business Development - Model and Strategies

Ncell App Camp 2015

The sessions of this two days training tries to instill knowledge of opportunity, market, consumer needs and wants, and the ways to model it into a validated value proposition and business model. It tries to build understanding of the market, business and marketing concepts among technology entrepreneurs. The idea is to transfer understanding and knowledge of market and business sense among mobile app developers/entrepreneurs so that they can integrate those concepts into their product (mobile app) design, architecture and its implementation model (it would have equivalent sense to social mobile app designers as well) and create best business model (applicable for social app model too). The idea is to integrate the concepts of consumer needs, market, marketing and business modeling in their development phase, idea pitching phase and take it further after that. This session would help each participant come out of technology cocoon and understand about the all-important business/market/consumer sense by creating best economic/social value.

Presentation prepared by Mr. Sohan Babu Khatri, CEO of Three H Management.

Transcript

1. BUSINESS  DEVELOPMENT   MODEL  AND   STRATEGIES  
2. Sohan  Babu   Khatri   CEO   Three  H  Management       Management   Consultant  and   Resource  Person   Various  organizaBons   across  the  cross   secBon  of  industries   and  academic   insBtuBons  
3. Day’s  Plan….  
4. AcAvity:  Say  something  about  your   app  in  2-­‐3  sentences  (as  short  as   possible”)  
5. Six  Tough  QuesAons  on  App  Business   Models  and  Strategies  
6. QuesAon  No.  1           What  are  the  main  business  models  I   can  use  to  make  money  and  how  do  I   select  the  right  one  for  my  idea?  
9. 9   On  Ideas      If  a  man  makes  a  be+er  mousetrap  than   his  neighbor,  though  he  builds  his  house  in   the  woods,  the  world  will  make  a  beaten   path  to  his  door.             Ralph  Waldo  Emerson  
10. Two  Problems   1.  He  never  said  it.   2.  The  research  doesn’t  support  it.  
11. •  The  basic  mousetrap  (1897)   •  How  much  innovaBon  (beQer  mousetraps)  in   mousetraps  since  then?  
12. Mousetrap  InnovaAons   •  Since  USPTO’s  founding  in  1828,  how  many   mousetrap  patents  in  U.S.?   – 4,400  patents  (Hargadon,  2010)   •  How  many  new  mousetrap  patent   applicaBons  each  year  currently?   – 400  as  of  the  mid-­‐1990s  (Hope,  1996)   – 40  of  these  are  granted   •  How  many  out  of  these  have  made  money?   – 20  out  of  the  4,400  
13. Why  don’t  every  innovaAon  succeed  ?  
14. And  then  somebody  said  this….  
15. 15   Business  Concept    The  manufacturer  who  waits  for  the   world  to  beat  a  path  to  his  door  is  a  great   op>mist.    But  the  manufacturer  who   shows  this  “mousetrap”  (and  its  value)  to   the  world,  keeps  the  smoke  coming  out   his  chimney.                 O.B.  Winters  
16. Value   ProposiBon   Business   Model   Revenue   Model  
17. Mind  the  Difference  ….   Do  you  like  my   product  ?   Would  you  pay  for   my  product  ?  
18. Value   ProposiBon   Business   Model   Revenue   Model  
19. App  MoneAzaAon    
20. Mobile  is  a  big  deal,  but  that  doesn’t   mean  it  will  magically  lead  to  a  big   deal  for  you.  You  need  to  build  a   sustainable  mobile  business,  not  just  a   one-­‐hit  wonder.  
21. Think  about  this  staBsBc:  2%  of  app   developers  claim  about  54%  of  all  app   revenues.    So,  how  do  you  join  that   alluring  2%?  Have  a  well-­‐thought  out   plan  to  profit  from  your  app.  And  hash   this  out  before  your  app  launches.  
22. Approach  mobile  app  business  model   with  the  dual  mindset  of  building  an   awesome  app  and  an  eventual   business  
23. Answer  the  Followings   •  What  problem  is  your  app  trying  to  solve  and  how   would  you  do  that  (in  the  best  way  possible)  ?   •  What  is  unique  about  your  app  and  would  people  pay   for  this?   •  What  else  do  you  think  your  app  users  would  be  willing   to  pay  for?   •  What  business  models  do  compeBng  apps  use  and   how  well  have  they  worked?  
24. A  Good  Place  to  Start   Business  Modeling  
25. From  an  economics  perspecAve,  a  large  number  of   successful  business  models  these  days  are  built  on  two-­‐ sided  networks  and  even  mulA-­‐sided  networks.       These  are  usually  services  that  connect  businesses  to   consumers  or  consumers  to  consumers,  such  as,  for   example  AirBnB  and  eBay  type  services.       These  models  exhibit  powerful  network  effects  if  they   manage  to  scale  up  and  allow  owners  to  moneAze   either  one  side  of  the  network  (e.g.  consumers  or   businesses)  or  both  (e.g.  commission-­‐based)  depending   on  the  applicaAon.  
26. Also,  it’s  important  figure  out  a  balance  between   your  need  to  gain  users  with  your  need  to  earn   revenue.  Some  app  business  models  earn  more   money  right  off  the  bat  at  the  expense  of  quickly   acquiring  tons  of  users,  while  others  result  in  high   downloads  first  and  profits  later.  What  is  your   Ametable?  Can  you  afford  to  iniAally  forgo   revenue  to  accumulate  users?  (It  might  be  worth   it,  depending  on  your  users).  
28. Top  6  Most  Bankable  App  Revenue   Models   1. Free,  But  With  Ads  (In-­‐App  AdverAsing)   2. Freemium  (Gated  Features)   3. Paid  Apps  (Cost  Money  to  Download)   4. In-­‐App  Purchases  (Selling  Physical/Virtual   Goods)   5. Paywalls  (SubscripAons)   6. Sponsorship  (IncenAvized  AdverAsing)      
32. Only  the  creaAve  and  courageous   app  marketers  make  it  rain  money.    
33. QuesAon  No.  2         Which  sectors  have  the  most   potenAal  in  my  country  /  market  ?  
34. Which  is  the  right  quesAon  in  this   regard  ?   A.  “What  works  in  my  local  market”     B.  “What  works  in  the  markets  that  I  want/I  am   well  placed  to  reach”  
35. Going  InternaAonal  /  Global    
36. Going  InternaAonal  /  Global  with   Mobile  App   •  The  good  thing  about  mobile  apps  is  the  fact   that  the  market  is  global  and  the  costs  and   barriers  to  reach  internaBonal  markets  are   very  low  compared  to  other,  more  tradiBonal   businesses.    
37. But….   •  Do  we  know  internaBonal  market  and  the   opportuniBes  posed  by  it  ?   – Gaps  ?   – Problems  ?   – Issues  ?   •  Do  we  know  “consumers”  well  ?   •  Are  we  well  placed  to  reach  them  ?  
38. Does  you  app  rely  on  local  content,   services,  businesses,  stakeholders,   intermediaries,  value  chain  ?  
39. Scalability  ?       For  most  apps,  scale  is  criAcal  and   thinking  locally  can  only  get  you  so   far  
44. AcAvity:  Opportunity  Mapping  
45. QuesAon  No.  3         What  is  more  difficult?  Coding  or   markeAng  the  app?  
46. The  consensus  among  developers   says  markeAng.       Constant  experimentaAon  (in  other   words  trial-­‐and-­‐error)  is  one  of  the   strategies  most  frequently  used  in   order  to  find  out  what  works  best  in   your  case.  
49. QuesAon  No.  4             What  are  the  best  ways  to  do   markeAng  for  my  app  and  acquire   users/downloads  etc?  
