Notesale: Turn your study into money

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Business Model Navigator
Patterns

Introduction
Business model literature has not yet reached a common opinion as to
which components exactly make up a business model
...
Due to the reduction to four dimensions the concept is
easy to use, but, at the same time, exhaustive enough to provide a
clear picture of the business model architecture
...
Thus, it should
answer the question ´Who is the customer?´
...

• What: The second dimension describes what is offered to the target
customer, or, put differently, what the customer values
...
It can be defined as a holistic view of a company's
bundle of products and services that are of value to the customer
...
These processes and activities, along with
the involved resources and capabilities, plus their orchestration in the focal
firm’s internal value chain form the third dimension within the design of a
new business model
...
In essence, it unifies aspects
such as, for example, the cost structure and the applied revenue
mechanisms, and points to the elementary question of any firm, namely
how to make money in the business
...
In the end, the customer pays
more than he or she initially assumed
...


AIKIDO
• Who What Value
• Six Flags (1961), The Body Shop (1976), Swatch (1983), Cirque du
Soleil (1984), Nintendo (2006)
• Aikido is a Japanese martial art in which the strength of an attacker is
used against him or her
...
This new value proposition attracts
customers who prefer ideas or concepts opposed to the mainstream
...
Affiliates usually profit
from some kind of pay-per-sale or pay-per-display compensation
...


AUCTION
• What Value
• eBay (1995), Winebid (1996), Priceline (1997), Google (1998), Elance
(2006), Zopa (2005), MyHammer (2005)
• Auctioning means selling a product or service to the highest bidder
...
This allows the
company to sell at the highest price acceptable to the customer
...


Barter (Volunteers)
• What Value
• Procter & Gamble (1970), Pepsi (1972), Lufthansa (1993), Magnolia
Hotels (2007), Pay with a Tweet (2010)
• Barter is a method of exchange in which goods are given away to
customers without the transaction of actual money
...
The
exchange does not have to show any direct connection and is valued
differently by each party
...
This results in increased liquidity which can be
used to amortise debt or to fund investments in other areas
...
In retail especially, companies can easily provide additional
products and offerings that are not linked to the main industry on
which they were previously focused
...


CROWDFUNDING
• How Value
• Marillion (1997), Cassava Films (1998), Diaspora (2010), Brainpool
(2011), Pebble Technology (2012)
• A product, project or entire start-up is financed by a crowd of
investors who wish to support the underlying idea, typically via the
Internet
...


CROWDSOURCING
• How Value
• Threadless (2000), Procter & Gamble (2001), InnoCentive (2001),
Cisco (2007), MyFab (2008)
• The solution of a task or problem is adopted by an anonymous crowd,
typically via the Internet
...
Customer interaction and inclusion can foster a positive
relationship with a company, and subsequently increase sales and
revenue
...
e
...
The goal is to increase loyalty by creating an emotional
connection or simply rewarding it with special offers
...


DIGITALIZATION
• What How
• Spiegel Online (1994), WXYC (1994), Hotmail (1996), Jones
International University (1996), CEWE Color (1997), SurveyMonkey
(1998), Napster (1999), Wikipedia (2001), Facebook (2004), Dropbox
(2007), Netflix (2008), Next Issue Media (2011)
• This pattern relies on the ability to turn existing products or services
into digital variants, and thus offer advantages over tangible products,
e
...
, easier and faster distribution
...


DIRECT SELLING
• What How Value
• Vorwerk (1930), Tupperware (1946), Amway (1959), The Body Shop (1976),
Dell (1984), Nestle Nespresso (1986), First Direct (1989), Nestlé Special
...
In this way, the company skips the retail
margin or any additional costs associated with the intermediates
...
Additionally, such close contact can improve
customer relationships
...
Customers benefit from higher availability and
convenience, while the company is able to integrate its sales and
distribution with other internal processes
...
T (2010)
• The value of a product or service is increased with the customer
experience offered with it
...
This means
that the customer experience must be adapted accordingly, e
...
, by
attuning promotion
...
The user benefits
from a simple cost structure while the company benefits from a
constant revenue stream
...
Typically, the asset is capital intensive but
only required on an occasional basis
...


FRANCHISING
• What How Value
• Singer Sewing Machine (1860), McDonald's (1948), Marriott
International (1967), Starbucks (1971), Subway (1974), Fressnapf
(1992), Naturhouse (1992), McFit (1997), BackWerk (2001)
• The franchisor owns the brand name, products, and corporate
identity, and these are licensed to independent franchisees who carry
the risk of local operations
...
The franchisees benefit from the
usage of well known brands, know-how, and support
...

The free offering is able to attract the highest volume of customers
possible for the company
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FROM PUSH TO-PULL
• What How
• Toyota (1975), Zara (1975), Dell (1984), Geberit (2000)
• This pattern describes the strategy of a company to decentralize and
thus add flexibility to the company's processes in order to be more
customer focused
...


