BUILDING

BUSINESS
MODELS
Presented by: Group 4
 What is a Business
Models?
-A company's strategic plan for
creating, delivering, and capturing
value to generate profit.
Different types of Business
Models
1. Manufacturer – is a person or a registered company
who transforms raw materials or components into
finished goods using a combination of labor, equipment,
and machinery.
2. Distributor – involves a company, purchasing products
from a manufacturer and then selling them to retailers,
wholesalers, or consumers.
3. Retailer – a retailer is a person or business that
purchases goods from the wholesaler or directly from
the manufacturer.
4. Franchise – a franchise can be a manufacturer,
distributor or retailer. It is also a contractual
relationship where a franchisor, the established brand
owner, grants a franchisee the right to operate a
business using the franchisor's brand name, proven
business system, and trademarks.
5. Brick-and-mortar - is a traditional retail strategy
where companies operate physical stores that
customers can visit to purchase products or services
in person. This model relies on face-to-face customer
interaction, allowing for personalized service and a
hands-on product experience.
6. Bricks-and-clicks – It is a model where a company
combines its online and a physical presence. Customers may
place their orders online and then pick up the products from
the physical store.
7. Direct Sales – In this model, the product are directly sold to
the customers.
8. High touch – this models uses a lot of human interaction
and involvement in order to the experience highly
personalized. This type of business operates on trust and
credibility to earn revenues for the company.
9. Family-owned – a structure where a company is
significantly owned and controlled by members of a single
family, often with the intent of intergenerational transfer of
leadership and wealth.
Some of the basic types of
modern business models
1. Nickle-and-dime – setting a low base price for a core
product to attract customers, then generating profit by
adding extra charges for various upgrades, services, and
add-ons.
2. Freemium – offers a basic version of a product or
service for free and charges for advanced or supplemental
features, allowing a large user base to be attracted and
converted into paying customers over time.
3. E-Commerce – outlines a company's strategy for selling
goods or services online to generate revenue and profit.
4. Subscription – This model offers long term contract to
customers by paying a fixed amount every month or year.
5. Aggregator – Brings together independent service
providers under a single, unified brand to offer a service to
customers.
6. Online Marketplace – connects buyers and sellers on a
digital platform, acting as an intermediary to facilitate
transactions of goods or services without the marketplace
holding inventory.
7. Hidden Revenue – In this model the company offers its
service for free. The company earns revenue streams from
advertisements which are paid for by identified sponsors
when information is shared.
8. Data Licensing / Data Selling – allows companies to
monetize their data assets by granting others permission
to use them in exchange for fees or royalties, creating new
revenue streams and valuable insights for both parties.
9. Agency-Based – involves a firm that provides
specialized professional services, acting as an
intermediary or service provider for clients by selling its
intellectual capital, skills, and problem-solving
capabilities, rather than products.
10. Affiliate Marketing – This is a commission-based
model where companies make profit by promoting a
partner’s product and convince its followers and users to
buy the same.
11. Drop shipping – In a drop-shipping business, the owner
has no ownership of the product or hold any inventory but he
has an E-store.
12. Network Marketing – often called multi-level marketing,
this model works on direct marketing and direct selling
philosophy. There are no retail shops here but the offerings
are sold to the target market directly by the participants.
13. Crowdsourcing – involves a company soliciting ideas,
services, or solutions from a large group of people, often
online, rather than relying on internal employees or
traditional suppliers.
14. Block chain – This is a digital ledger that is irreversible
and decentralized.
15. Low touch – In this model there is minimum human
assistance or intervention in selling a product or service.
16. Razor and Blade – a strategy where a company sells
a main product, the "razor," at a low price to attract
customers, but then generates significant profit from
high-margin, complementary "blades" that users must
repeatedly purchase to use the main product.
17. Consulting – The consulting business is composed of
experienced and qualified professionals that offers
services based on their line of expertise.
18. Social Enterprise – This model aims to put up a
business more for creating a positive change but with
profit.
 The Business Model Canvas
- is a strategic management tool that helps
entrepreneurs and managers visualize, describe,
and analyze a business model on a single, one-
page document. Developed by Alexander
Osterwalder and Yves Pigneur, the canvas
simplifies a complex business plan into nine
fundamental building blocks that show how a
company creates, delivers, and captures value.
The 9 Fundamental BMC
1. Key Partnerships – This includes the network of
suppliers and partners that help a company
succeed. Businesses create partnerships to optimize
operations, reduce risks, or acquire necessary
resources. Partnership also has four different types.
a. Strategic Alliances – This partnership is an
arrangement between non-competitors to help each
other do an equally advantageous task but retaining
their independence.
b. Coopetition – a portmanteau of "cooperation" and
"competition," describing situations where competing
entities work together to achieve a common goal while
still competing in other areas.
c. Joint-ventures – is a temporary business
arrangement where two or more parties, typically
companies, pool their resources to achieve a specific,
shared goal, such as a project or market entry.
d. Buyer-supplier relationship – is the interaction
between companies for the exchange of goods or
services, which can range from simple transactional
exchanges to complex, long-term strategic partnerships.