50. StarAng  Point   Customer   Analysis   Decision   Process   Type   Value   Drivers   Customer   Base   Products   Number  
55. #1  Cross-­‐promoAon     #2  Become  part  of  an  ecosystem/ plaiorm     #3  Do  some  PR  
57. QuesAon  No.  5         What  are  the  most  common  mistakes   that  mobile  app  developers  do  and   how  can  I  avoid  them?  
58. #1  Failing  to  see  app  development  as   a  business   •  The  best  technology  soluBon  is  not  good   enough  without  the  right  business  models  and   execuBon.     •  This  is  one  of  the  best  known  principles  in  the   area  of  technology  strategy.     •  Developers  that  lack  business  acumen/   experience  ogen  fail  on  the  commercial  side   of  the  business.  
60. #2  Failing  to  prepare  for  success   •  The  nature,  scale  and  pace  of  the  app  economy  is  such  that  in  a   maQer  of  days  your  user  based  may  grow  from  tens  to  tens  of   thousand  users.   •  Will  your  back-­‐end  cope?     •  Will  you  be  able  to  pay  for  third-­‐party  API  calls  uBlized  in  your   app?     •  If  not,  what  may  have  been  iniBally  a  great  service,  will  fail  due   to  poor  customer  experience  or  you  may  run  out  of  money.     •  A  proper  business  case  should  anBcipate  success.  
61. #3  Failing  to  pivot/adapt   •  A  common  advice  in  the  startup  world  is   “pivot  Bll  you  die”.     •  If  your  idea  is  not  working  try  applying  it  on  a   different  market,  adapt  it  to  the  current   market,  flip  it  on  its  head  or  scrap  it  altogether   and  go  for  something  else.  
62. #4  Failing  to  know  and  listen  to  your   users   •  In  a  market  where  consumer  switching  costs  are  so  low   and  a  user  can  easily  replace  your  app  with  the   compeBtor’s  app,  user  experience  and  customer  support   are  criBcal  success  factors.     •  Your  app  will  be  deleted  if  it  crashes  repeatedly,  if  it  is   poorly  designed,  or  does  not  deliver  what  it  says  on  the   Bn.     •  Test  your  app,  test  it  again,  use  crash-­‐reporBng  and  user-­‐ analyBcs  services  and  keep  it  up  to  date,  implemenBng   new  features  and  listening  to  user  feedback.  
64. QuesAon  No.  6         Is  it  bejer  to  try  to  innovate  with  a   never-­‐seen  app,  or  is  it  bejer  to  be  a   follower?  
65. Neither  is  easy  and  both  can  work.    
66. •  The  downside  is  that  by  the  Bme  you  do  it,  others  will  probably   be  trying  to  do  it  too,  so  there  will  be  more  compeBBon.     •  You  don’t  just  need  a  bejer  app,  you  also  need  bejer   execuAon,  i.e.  a  bejer  business  model  and  markeAng,  in  order   to  topple  the  leader.   The  advantage  of  being  a   follower  is  that  you  learn   from  others’  mistakes  and   failures.       You  may  for  example  see   what  is  not  so  good  or  what   is  missing  from  an  app  and   fill  the  gap,  or  extend  it  into   another  market.    
67. On  the  other   hand,  a  new,   innovaBve  idea   can  take  you  a   long  way  before   the  compeBBon   catches  up   (although  never   at  a  safe  distance)   but  it  is  more   difficult  to  create   a  niche  and  then   expand  it.  
70. In  the  app  economy  innovaAon  is  not   limited  to  technology  but  extends  to   business  models,  strategies  and   business  funcAons  too.  
71. END  OF  PART  I  
72. BUSINESS  MODELING     BUSINESS  MODEL   CANVAS  
73. Why  do  I  (Technologist)  need  (to   waste  Ame  developing)  a  business   model?  
74. •  Because  technologists  think  like   technologists   •  Technologists  are  notoriously:   – Smart   – Logical   – RaBonal   – PracBcal   – Fair-­‐minded   – Proud  of  their  work  
75. •  Because  technologists  ONLY  think  like   technologists   •  Technologists  are  notoriously:   – Smart   – Logical   – RaBonal   – PracBcal   – Fair-­‐minded   – Proud  of  their  work  
76. …  and  that  exactly  might  be  the   problem  
77. Business  development  is  different   than  technology   development  and  requires  a  (slightly)   different  skill  set  
78. BUSINESS  SENSE       +       TECHNICAL  SENSE  =       COMMON  SENSE    
79. Common  Sense  =              AND  SOME  MORE……  
80. The  future  of  your  business  depends  on  just   two  abiliAes   80 Being  able  to   come  up  with   excellent   ideas     • Remember  every  ideas  cannot  be   converted  into  Business  Concepts   Being  good  at   implemenBng   those   Business   Concepts     • Remember  sustainability  –  its  not  just   about  achieving  success  but  also   maintaining  it  
81. Three  FoundaAons  of  Successful   Venture    
83. ….  Answering  these  three  quesAons  
85. The  BUSINESS  MODEL  is  the  logic  by   which  you  answer  these  three   quesAons  
86. BUSINESS  MODEL  CANVAS   The  9  Building  Blocks  
90. For  whom  are  we  creaBng  value?   Who  are  our  most  important  customers?  
91. Customer  SegmentaAon   •  Demography   •  Geography   •  Psychograph   •  Behavior     •  User  type   •  Usage   •  Benefits  sought   •  Price  sensiBvity   •  CompeBtor   •  ApplicaBon   •  Brand  loyalty  
92. SegmentaAon   and  Market-­‐ Driven  Strategy   Segments   Value   OpportuniBes     CapabiliBes/ Segment   Match   Targets   PosiBoning   Strategy  
93. IllustraAve  SegmentaAon  Variables   Characteristics of people/ organizations Consumer Markets Industrial/ Organizational Markets Age, gender, income, family size, lifecycle stage, geographic location, lifestyle Type of industry , size, geographic location, corporate culture, stage of development, producer/ intermediary Use situation Occasion, importance of purchase, prior experience with product, user status Application, Purchasing procedure (new task, modified rebuy, straight rebuy Buyers’ needs/ preferences Brand loyalty status, brand preference, benefits sought, quality, proneness to make a deal Performance requirements, brand preferences, desired features, service requirements Purchase behavior Size of purchase, frequency of purchase Volume, frequency of purchase
94. SegmentaAon   Requirements     Customer   Segment   IdenBfiable   AcBonable   Favorable   Stability   over  Bme   Response   Differences  
95. Are  you  serving………  ??   •  Mass  market   –  one  large  group  of  customers  with  broadly  similar  needs  and  problems.   •  Niche  market   –  Business  models  targeBng  niche  markets  cater  to  specific,  specialized   Customer  Segments.   •  MulA-­‐  Segmented   –  Market  segments  with  slightly  different  needs  and  problems   –  Segments  have  similar  but  varying  needs  and  problems.   •  Diversified  (unrelated)   –  Two  unrelated  Customer  Segments  with  very  different  needs  and  problems.   For  example,  in  2006  Amazon.com  decided  to  diversify  its  retail  business  by   selling  “cloud  compuBng”  services:  online  storage  space  and  on-­‐demand   server  usage.     –  Thus  it  started  catering  to  a  totally  different  Customer  Segment—Web   companies—with  a  totally  different  Value  ProposiBon   •  MulA-­‐sided  plaiorms  (or  mulA-­‐sided  markets)   –  Two  or  more  interdependent  Customer  Segments.  A  credit  card  company,  for   example,  needs  a  large  base  of  credit  card  holders  and  a  large  base  of  
96. What  value  do  we  deliver  to  the  customer?   Which  one  of  our  customer’s  problems  are  we  helping  to  solve?  Which  customer   needs  are  we  saBsfying?   What  bundles  of  products  and  services  are  we  offering  to  each  Customer  Segment?  