GUARANTEED AVAILABILITY
• What How Value
• NetJets (1964), PHH Corporation (1986), IBM (1995), Hilti (2000),
MachineryLink (2000), ABB Turbo Systems (2010)
• Within this model, the availability of a product or service is
guaranteed, resulting in almost zero downtime
...
The company uses expertise and economies of scale to
lower operation costs and achieve these availability levels
...
1 (1984), Metro Newspaper (1995), Google
(1998), Facebook (2004), Spotify (2006), Zattoo (2007)
• The logic that the user is responsible for the income of the business
is abandoned
...
A very common case of this model is
financing through advertisement, where attracted customers are of
value to the advertisers who fund the offering
...


INGREDIENT BRANDING
• What How Value
• DuPont Teflon (1964), W
...
Gore & Associates (1976), Intel (1991),
Carl Zeiss (1995), Shimano (1995), Bosch(2000)
• Ingredient branding describes the specific selection of an ingredient,
component, and brand originating from a specific supplier, which will
be included in another product
...
This projects the positive brand
associations and properties on the product, and can increase the
attractiveness of the end product
...
The control of all resources and capabilities in terms of value
creation lies with the company
...


LAYER PLAYER
• How Value
• Dennemeyer (1962), Wipro Technologies (1980), TRUSTe (1997),
PayPal (1998), Amazon Web Services (2002)
• A layer player is a specialized company limited to the provision of one
value-adding step for different value chains
...
The
company benefits from economies of scale and often produces more
efficiently
...


LEVERAGE CUSTOMER DATA
• What How
• Amazon Store (1995), Google (1998), Payback (2000), Facebook
(2004), PatientsLikeMe (2004), 23andMe (2006), Twitter (2006),
Verizon Communications (2011)
• New value is created by collecting customer data and preparing it in
beneficial ways for internal usage or interested third-parties
...
e
...


LICENSE
• How Value
• BUSCH (1870), IBM (1920), DIC 2 (1973), ARM (1989), Duales System
Deutschland (1991), Max Havelaar (1992)
• Efforts are focused on developing intellectual property that can be
licensed to other manufacturers
...
This
allows a company to focus on research and development
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LOCK-IN
• What How Value
• Gillette(1904), Lego (1949), Microsoft (1975), Hewlett-Packard
(1984), Nestlé Nespresso (1986), Nestlé BabyNes (2012), Nestlé
Special
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Using another vendor is impossible without incurring
substantial switching costs, and thus protecting the company from
losing customers
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LONG TAIL
• How Value
• Amazon Store (1995), eBay (1995), Netflix (1999), Apple iPod/iTunes
(2003), YouTube (2005),
• Instead of concentrating on blockbusters, the main bulk of revenues is
generated through a 'long tail' of niche products
...
If a vast
variety of these products are offered in sufficient amounts, the profits
from resultant small sales can add up to a significant amount
...

Slack resources, therefore, can be used to create additional revenue
besides those generated directly from the core value proposition of
the company
...
The approach of modular products and
production systems has enabled the efficient individualization of
products
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NO FRILLS
• How What Value
• Ford (1908), Aldi (1913), McDonald's (1948), Southwest Airlines
(1971), Aravind Eye care System (1976), Accor (1985), McFit (1997),
Dow Corning (2002)
• Value creation focuses on what is necessary to deliver the core value
proposition of a product or service, typically as basic as possible
...


OPEN BUSINESS MODEL
• What Who Value
• Valve Corporation (1998), Abril (2008)
• In open business models, collaboration with partners in the
ecosystem becomes a central source of value creation
...


OPEN SOURCE
• Who What How Value
• IBM (1955), Mozilla (1992), Red Hat (1993), mondoBIOTECH (2000),
Wikipedia (2001), Local Motors (2008)
• In software engineering, the source code of a software product is not
kept proprietary, but is freely accessible for anyone
...
Others can
contribute to the product, but also use it free as a sole user
...


ORCHESTRATOR
• How Value
• Procter & Gamble (1970), Li & Fung (1971), Nike (1978), Bharti Airtel
(1995)
• Within this model, the company's focus is on the core competencies
in the value chain
...
This allows the company to reduce costs
and benefit from the suppliers' economies of scale
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PAY PER USE
• What How Value
• Hot Choice (1988), Google (1998), Ally Financial (2004), Better Place
(2007), Car2Go (2008)
• In this model, the actual usage of a service or product is metered
...

