Business Model•A set of planned activities designed to result in a

marketplace•BUSINESS PLAN

A document that describes a firm’s business model. E-COMMERCE BUSINESS MODEL

A business model that aims to use and leverage the unique qualities of the

internet and web.

E-commerce Business Models

1. Customer Value Proposition

•Why Should the customer buy from you?

•How company’s product or service fulfills the need of customers?

•Wall mart – Save Money live better •PizzaHut – In 17 n half minutes

delivery

VALUE = BENEFITS - COST

Eight Key Elements of a Business model

Value Preposition Include

• Personalization• Customization• Reduction in Product search cost• Reduction of price discovery cost• Managing Product delivery

Examples:

• Fresh Direct» http://www.freshdirect.comValue Proposition: Fresh , convenience and saved

time

Example

• Amazon» http://www.amazon.com» Unparalleled Selection, Convenience, delivery in

24hrs

Social Marketingand this is done

by customer/users

Example

• Acer» http://www.acer.com» Time saving , Customization , Personalization

Example

• Dell» http://www.dell.com» Time saving , Customization , Personalization

2. Revenue Model

• How will you earn Money• Describes how the firm will earn revenue,

produce profits, and produce a superior return on invested capital

• Profits are not sufficient to make a company successful but firm produce returns greater than alternative investments.

Example:

• Retailers, sell a product, such as a personal computer to a customer , this generate revenue.

• The profits from the business constitute the return on invested capital.

• And this return is greater than the merchant could obtain by saving in account or by investing in real state

E-Commerce Primary Revenue Models

• Advertising Revenue Model • Subscription Revenue Model• Transaction Revenue Model• Sales Revenue Model• Affiliate Revenue Model

Advertising Revenue Model

• Examples » Yahoo-also its provide a forum / group» Msn» Google

Subscription Revenue Model

• Examples » WSJ.COM - » Consumerreports.com - $5.95 monthly / $26 annual

fee» Yahoo premium Services

Transaction Fee Revenue Model

• Examples » eBay» Amazon.com

Sales Revenue Model

• Examples » Amazon.com» LLBean.com» Gap.com

Affiliate Revenue Model

• Examples » MyPoints.com

3. Market Opportunity • Refer to the company’s intended

marketspace• And opportunity available for company to

operate . • Marketspace(consist on multiple segments

)• The market opportunity divided into small

niche(sub segments).

Example: 3A software training company that

create software's learning systems for sale to corporations on the

internet.Over all size Computer training market 100 %

70% 30%

Realistic Market opportunity for start

up firm

Competitive Environment • Refer to the other companies operating in the• same marketspace selling similar products. • Can we(our business) enter in that

marketspace?• The competitive environment for a company

influenced by several factors. Like – How many competitors are active.– How large their operations are.– What the market share of each.– How profitable these firms . – And how they price their products.

Direct & Indirect Competitors • Firms have both competitors (D & I)• Direct: that selling similar products/services

in same market segment. • Example: Priceline.com & Travelocity.com• Indirect : may be in different industries but

they compete indirectly• Example: Automobile manufactures and

Airline companies • CNN & ESPN

Question?• Existence of a large number of

competitors • Market is Profitable?

• If there is no Competitors In Marketspace.• Can we make money?

Competitive Advantage• Achieved BY a firm when it can produce a

superior product to market at a lower price than most or all, of its competitors.

Some firms

Develop Global market

Other firms

Develop National or Regional markets

Firms that can provide superior products at lowest cost on a global basis are truly advantage

Competitive Advantage-> Asymmetry

• May be firm has more experienced, knowledgeable, and loyal employees than any competitors ..

• May be firm has a patent on a product that others cannot .Asymmetry exists whenever one participant

in market has more resources than other Competitors

Firms that can provide superior products at lowest cost on a global basis are truly advantage

Competitive Advantage-> First Mover Advantage

• One unique competitive advantage derives from being first mover.

• May be firm has a patent on a product that others cannot .