97. Value  ProposiAons   •  The  Value  ProposiBon  is  the  reason  why   customers  turn  to  one  company  over  another.     •  It  solves  a  customer  problem  or  saBsfies  a   customer  need.   •  Value  ProposiBon  is  an  aggregaBon,  or  bundle,   of  benefits  that  a  company  offers  customers.  
98. A  Value  Proposi>on  creates  value  for   a  Customer  Segment  through  a   dis>nct  mix  of  elements  catering  to   that  segment’s  needs.       Values  may  be  quan>ta>ve   (e.g.  price,  speed  of  service)  or   qualita>ve   (e.g.  design,  customer  experience).  
99. AcAvity:  Value  ProposiAon    
100. Some  possible  elements  of  value   •  Newness  /  Novelty   •  Performance   •  CustomizaBon   •  Geqng  the  Job  Done   •  Design   •  Brand  /  Status   •  Price   •  Cost  ReducBon   •  Risk  ReducBon   •  Accessibility     •  Convenience  /  Usability      
101. 101 The  Value  Triad  –  Be  Clear   Customer Product Application Value Proposition
102. Technology Functional Capabilities Benefits
104. Sohan  B.  Khatri  
105. Selling  Benefits   Feature Advantage Benefit Specific characteristic inbuilt in the product What the feature does / The function of the feature What the feature can do for the customer Sohan  B.  Khatri  
106.       Wrinkle-­‐free         Attached  water   bottle  holder         3X  Zoom   Feature Advantage Benefit Can  hold  a  water   bottle   No  need  for   ironing   Saves  time,  energy   and  electricity   Don’t  have  to  stop  for   drinking  water,  hence   time  saved   Better  and  more  close-­‐ up  pictures,  fond   memories   Can  capture  images  from  a   distance   Sohan  B.  Khatri  
107. Value  ProposiAon  Canvas   Match  Between   Customer  Segment   and  Value    
110. Customer’s  Side  
111. Value  ProposiAon  Side  
112. Value  ProposiAon  Design  
124. Through  which  Channels  do  our  Customer  Segments  want  to  be  reached?     How  are  we  reaching  them  now?   How  are  our  Channels  integrated?  Which  ones  work  best?   Which  ones  are  most  cost-­‐efficient?  How  are  we  integraBng  them  with  customer  rouBnes?  
125. …….   •  Finding  the  right  mix  of  Channels  to  saBsfy  how  customers   want  to  be  reached  is  crucial  in  bringing  a  Value   ProposiBon  to  market.   •  Own  Channels,  through  partner  Channels,  or  through  a   mix  of  both.   •  Partner  Channels  lead  to  lower  margins,  but  they  allow  an   organizaBon  to  expand  its  reach  and  benefit  from  partner   strengths.     •  Owned  Channels  and  parBcularly  direct  ones  have  higher   margins,  but  can  be  costly  to  put  in  place  and  to  operate.     •  The  trick  is  to  find  the  right  balance  between  the  different   types  of  Channels,  to  integrate  them  in  a  way  to  create  a   great  customer  experience,  and  to  maximize  revenues.  
127. What  type  of  relaBonship  does  each  of  our  Customer   Segments  expect  us  to  establish  and  maintain  with  them?   Which  ones  have  we  established?  How  costly  are  they?   How  are  they  integrated  with  the  rest  of  our  business  model?  
128. Can  be  driven  by  following   moAvaAons   •  Customer  acquisi9on   •  Customer  reten9on   •  Boos9ng  sales  (upselling)   •  In  the  early  days,  for  example,  mobile  network   operator  Customer  RelaBonships  were  driven  by   aggressive  acquisiBon  strategies  involving  free   mobile  phones.  When  the  market  became   saturated,  operators  switched  to  focusing  on   customer  retenBon  and  increasing  average  revenue   per  customer.  
129. The  Target  …..  To  Enhance  Overall   Customer  Experience  
130. Types  /  Categories/  Ways/   Strategies   •  Personal  Assistance   •  Dedicated  Personal  Assistance   •  Self  –  Service   •  Automated  Services   •  CommuniBes   •  Co-­‐creaBon  
131. •  For  what  value  are  our   customers  really  willing  to  pay?   •  For  what  do  they  currently  pay?   How  are  they  currently  paying?     •  How  would  they  prefer  to  pay?     •  How  much  does  each  Revenue   Stream  contribute  to  overall   revenues?  
132. A  business  model  can  involve  two   different  types  of  Revenue   Streams:   1.  Transac9on  revenues  resul9ng  from  one-­‐9me   customer  payments   2.  Recurring  revenues  resul9ng  from  ongoing   payments  to  either  deliver  a  Value   Proposi9on  to  customers  or  provide  post-­‐ purchase  customer  support  
133. Pricing  Mechanisms  
134. Set  Pricing  ObjecAves  ….   1. Survival   2. Customer  AcquisiBon   3. ImpacBng  Customer  PercepBon  of  Value   4. Maximum  Current  Profit   5. Maximum  Market  Share   6. Maximum  Market  Skimming   7. Product-­‐Quality  Leadership  
135. Pricing  Strategies  
136. App  MoneAzaAon     Concepts,  Ideas  and  Strategies  
137. Top  6  Most  Bankable  App  Revenue   Models   1. Free,  But  With  Ads  (In-­‐App  AdverAsing)   2. Freemium  (Gated  Features)   3. Paid  Apps  (Cost  Money  to  Download)   4. In-­‐App  Purchases  (Selling  Physical/Virtual   Goods)   5. Paywalls  (SubscripAons)   6. Sponsorship  (IncenAvized  AdverAsing)      
138. 1.  Free,  But  With  Ads  (In-­‐App   AdverAsing)   •  In  this  business  model,  you  remove  the  cost-­‐ barrier  to  purchasing  your  app  and  allow  free   downloads.     •  Goal  is  to  accumulate  a  sizeable  user  base  and   gather  informaBon  on  the  people  interacBng   with  your  app.     •  Then,  this  data  gets  sorted  and  sold  to  app   publishers  who  pay  you  to  place  targeted  ads   in  your  app.    
139. ……   •  This  moneBzaBon  strategy  has  proven  quite   effecBve  for  Facebook.  The  social  behemoth   reported  a  151%  increase  in  their  mobile   adverBsing  revenue  during  the  second-­‐ quarter  of  this  year.   •  EssenBally,  you  make  money  by  selling  data-­‐ driven  adverBsing  space  in  your  app.  You  can   do  this  independently  or  work  with  a  mobile   ad  partner.  
140. •  According  to  staBsBcs  released  from  the   InteracBve  AdverBsing  Bureau,  mobile   adverBsing  spend  rose  to  $3.4  billion  in  2012,   up  111  percent  from  the  prior  year’s  record   levels,  and  mobile  adverBsing  now  accounts   for  9  percent  of  all  digital  revenue.  
141. •  Currently,  desktop  ad  spend  leads  mobile  by  $1.18   billion  according  to  recent  eMarketer  report.  This  win   is  short-­‐lived  as  mobile  expects  to  double  desktop   spend  reaching  $49.81  billion  in  two  years’  Bme.   •  Mobile’s  growth  is  not  enBrely  cannibalizing  as  we  see   digital  ad  spend  growing  as  a  whole.  However,  desktop   spend  will  stagnate  to  around  $25  billion  in  the  next   several  years.  By  2019,  mobile  will  make  up  a   whopping  72  percent  of  total  spend.  