The company is able to attract customers who wish to benefit from
the additional flexibility, which might be priced higher

PAY WHAT YOU WANT
• How Value
• One World Everbody Eats (2003), NoiseTrade (2006), Radiohead
(2007), Humble Bundle (2010), Panera Bread Bakery (2010)
• The buyer pays any desired amount for a given commodity,
sometimes even zero
...
The customer is allowed to influence the price, while the seller
benefits from higher numbers of attracted customers, since
individuals‟ willingness to pay is met
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PEER-TOPEER
• What Value
• eBay (1995), Craigslist (1996), Napster (1999), Couchsurfing (2003),
LinkedIn (2003), Skype (2003), Zopa (2005), SlideShare (2006), Twitter
(2006), Dropbox (2007), Airbnb (2008), TaskRabbit (2008), RelayRides
(2010), Gidsy (2011)
• This model is based on a cooperation that specializes in mediating between
individuals belonging to an homogeneous group
...
The company offers a meeting point, i
...
, an online database and
communication service that connects these individuals (these could include
offering personal objects for rent, providing certain products or services, or
the sharing of information and experiences)
...

Performance based contractors are often strongly integrated into the
value creation process of their customers
...
Extreme
variants of this model are represented by different operation
schemes in which the product remains the property of the company
and is operated by it
...
T (2010), Nestlé
BabyNes (2012)
• The basic product is cheap or given away for free
...
The initial product's price lowers customers‟
barriers to purchase, while the subsequent recurring sales crossfinance it
...


RENT INSTEAD OF BUY
• What How Value
• Saunders System (1916), Xerox (1959), Blockbuster (1985), Rent a
Bike (1987), Mobility Carsharing (1997), MachineryLink (2000), CWSboco (2001), Luxusbabe (2006), Flexpetz (2007), Car2Go(2008)
• The customer does not buy a product, but instead rents it
...
The
company itself benefits from higher profits on each product, as it is
paid for the duration of the rental period
...


REVENUE SHARING
• What How Value
• CDnow (1994), HubPages(2006), Apple iPhone/AppStore(2008),
Groupon (2008)
• Revenue sharing refers to firms‟ practice of sharing revenues with
their stakeholders, such as complementors or even rivals
...
One party is able to
obtain a share of revenue from another that benefits from increased
value for its customer base
...
Because no huge investment in research or development is
necessary, these products can be offered at a lower price than the
original product
...
The term
„reverse‟ refers to the process by which new products are typically
developed in industrial countries and then adapted to fit emerging
market needs
...
Thus, the main bulk of profits are
generated from the wealthy customer base
...
Additionally, it has a positive effect on the
company's image
...
This is particularly suited
for process steps that add relatively little perceived value for the
customer, but incur high costs
...
This can also increase
efficiency, since in some cases, the customer can execute a
valueadding step more quickly and in a more target-oriented manner
than the company
...
The
hosting store can benefit from more attracted customers and is able to
gain constant revenue from the hosted shop in the form of rent
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SOLUTION PROVIDER
• What How
• Lantal Textiles (1954), Heidelberger Druckmaschinen (1980), Tetra Pak
(1993), Geek Squad (1994), CWS-boco (2001), Apple iPod/iTunes (2003),
3M Services (2010)
• A full service provider offers total coverage of products and services in a
particular domain, consolidated via a single point of contact
...
By becoming a full service provider, a company can prevent
revenue losses by extending their service and adding it to the product
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SUBSCRIPTION
• How What
• Blacksocks (1999), Netflix (1999), Salesforce (1999), Jamba (2004),
Spotify (2006), Next Issue Media (2011), Dollar Shave Club (2012)
• The customer pays a regular fee, typically on a monthly or an annual
basis, in order to gain access to a product or service
...


SUPERMARKET
• What Value
• King Kullen Grocery Company (1930), Merrill Lynch (1930), Toys“R”Us
(1948), The Home Depot (1978), Best Buy (1983), Fressnapf (1985),
Staples (1986)
• A company sells a large variety of readily available products and
accessories under one roof
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More customers are attracted due
to the great range on offer, while economies of scope yield
advantages for the company
...
Customers with lower purchasing power benefit from
affordable products
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TRASH-TOCASH
• Who What How Value
• Duales System Deutschland (1991), Freitag lab
...
The profit scheme is
essentially based on low-to-no purchase prices
...
This also
addresses customers‟ potential environmental awareness ideals
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1 (1984), Amazon Store
(1995), eBay (1995), Metro Newspaper (1995), Priceline (1997),
Google (1998), Facebook (2004), MyHammer(2005), Elance (2006),
Zattoo (2007), Groupon (2008)
• A two-sided market facilitates interactions between multiple
interdependent groups of customers
...
The two sides usually come from disparate groups,
e
...
, businesses and private interest groups
...
This allows a company to distinguish
its products or services greatly from others
...
The necessary investments for these differentiations are
met by the relatively high prices that can be achieved - which usually
allow for very high margins
...
As an example, an online platform provides the customer with
the necessary support in order to design and merchandise the product,
e
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, product design software, manufacturing services, or an online shop to
sell the product
...
The customer benefits from
the potential to realize entrepreneurial ideas without having to provide the
required infrastructure
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WHITE LABEL
• What How
• Foxconn (1974), Richelieu Foods (1994), Printing-In-A-Box (2005)
• A white label producer allows other companies to distribute its goods
under their brands, so that it appears as if they are made by them
...
This way, various customer segments can be
satisfied with the same product

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