Advantage for a firm that results from being the first into a

marketplace

As amazon.com first in books retailingOffline example: Paktel(First Mover) -----but surviver--- Jazz(Follower)

Coke, Pepsi

Competitive Advantage-> Complimentary Resources

• Resources and assets not directly involved in the production of a product but require

For Success

Marketing Management Financial Assets

Reputation

Competitive Advantage-> Unfair competitive advantage

• Occurs when one firm develops an advantage based on a factor that other firms cannot purchase .

Brand Name

loyalty trust reliability

Unfair C-Advantage

Quality

Macromedia -> Adobe.com

Charge Premium

prices

Competitive Advantage-> No competitive advantage (Perfect Market)

• Perfect Market : a market in which there are no CA

• OR Asymmetries because all firms have equal access to all factors of production.

• ? Real markets are imperfect

Coca Cola CA IS LONG TERM BUT NOW CHALLENGED BY FRUIT, HEALTH AND UNIQUE FLAVOR DRINKS.

Competitive Advantage-> LEVERAGE

• WHEN A COMPANY USES ITS COMPETITIVE ADVANTAGES TO ACHIEVE MORE ADVANTAGE IN SURROUNDING MARKETS.

• AMAZON.COMVs

Freshdirect.comHave huge customer database -> Now he move into

online Grocery business as well fresh foods (fresh.amazon.com)

Market Strategy• Marketing : Everything you do to promote your

company’s products and services to potential customers is known as marketing .

The plan you put together that details exactly how you

intend to enter a new market and attract new

customer.Mountain Dew: Give free bottles to attract customers.

Ufone give free Sims's at initial level Microsoft office offer free trail version

Benefits

Part of Freshdirect Strategy , is to develop close supply chain partnerships with growers and

manufacturers so it purchase goods at lower prices directly from the source. And lower prices to

customer .

IN 2007 250, 000 ACTIVE CUSTOMRS.

FRESH DIRECT PAYS TO

SUPPLIER IN 4 BUSINESS

DAYS AFTER DELIVERY ,

BUT INDUSTRY

PATTEREN IS 35 DAYS.

CUSTOMER RELATIONSHIP MANAGEMENT

At start up ,AOL used sampling of millions of free CD-ROM’S to attract new users .

And advertisement in magazines and news papers.

Organizational Development

• It is rare that one person alone can grow an idea into a multi-million dollar company.

Companies E-commerce Business

Employees and set of business Procedures

Organizational Development

• IN short ,Every new business need an organization to efficiently implement their business plans and strategies.

• Many firms fails due to lack of organizational structure .

Plan describes how the company will organize the

work that needs to be worked.

Organizational Development

• Typically , work is divided into functional departments, such as

Production Shipping Marketing Customer Support Finance

Jobs within these functional areas are defined,

Then recruitment begins for specific job titles and responsibilities

Organizational Development

• Mostly , in the beginning those persons are hired who perform multiple tasks.

• For example: At start up a company have one marketing manager.

But after two are three year

A marketing position broken down into seven separate jobs done by seven individual.

Organizational Development

• Example: Ebay(an auctions site ) Founder

Pierre Omidyar

To help his friend PEZ

BUT within few months the volume of business exceeded . What he alone could handle?

So he hiring people with more business experience to help out . Soon company had many employees, departments and

business managers.

Management Team

• Employees of the company responsible for making the business model work .

A strong Management Team

Outside Investors Market Specific

Knowledge

And Experience in Implementing business plan.

Management Team

Google stanford grad students 1998Sergey brin and larry page

A strong Management Team

May not be able to salvage a weak business model , but the team should be able to change the model and redefine the business

Management Team

• Identify good managers for a business startup, – First consider kind of experience– His/her Technical Background– His/her supervisory experience– How many year in a particular area– What job functions should be fulfilled first

Production Finance Marketing Operations

Thanks

http://hailey.tech.officelive.com

typically thought of as a low-cost way for businesses to obtain rights to use software as needed versus licensing all devices with all applications.