142. Pros   •  Mobile  apps  are  in  a  prime  posiBon  to  collect   tons  of  data  on  their  users  (such  as  their  in-­‐app   behavior  and  their  locaBon)   •  Allows  you  to  gain  users  quickly  because  people   love  free  apps   •  Can  be  effecBve  if  moderate  and  targeted   adverBsing  is  used  (ads  are  interesBng  yet   limited)   •  eMarketer  projects  in-­‐app  ad  spend  ($29.66b)  to   nearly  triple  mobile  web  spend  ($10.84b)  by   2016.  
143. Cons   •  Not  an  innovaBve  model  and  people  can  get   annoyed  of  ads,  which  may  lead  to  app  churn   •  Mobile  ads  can  comprise  your  app  experience  by   claiming  a  porBon  of  the  already  limited  screen   size   •  This  model  won’t  work  for  niche  or  uBlity  apps   that  are  designed  to  help  users  perform   important  funcBons  (ads  will  be  too  unnatural   and  intrusive  in  this  seqng  when  people  just   want  to  do  something  quickly)    
144. 2.  Freemium  (Gated  Features)   •  Similar  to  in-­‐app  adverBsing,  the  app  is  also  offered   for  free  in  a  freemium  business  model,  but  certain   features  are  gated  and  cost  money  to  be  unlocked.     •  In  other  words,  people  have  access  to  an  app’s   basic  funcBonality,  but  there  is  a  charge  for   premium  or  proprietary  features.     •  The  premise  of  this  model  is  that  you  aQract  people   to  your  app  and  give  them  a  rich  preview  of  what   your  app  can  do  (without  giving  them  everything).     •  The  goal  is  to  accumulate  and  engage  app  users   unBl  they  are  willing  to  pay  for  addiBonal  in-­‐app   tools.  
145. …….   •  A  great  example  of  a  brand  that  capitalizes  on   this  strategy  is  Angry  Birds.  The  Rovio  team   (the  creator  of  Angry  Birds)  released  a  free   version  of  their  addicBve  app.  However,  the   app  keeps  certain  features  hidden  (like  being   able  to  juice  up  your  bird,  addiBonal  levels,   etc.)  unBl  users  upgrade  (for  a  small  fee)  to   the  full  version.  
146. His  moneBzaBon   strategy  allows  you   to  tease  users  with   a  stripped  down   version  of  your  app   unBl  they  are   hooked  enough  to   happily  buy   addiBonal  features.    
147. Pros   •  This  mobile  business  model  makes  it  easy  to   build  up  a  large  user  base  and  showcases  your   app  so  people  get  hooked  (and  then  you  can   upsell)   •  People  who  “try  before  they  buy”  are  more   likely  to  become  engaged  and  loyal  users  later   on   •  Flexible  model  because  it  can  be  adapted  to   almost  any  verBcal    
148. Cons   •  If  you  offer  too  few  features  for  free,  app   churn  will  be  high   •  If  you  offer  too  many  features  for  free,  it  will   be  difficult/complex  to  convince  your  exisBng   user  base  to  pay  for  an  upgrade  (upgrade   won’t  have  much  incremental  value)   •  App  marketers  must  be  careful  not  to  provide   a  large  segment  of  their  users  (the  free  ones)   with  an  inferior  app  experience    
149. 3.  Paid  Apps  (Cost  Money  to   Download)   •  App  is  not  free  to  download.     •  If  people  want  to  use  your  app  they  must  first   purchase  it  from  the  app  store.     •  They  key  to  finding  success  with  this  model  is  in   your  ability  to  showcase  the  perceived  value  of   your  app  with  a  killer  app  lisBng  (which  includes   screenshots,  five  star  reviews,  etc.)  that   differenBates  it  from  similar  free  apps.     •  Put  another  way,  the  most  profitable  paid  apps  do   a  great  job  of  selling  their  app’s  unique  features,   be  it  design  or  funcBonality  or  brand.  
150. …..   •  For  example,  let’s  look  at  Calendars  5,  which  is  a  paid   producBvity  app  that  costs  $4.99  in  Apple's  app  store.     •  When  you  check  out  Calendars  5’s  iTunes  lisBng,  the   app  immediately  posiBons  itself  as  a  “smart  calendar”   that  incorporates  tasks,  human  language,  and   reminders  in  a  clean  and  colorful  layout.     •  The  app’s  lisBng  page  includes  rich  screenshots  that   highlight  its  sleek  design  and  stellar  reviews  about  its   superior  funcBonality.     •  Within  a  few  seconds,  the  app  is  able  to  make  a   compelling  case  that  it’s  beQer  than  Apple’s  default   calendar  and  thus,  worth  the  monetary  investment.      
151. The  paid  app   business  model   is  like  a  “pay   then  play”   strategy  that  is   propped  up  by   your  mobile   markeBng   team’s  ability  to   convince  users   to  buy  your  app   instead  of  free   subsBtutes.  
152. Pros   •  App  developers  and  app  marketers  earn  revenue   upfront  with  every  new  download   •  People  who  have  paid  for  an  app  are  more  likely   to  turn  into  engaged  users  (since  they  spent   money  to  purchase  your  app  vs.  choosing  a  free   one)   •  In  this  model,  the  app  does  not  usually  have  any   in-­‐app  adverBsing  thus  allowing  it  to  have  a   cleaner  interface   •  This  model  moBvates  app  developers  to  focus  on   innovaBon  since  people  expect  paid  apps  to  be   the  crème  of  the  crop  
153. Cons   •  Selling  an  app  is  hard  because  app  stores  are  so   overcrowded  (sBff  compeBBon  from  many  free   apps)   •  App  stores  take  a  cut  of  the  revenue  from  paid   apps  (Apple  gets  approximately  30%)   •  Paid  models  are  a  shrinking  part  of  app  store   revenue   •  90%  of  paid  apps  are  downloaded  less  than  500   Bmes  per  day  (cost-­‐barrier  to  gaining  a  large   number  of  users)  
154. 4.  In-­‐App  Purchases     (Selling  Physical/Virtual  Goods)   •  In-­‐app  purchases  are  exactly  what  they  sound  like.     •  In  a  nutshell,  this  app  moneBzaBon  strategy   involves  selling  physical  or  virtual  goods  within   your  app,  and  then  retaining  the  profits.     •  In-­‐app  purchases  can  include  a  wide  variety  of   consumer  goods  such  as  clothes  and  accessories.     •  However,  in-­‐app  purchases  can  also  be  virtual   goods  such  as  extra  lives  or  in-­‐game  currency.     •  Whatever  your  app  is  selling,  make  sure  the  in-­‐app   purchases  feel  like  a  natural  part  of  your  app.  
155. ………   •  MeetMe  is  an  example  of  an  app  that  has   creaBvely  incorporated  in-­‐app  purchases  into   their  social  app.     •  People  can  download  MeetMe  for  free  and  use   it  to  browse  profiles,  chat  with  people,  and   connect  with  locals.     •  However,  you  can  also  purchase  credits  to   enhance  your  visibility  and  gain  new  ways  to   interact  with  people.     •  MeetMe’s  purchase  model  has  is  lucraBve   because  the  app  is  able  to  clearly  highlight  the   benefits  of  in-­‐app  currency.    
156. The  in-­‐app   purchases  model   is  about  turning   your  app  into   another  sales   channel  (for   physical  products   that  are  used  in   the  real  world)  or   a  mobile   storefront  (for   virtual  goods   which  can  only  be   used  inside  the   app).    
157. Affiliate  and  Referral  MarkeAng   •  New  services  are  automaBcally  transforming  exisBng   mobile  links  into  revenue-­‐generaBng  links  by   direcBng  the  user  to  one  of  thousands  of  retailers.     •  Instead  of  an  ad,  viewers  are  unobtrusively  presented   links  within  relevant  content.   •  The  popular  mobile  and  social  shopping   app  Wanelo  (also  available  as  a  web  app)  showcases   products  available  for  sale  ,  each  of  which  is  shared   by  a  member  of  the  Wanelo  community.  The  app  lets   users  follow  certain  stores  or  individuals  and  discover   products  they  love.  These  discoveries  turn  into   purchases,  and  these  purchases  provide  Wanelo  with   referral  revenue.  
158. ………   •  Another  form  of  affiliate  markeBng  for  apps  is  to   promote  other  mobile  apps  with  the  goal  of   earning  commissions  when  the  app  is  purchased   and  downloaded.     •  These  types  of  ads  typically  have  a  more   integrated  and  natural  feel  within  the  app,   especially  if  the  content  or  style  (for  example  a   skiing  game  referring  a  mountain  weather   applicaBon)  of  both  applicaBons  are  natural   complements.  
159. Pros   •  This  app  business  model  works  parBcularly  well  for   eCommerce/mCommerce  brands  and  is  flexible  enough   for  other  verBcals  too   •  In-­‐app  purchases  can  help  app  marketers  make   comfortable  profits  with  the  lowest  amount  of  risk   •  Buying  virtual  goods  can  lead  to  deeper  levels  of   engagement  (growing  moneBzaBon  strategy)   •  The  profit  margin  is  usually  high  with  this  model  because   brands  don’t  have  the  tradiBonal  expenses  on  mobile  that   brick-­‐and-­‐mortar  stores  do  (like  staffing  and  rent)   •  Flexible  model  which  can  also  be  adapted  to  include   affiliate  programs  and  partnerships  that  drive  referral   revenue  
160. Cons   •  App  stores  usually  take  a  cut  of  the  revenue  for   virtual  goods  (but  not  physical  goods  or  services)   purchased  inside  an  app   •  Recently,  this  model  has  received  bad   publicity  because  government  officials  are   pressuring  Apple  and  Google  to  add  stricter   regulaBons  to  prevent  children  from  making   accidental  in-­‐app  purchases   •  Apps  will  need  to  be  more  transparent  on  their  app   store  lisBng  page  if  they  include  in-­‐app  purchases   (which  may  prevent  some  people  from   downloading)  
161. 5.  Paywalls  (SubscripAons)   •  The  paywall  app  business  model  is  similar  to   the  freemium  model  except  that  it  focuses  on   gaBng  content,  not  features.     •  Paywalls  allow  an  app  user  to  view  a   predetermined  amount  of  content  for  free   and  then  prompts  them  to  sign  up  for  a  paid   subscripBon  to  get  more.     •  This  model  is  best  suited  for  service  focused   apps  and  allows  brands  to  earn  revenue  on  a   recurring  basis.  
162. ………   •  An  example  of  an  app  that  uBlizes  this  app   business  model  is  Umano,  which  transforms   news  stories  into  podcasts.     •  Umano  allows  users  to  listen  to  a  limited   number  of  stories  unBl  they  sign  up  for  a   premium  subscripBon.     •  With  this  strategy,  people  get  to  use  all  of   Umano’s  best  features,  but  for  a  fixed  amount   of  Bme  unBl  they  are  engaged  enough  to  pay   for  unlimited  use  and  content.      
163. At  its  core,  this   model  is  like  a  “pay   later”  or  “free  trial”   model  because   users  get  to  test   drive  the  app,  but   then  need  to  sign   up  for  a   subscripBon  to   bypass  certain   content  limits  and   restricBons.  
164. Pros   •  People  get  to  experience  all  of  your  app’s  features   which  increases  session  lengths  and  lowers  app  churn   •  This  app  business  model  results  in  a  conBnual  weekly/ monthly/yearly  (depending  on  your  setup)  flow  of   revenue  since  subscripBons  usually  auto-­‐renew   •  Subscribers  are  more  likely  to  be  loyal  and  engaged   app  users   •  SubscripBons  and  content  gaBng  also  moBvate  app   developers  and  app  marketers  to  ensure  they  curate   high-­‐quality  content  that  is  worth  paying  for    
165. Cons   •  Does  not  easily  translate  to  all  verBcals  (most   suited  for  news,  lifestyle,  and  entertainment   apps  since  they  can  limit  content  like  arBcles   read  or  videos  watched)   •  It  can  be  hard  to  determine  where  and  when   to  place  a  paywall  (what  is  the  right  limit  to   place?)  
166. 6.  Sponsorship  (IncenAvized   AdverAsing)   •  Of  all  the  app  business  models  listed  in  this  post,  this  is   probably  the  newest  entrant  in  the  mobile  world.     •  Sponsorship  entails  partnering  with  adverBsers,  who   provide  your  users  with  rewards  for  compleBng  certain   in-­‐app  acBons.     •  In  this  model,  brands  and  agencies  pay  to  be  part  of  an   incenBve  system.     •  Your  app  earns  money  by  taking  a  share  of  the  revenue   from  redeemed  rewards.     •  This  way,  you  can  incorporate  adverBsing  into  your  app   that  actually  enhances  your  app’s  ability  to  engage  users.  
167. ……   •  An  early  adopter  of  this  app  business  model  is   RunKeeper.  RunKeeper  uses  incenBvized   adverBsing  to  moBvate  its  users  to  track  their   running  acBvity  with  their  app  to  unlock   exclusive  rewards  and  promoBons.  This   strategy  lets  RunKeeper  moneBze  their  app   without  disrupBng  their  app’s  experience  with   banner  ads.      
168. In  the   sponsorship  app   business  model,   adverBsers  gain   inclusion  in  your   app  by  funding   rewards  for  your   users,  who  earn   these  rewards   by  engaging   more  with  your   app.  
169. Pros   •  InnovaBve  app  business  model  which  can  be   adapted  for  many  verBcals   •  This  adverBsing  strategy  will  likely  be  beQer   received  by  app  users  because  it  is  relevant  and   related  to  an  app’s  purpose   •  App  developers  and  marketers  earn  revenue,   adverBsers  get  more  ad  space,  and  users  benefit   from  free  promos   •  This  form  of  adverBsing  can  be  aligned  with  your   app’s  conversion  funnels  
170. Cons   •  Mobile  marketers  need  to  be  careful  about   what  acBons  they  incenBvize  within  their  app   (Apple  has  been  cracking  down  on   incenBvizing  downloads  and  social  sharing)   •  This  app  business  model  has  not  been  as   thoroughly  tried  and  tested  as  the  other  ones   (results  and  success  may  vary)  
171. Apps  Are  Trending  Towards  Blended   Models  
172. •  Last  year,  Developer  Economics  published  a   chart  which  shows  the  popularity  and   revenues  from  five  of  the  most  bankable  app   business  models  (excluding  sponsorships  since   it’s  so  new).     •  InteresBngly,  it  shows  that  adverBsing  is  the   most  popular  app  moneBzaBon  strategy,  but   subscripBons  are  the  most  profitable.      
173. As  the  app   landscape   becomes  more   sophisBcated,  we   should  expect  to   see  a  trend   towards  more   blended  models.       For  instance,  you   can  start  with  a   “free,  but  with   ads”  model  and   then  offer  users  a   paid  upgrade  to   an  ad-­‐free   version,  which  is   a  “freemium”   approach.     The  end  lesson   here  is:  don’t  just   do  what  others   have  done  before,   adapt  and  iterate   on  each  app   moneBzaBon   strategy  to  make  it   work  for  your  app.    
174. What  Key  Resources  do  our  Value  ProposiBons   require?   Our  DistribuBon  Channels?  Customer   RelaBonships?   Revenue  Streams?  
175. Categories   •  Physical   •  Financial   •  Intellectual   •  Human  
176. What  Key  AcBviBes  do  our  Value  ProposiBons   require?   Our  DistribuBon  Channels?  Customer  RelaBonships?   Revenue  streams?  
178. 7S  of  a  Business  Model  /   Management   Shared   Values   Systems   Structure   Strategy   Staffs   Skills   Style  
179. Who  are  our  Key  Partners?  Who  are  our  key  suppliers?   Which  Key  Resources  are  we  acquiring  from  partners?   Which  Key  AcBviBes  do  partners  perform?  
182. Modes  of  Partnerships   1.  Strategic  alliances  between  non-­‐compeBtors   2.  CoopeBBon:  strategic  partnerships  between   compeBtors   3.  Joint  ventures  to  develop  new  businesses   4.  Buyer-­‐supplier  relaBonships  to  assure  reliable   supplies  
183. MoAvaAons  for  Partnerships   •  OpAmizaAon  and  economy  of  scale   –  usually  formed  to  reduce  costs,  and  ogen  involve  outsourcing  or  sharing   infrastructure..   •  ReducAon  of  risk  and  uncertainty   –  Blu-­‐ray,  for  example,  is  an  opBcal  disc  format  jointly  developed  by  a  group  of  the   world’s  leading  consumer  electronics,  personal  computer,  and  media   manufacturers.  The  group  cooperated  to  bring  Blu-­‐ray  technology  to  market,  yet   individual  members  compete  in  selling  their  own  Blu-­‐ray  products.   •  AcquisiAon  of  parAcular  resources  and  acAviAes   –  Some  extend  their  own  capabiliBes  by  relying  on  other  firms  to  furnish  parBcular   resources  or  perform  certain  acBviBes.  Such  partnerships  can  be  moBvated  by   needs  to  acquire  knowledge,  licenses,  or  access  to  customers.  A  mobile  phone   manufacturer,  for  example,  may  license  an  operaBng  system  for  its  handsets  rather   than  developing  one  in-­‐house.  An  insurer  may  choose  to  rely  on  independent   brokers  to  sell  its  policies  rather  than  develop  its  own  sales  force.  
185. •  What  are  the  most  important  costs  inherent   in  our  business  model?     •  Which  Key  Resources  are  most  expensive?     •  Which  Key  AcAviAes  are  most  expensive?  
186. Two  Models   Naturally  enough,  costs  should  be  minimized  in   every  business  model.  But  low  Cost  Structures   are  more  important  to  some  business  models   than  to  others.  Therefore  it  can  be  useful  to   dis>nguish  between  two  broad  classes  of   business  model  Cost  Structures:  cost-­‐driven  and   value-­‐driven  (many  business  models  fall  in   between  these  two  extremes)  
187. Cost  Driven  Business  Model   •  Cost-­‐driven  business  models  focus  on   minimizing  costs  wherever  possible.     •  This  approach  aims  at  creaBng  and   maintaining  the  leanest  possible  Cost   Structure,  using  low  price  Value  ProposiBons,   maximum  automaBon,  and  extensive   outsourcing.    
188. Value  Driven  Business  Model   •  Some  companies  are  less  concerned  with  the   cost  implicaBons  of  a  parBcular  business   model  design,  and  instead  focus  on  value   creaBon.     •  Premium  Value  ProposiBons  and  a  high   degree  of  personalized  service  usually   characterize  value-­‐driven  business  models.  
189. Right  Mix  of  9  Building  Blocks  
195. www.canvaniser.com  
197. DESIGN  ASPECTS  OF  BUSINESS   MODELS  
198. 1.  Customer  Insight  
199. Customer  Insight   •  Companies  invest  heavily  in  market  research,  yet  ogen   wind  up  neglecBng  the  customer  perspecBve  when   designing  products,  services—and  business  models.   •  Good  business  model  design  avoids  this  error.     •  It  views  the  business  model  through  customers‘  eyes,  an   approach  that  can  lead  to  the  discovery  of  completely  new   opportuniBes.     •  This  does  not  mean  that  customer  thinking  is  the  only   place  from  which  to  start  an  innovaBon  iniBaBve,  but  it   does  mean  that  we  should  include  the  customer   perspecBve  when  evaluaBng  a  business  model.     •  Successful  innovaBon  requires  a  deep  understanding  of   customers,  including  environment,  daily  rouBnes,   concerns,  and  aspiraBons.  
200. Adop>ng  the  customer  perspec>ve  is  a   guiding  principle  for  the  en>re  business  model   design  process.       Customer  perspec>ves  should  inform  our   choices  regarding  Value  Proposi>ons,   Distribu>on  Channels,  Customer   Rela>onships,  and  Revenue  Streams.  
201. Henry  Ford  once  said,       “If  I  had  asked  my  customers  what   they  wanted,  they  would  have  told   me  ‘a  faster  horse.”  
202. …..   •  Business  model  innovators  should  avoid   focusing  exclusively  on  exisBng  Customer   Segments  and  set  their  sights  on  new  or   unreached  segments.   •  A  number  of  business  model  innovaBons  have   succeeded  precisely  because  they  saBsfied  the   unmet  needs  of  new  customers  
203. Customer  Insight  in  Business  Model   Design   OrganizaAon-­‐Centric  Business   Model  Design   •  What  can  we  sell   customers  ?   •  How  can  we  reach   customers  most  efficiently  ?   •  What  relaBonships  do  we   need  to  establish  with   customer  ?   •  How  can  we  make  money   from  our  customers  ?   Customer-­‐Centric  Business  Model   Design   •  What  job(s)  do(es)  our  customer   need  to  get  done  and  how  can   we  help  ?   •  What  are  our  customer’s   aspiraBons  and  how  can  we  help   him  live  upto  them  ?   •  How  do  our  customers  prefer  to   be  addressed?   •  How  do  we  as  an  enterprise  best   fit  into  their  rouBnes?   •  What  relaBonship  do  our   customers  expect  us  to  establish   with  them?   •  For  what  value(s)  are  customers   truly  willing  to  pay?  
204. The  Empathy  Map  
205. What  does  she  see?   •  Describe  what  the  customer   sees  in  her  environment   –  What  does  it  look  like?   –  Who  surrounds  her?   –  Who  are  her  friends?   –  What  types  of  offers  is  she   exposed  to  daily  (as  opposed   to  all  market  offers)?   –  What  problems  does  she   encounter?   What  does  she  hear?   •  Describe  how  the   environment  influences  the   customer   •  What  do  her  friends  say?   •  Her  spouse?   •  Who  really  influences  her,   and  how?   •  Which  media  Channels  are   influen9al?  
206. What  does  she  really  think  and   feel?   •  Try  to  sketch  out  what  goes   on  in  your  customer’s  mind   –  What  is  really  important  to   her  (which  she  might  not  say   publicly)?   –  Imagine  her  emo9ons.  What   moves  her?   –  What  might  keep  her   worried  ?   –  Try  describing  her  dreams  and   aspira9ons.   What  does  she  say  and  do?   •  Imagine  what  the  customer   might  say,  or  how  she  might   behave  in  public   –  What  is  her  aQtude?   –  What  could  she  be  telling   others?   –  Pay  par9cular  aRen9on  to   poten9al  conflicts  between   what  a  customer  might  say   and  what  she  may  truly  think   or  feel.  
207. What  is  the  customer’s  pain?   •  What  are  her  biggest   frustra9ons?   •  What  obstacles  stand   between  her  and  what  she   wants  or  needs  to  achieve?   •  Which  risks  might  she  fear   taking?   What  does  the  customer  gain?   •  What  does  she  truly  want  or   need  to  achieve?   •  How  does  she  measure   success?   •  Think  of  some  strategies  she   might  use  to  achieve  her   goals.  
208. The  Empathy  Map  
209. Buyer  Behaviour  -­‐  Social  Factors   •  A  customer’s  buying  behaviour  is  also  influenced  by  social  factors,  such  as   the  groups  to  which  the  customer  belongs  and  social  status.   •  In  a  group,  several  individuals  may  interact  to  influence  the  purchase   decision.     •  The  typical  roles  in  such  a  group  decision  can  be  summarised  as  follows:   •   The  person  who  first  suggests  or  thinks  of  the  idea  of  buying   a  parBcular  product  or  service   IniBator   •   A  person  whose  view  or  advice  influences  the  buying  decision   Influencer   •   The  individual  with  the  power  and/or  financial  authority  to   make  the  ulBmate  choice  regarding  which  product  to  buy   Decider   •   The  person  who  concludes  the  transacBon   Buyer   •   The  person  (or  persons)  who  actually  uses  the  product  or   service   User   Sohan  B.  Khatri  
210. Post  Purchase  EvaluaBon   SaBsfacBon  vs  DissaBsfacBon     Actual  Purchase   Time  ,  Access  and  Reference   Purchase  Decision   Choosing  AlternaBve   Product  Features   EvaluaBon  of  AlternaBves   Criteria  for  EvaluaBon   Rank  AlternaBves  or  Resume  Search   InformaBon  Search   Internal  Search   External  Search   Problem  RecogniBon  [Awareness  of  Need]   Desired  State   Actual  State   Buyer  Decision-­‐making  Process   Sohan  B.  Khatri  
211. What  Marketers  need  to  do  ?   Post  Purchase  EvaluaBon   Ager  sales  communicaBon   Ager  sales  service   Customer  lifeBme  value   Actual  Purchase   Design  moment  of  truth   Purchase  Decision   Communicate  Product  Features   Design  easy  process   EvaluaBon  of  AlternaBves   Help  consumers  with  informaBon   Influence  by  framing  alternaBves   InformaBon  Search   Impress  consumers  intensely   Be  present  in  all  sources  of  informaBon   Problem  RecogniBon  [Awareness  of  Need]   Communicate  Need     Sell  soluBon   Sohan  B.  Khatri  
212. 2.  IdeaAon  
213. GeneraAng  New  Business  Model   •  Mapping  an  exisBng  business  model  is  one   thing;  designing  a  new  and  innovaBve  business   model  is  another.     •  What’s  needed  is  a  creaBve  process  for   generaBng  a  large  number  of  business  model   ideas  and  successfully  isolaBng  the  best  ones.     •  This  process  is  called  ideaBon.     •  Mastering  the  art  of  ideaBon  is  crucial  when  it   comes  to  designing  viable  new  business   models.  
214. Business  Model  InnovaAon   •  ignoring  the  status  quo  and  suspending  concerns   over  operaBonal  issues   •  is  not  about  looking  back,  because  the  past   indicates  liQle  about  what  is  possible  in  terms  of   future  business  models   •  not  about  looking  to  compeBtors,  since  business   model  innovaBon  is  not  about  copying  or   benchmarking,  but  about  creaBng  new   mechanisms  to  create  value  and  derive  revenues.   •  is  about  challenging  orthodoxies  to  design  original   models  that  meet  unsaBsfied,  new,  or  hidden   customer  needs.  
215. Ideas  for  business  model  innovaAon   can  come  from  anywhere,  and  each   of  the  nine  business  model  building   blocks  can  be  a  starAng  point.       TransformaAve  business   model  innovaAons  affect  mulAple   building  blocks.  
216. Epicenters  of  Business  Model   InnovaAon   1.  Resource-­‐driven   – Resource-­‐driven  innovaBons  originate  from  an   organizaBon’s  exisBng  infrastructure  or   partnerships  to  expand  or  transform  the  business   model.   •  Example:  Amazon  Web  Services  was  built  on   top  of  Amazon.com’s  retail  infrastructure  to   offer  server  capacity  and  data  storage  space  to   other  companies.  
217. Epicenters  of  Business  Model   InnovaAon   2.  Offer-­‐driven   – Offer-­‐driven  innovaBons  create  new  value   proposiBons  that  affect  other  business  model  building   blocks.   •  Example:  When  Cemex,  a  Mexican  cement  maker,   promised  to  deliver  poured  cement  to  job  sites  within   four  hours  rather  than  the  48  hour  industry  standard,   it  had  to  transform  its  business  model.  This  innovaBon   helped  change  Cemex  from  a  regional  Mexican  player   into  the  world’s  second  largest  cement  producer.  
218. Epicenters  of  Business  Model   InnovaAon   3.  Customer-­‐driven   –  Customer-­‐driven  innovaBons  are  based  on  customer  needs,   facilitated  access,  or  increased  convenience.  Like  all   innovaBons  emerging  from  a  single  epicenter,  they  affect   other  business  model  building  blocks.   •  Example:  23andMe  brought  personalized  DNA  tesBng  to   individual  clients—an  offer  previously  available   exclusively  to  health  professionals  and  researchers.  This   had  substanBal  implicaBons  for  both  the  Value   ProposiBon  and  the  delivery  of  test  results,  which   23andMe  accomplishes  through  mass-­‐customized  Web   profiles.  
219. Epicenters  of  Business  Model   InnovaAon   4.  Finance-­‐driven   –  InnovaBons  driven  by  new  revenue  streams,  pricing   mechanisms,  or  reduced  Cost  structures  that  affect  other   business  model  building  blocks.   •  Example:  When  Xerox  invented  the  Xerox  914  in  1958—   one  of  the  first  plain  paper  copiers—it  was  priced  too   high  for  the  market.  So  Xerox  developed  a  new  business   model.  It  leased  the  machines  at  $95  per  month,   including  2,000  free  copies,  plus  five  cents  per  addiBonal   copy.  Clients  acquired  the  new  machines  and  started   making  thousands  of  copies  each  month.  
220. Epicenters  of  Business  Model   InnovaAon   5.  MulAple-­‐epicenter  driven   –  InnovaBons  driven  by  mulBple  epicenters  can  have   significant  impact  on  several  other  building  blocks.   •  Example:  HilB,  the  global  manufacturer  of   professional  construcBon  tools,  moved  away  from   selling  tools  outright  and  toward  renBng  sets  of   tools  to  customers.  This  has  a  substanBal  change  in   Hitli’s  Value  ProposiBon,  but  also  in  its  Revenue   Streams,  which  shiged  from  oneBme  product   revenues  to  recurring  service  revenues.  
221. Show  your  full  creaAve  colors…..   221   Sohan  Khatri    
222. "An  innovaBve  business  is  one  which  lives  and  breathes   'outside  the  box'.  It  is  not  just  good  ideas,  it  is  a  combinaBon   of  good  ideas,  moBvated  team  members  and  an  ins9nc9ve   understanding  of  what  your  customer  wants."         Richard  Branson  -­‐  DTI  Innova9on  lecture,  1998   Sohan  Khatri     222  
223. Techniques   •  “What  IF”…  and  Scenario  Analysis   •  5Why  Techniques   •  Brainstorming   •  Reverse  Brainstorming   •  Focus  Group  Discussion  
224. IdeaAon   •  Which  elements  must  we  study  before   generaBng  business  model  ideas?   •  What  innovaBons  can  we  imagine  for  each   business  model  building  block?   •  What  are  the  most  important  criteria  for   prioriBzing  our  business  model  ideas?  
225. DESIGN  ASPECTS  OF  BUSINESS   MODELS   1. Customer  Insights   2. IdeaBon   3. Visual  Thinking   4. Prototyping   5. Storytelling   6. Scenarios  
226. STRATEGY  
227. Strategy  Landscape  -­‐  Business   Environment:     context,  design  drivers,  and   constraints  
233. Each  of  these  contextual  aspects   offers  feeders  for  strategy   formulaAon  for  business  model   design  and  implementaAon  
234. How  should  your   business  model  evolve   in  light  of  a  changing   environment?  
236. EVALUATING  BUSINESS  MODELS  
240. Perform  Detail  SWOT  analysis  of  each   building  block  of  Business  Model  
241. Strength-­‐Weakness  Analysis  
245. Analyzing  Threats  
247. Assessing  OpportuniAes  
251. Using  SWOT   assessment   analysis  results   to   design  new   business  model   opAons  
252. Value  InnovaAon  
254. Changing  elements  on  the  right-­‐ hand  side  has  implicaBons  for  the   leg-­‐hand  side.  For  example,  if  we   add  to  or  eliminate  parts  of  the   Value  ProposiBon,  Channels,  or   Customer  RelaBonship  Building   Blocks,  this  will  have  immediate   implicaBons  for  Resources,   AcBviBes,  Partnerships,  and  Costs.   IdenBfying  which  elements  of   the  Value  ProposiBon  can  be   eliminated,  reduced,  raised,  or   newly  created.  The  first  goal  is   to  lower  costs  by  reducing  or   eliminaBng  less  valuable   features  or  services.  The  second   goal  is  to  enhance  or  create   high-­‐value  features  or  services   that  do  not  significantly  increase   the  cost  base.   You  can  ask  the  Four  AcBons   Framework  quesBons  (eliminate,   create,  reduce,  raise)  about  each   business  model  Building  Block   and  immediately  recognize   implicaBons  for  the  other  parts  of   the   business  model,  (e.g.  what  are   the  implicaBons  for  the  cost  side   when  we  make  changes  on  the   value  side?   and  vice  versa).  
255. QuesAoning  your  canvas  with  the   four  acAons  framework  
256. Customer  Segment  PerspecAve   Ask  yourself  the  Four  AcBons  Framework  quesBons   about  each  business  model  Building  Block  on  the   customer  side  of  the  Canvas:  Channels,  RelaBonships,   and  Revenue  Streams.  Analyze  what  happens  to  the   cost  side  if  you  eliminate,  reduce,  raise,  or  create  value   side  elements.     •  Which  new  Customer  Segments  could  you  focus  on,   and  which  segments  could  you  possibly  reduce  or   eliminate?   •  What  jobs  do  new  Customer  Segments  really  want   to  have  done?   •  How  do  these  customers  prefer  to  be  reached  and   what  kind  of  relaBonship  do  they  expect?   •  What  are  the  cost  implicaBons  of  serving  new   Customer  Segments?  
257. Value  ProposiAon  PerspecAve   Begin  the  process  of  transforming  your  Value   ProposiBon   by  asking  the  Four  AcBons  Framework  quesBons.   Simultaneously,  consider  the  impact  on  the  cost  side   and  evaluate  what  elements  you  need  to  (or  could)   change  on  the  value  side,  such  as  Channels,   RelaBonships,   Revenue  Streams,  and  Customer  Segments.     •  What  less-­‐valued  features  or  services  could  be   eliminated  or  reduced?   •  What  features  or  services  could  be  enhanced  or   newly  created  to  produce  a  valuable  new  customer   experience?   •  What  are  the  cost  implicaBons  of  your  changes  to   the  Value  ProposiBon?   •  How  will  changes  to  the  Value  ProposiBon  affect  the   customer  side  of  the  model?  
258. Cost  PerspecAve   IdenBfy  the  highest  cost  infrastructure  elements  and   evaluate  what  happens  if  you  eliminate  or  reduce   them.   What  value  elements  disappear,  and  what  would  you   have  to  create  to  compensate  for  their  absence?  Then,   idenBfy  infrastructure  investments  you  may  want  to   make  and  analyze  how  much  value  they  create.     •  Which  acBviBes,  resources,  and  partnerships  have   the  highest  costs?   •  What  happens  if  you  reduce  or  eliminate  some  of   these  cost  factors?   •  How  could  you  replace,  using  less  costly  elements,   the  value  lost  by  reducing  or  eliminaBng  expensive   resources,  acBviBes,  or  partnerships?   •  What  value  would  be  created  by  planned  new   investments?  
259. FIND  POINTS  OF  SYNERGIES  WITH   OTHER  BUSINESS  MODELS     Strategic  alliance   Partnerships   Joint  Ventures   DiversificaAon  (horizontal  /  verAcal)  
260. Design  –  InnovaAon   SaBsfy  Market   Bring  to   Market   Improve   Market   Create  Market   Be  ReacBve   Be  AdapBve   Be  Expansive   Be  Pro-­‐acBve/   ExploraBve  
261. Note  the  followings  carefully   •  CriBcal  Success  Factors     •  Key  Performance  Indicators   •  Metrics  and  Measurements  to  be  used   •  Feedback  Loop     •  Incremental  Improvements   •  Total  Quality  Management  
262. APP  MARKETING  STRATEGIES  
263. 7Ps  of  MarkeAng  
264. In  a    market  that  is  esAmated  to  be  worth  $   25  billion  by  2015,  discoverability  is  the  key   and  this  is  reliant  on  a  clear  app  markeAng   strategy  and  Amely  execuAon.      
265. Study  Consumer  Behavior  Pajerns  
270. Some  prescripAons   •  IdenAfy  Your  Target  Persona  First   •  Consider  Pricing  Carefully   •  Cast  a  Wide  Net  With  Your  Elevator  Pitch   •  ConAnuously  Promote  RetenAon   •  Don’t  Overlook  the  InternaAonal  Market   •  USER  ENGAGEMENT  IS  THE  KEY  
271. ………   •  Make  your  press  kit  pop.   •  Build  an  enAcing  microsite.   •  Create  a  teaser  or  giveaway  campaign.   •  Keep  content  fresh.     •  Build  hype.     •  Ask  customers  for  feedback.  
272. ……..a  high-­‐resoluAon  logo,  sample  design  screens,  an   app  icon,  a  press  release,  a  microsite  and  a  teaser  video.   Make  sure  you  have  a  fantasAc  name  and  icon  for  your   app  that's  catchy  and  connects  with  the  audience   instantly.  The  first  paragraph  of  the  app  descripAon   should  be  your  selling  pitch  and  app  store  screenshots   should  be  customized  to  ajract  your  customer.     One  of  the  most  under-­‐rated,  but  highly  effecAve   strategies  is  app  store  markeAng.  Because  a  lot  of   people  browse  with  keyword  searches,  select  your   keywords  wisely  by  researching  successful  compeAtors.    
273. ………   •  Create  a  Buzz  around  your  App   – a.  Extensive  market  &  compeAAve  analysis   – b.  SEO  and  ASO   – c.  Press  Releases   •  Integrate  social  media   •  Mobile  display  adverAsing   •  Burst  MarkeAng   •  IncenAvized  downloads  
274. An  esAmated  60%  of  downloads   come  directly  from  users  who   discover  your  app  from  organic   search  within  the  app  store,  so  your   app    store  descripAon  is  crucial.    
275. ALL  THE  BEST