2. Key Activities – The most important actions a business
must perform to operate successfully and deliver its value
proposition. Here are the seven categories of key activities:
a. Marketing – Adding value by promoting products or
services such as advertising a product to create awareness
and hence demand.
b. Sales – This concerns selling a product or services. For
instance, personal selling includes creating customer
relationships, discovering solutions to the customer’s
problem and closing sales.
c. Design – This is about forming designs of various items.
d. Development – This is adding a value through developing
products and services.
e. Operations – The manufacturing of products and
delivery services.
f. Distribution – This is about reaching out to the
customers to sell them and delivering the items to them.
g. Customer experience – Customer service, consulting
and customer support are some of the activities involve
here.
3. Key Resources – describes the most important assets
required to make a business model work. Here are the
four categories of resources, namely;
a. Physical – these are physical assets which are
considered tangible resources that a company make use of
to form its value proposition.
b. Intellectual – These are non-physical, intangible
resources such as brand, patents, proprietary knowledge,
copyrights, and even partnerships.
C. Human – Employees are the biggest and most vital
resources of any company but are often overlooked.
d. Financial – All businesses have key resources in
finance, however some will have stronger financial
resources compared to others.
4. Customer Value Proposition – is a statement that
explains the unique value a company offers to its
customers, highlighting the benefits and solutions to their
needs and problems, and why they should choose this
company over competitors.
Types of
CVP’s
1. All Benefits – The company in this type of CVP just list all the
benefits or solutions that a product or services offering can
deliver and serve to target customers. The more benefits that can
be listed down, the better.
2. Favorable Points of Difference – The company using the CVP
tries to differentiate their solution by conveying its point of
difference compared to the customers next-best alternative.
3. Resonating Focus – is a marketing strategy for crafting a CVP
that emphasizes the one or two most important benefits that most
directly address specific customer needs, differentiating the
product by articulating its unique value from the customer's
perspective, rather than simply listing features or benefits.
There are factors considered in the
development of the customer value proposition
which are:
a. Functional Value – The product and or service offers the
solution to a particular problem. Said solution is convenient,
better version, easier to use and more complete compared to
others.
b. Emotional Value – The product and or service is pleasant
to look at or attractive. Here the customer is fond of this
offering because of sentimental reasons, based from tradition
or the advice of people attached to the customer.
c. Economic Value – The product and or service offers a
financial advantage, promotes energy conservation, saves time
or is innovative
d. Symbolic Value – For the customer the product and or
service is valuable because of a certain type of status given
to the customer. This status can be a social responsibility
orientation or based from the brand.
5. Customer Relationship – are the types of relationship
a company forms with its particular customer segments.
These relationships are essential in order to gain
customers.
Types of customer relationship
a. Personal assistance – Founded on human
collaboration, the customer can communicate with a real
salesperson to provide help during and after the sales
process.
b. Dedicated Personal Assistance – This is the deepest and
most intimate type of relationship that involves assigning a
salesperson to an individual customer.
c. Self-service – Basically there is no direct relationship that
exist here, although all the essential things to assist
customers help themselves are given.
d. Automated Services – This is a combination of customer
self-service and automated processes.
e. Communities – refers to building loyalty and engagement
by connecting customers with each other and the brand,
fostering a sense of belonging through shared interests, and
creating a space for feedback and support, which can lead to
increased retention, brand advocacy, and product innovation.
f. Co-creation – Basically, this is an extension of the
traditional customer-vendor relationship. Here customers
have the chance to co-create value with the company such
as in designing and innovating products.
6. Customer segments – refers to the demographics such
as age, ethnicity, profession and/or gender, or
psychographic factors which include spending behavior,
interests, and motivations.
Various Types of Customer Segments
a. Mass – This is basically an unsegmented market in
which products with mass appeal products such as aspirin,
orange juice, soft drinks, paperback romances, and the like
are offered to every customer.
b. Niche – This market speaks of a customer segment with
every distinct characteristics and extremely specific needs.
c. Segmented – refers to dividing a broad market or a
business into smaller, distinct sub-groups based on shared
characteristics to tailor products, services, and marketing
efforts more effectively.
d. Diversified – means a company expands its operations
by creating new products, offering new services, or
entering new markets that are different from its existing
business lines.
e. Multi-sided platforms – This type of customer
segment is used when customer segments are reliant with
each other.
7. Channels – are the touch points through which a
company communicates with its target customer. Hence,
they play a big role in defining the customer experience
and providing value.
The five phases of channel
a. Awareness – This is the marketing and advertising
phase.
b. Evaluation – in this phase, the customer evaluates,
read about or uses the product or avail of the service in
order to formulate an honest opinion about it.
c. Purchase – This phase is the actual sales process. Here
the customers buy their chosen product or service.
d. Delivery – Also known as the fulfillment stage of
the process, this is the phase when the promised
value proposition has reached the customer.
e. After Sales – This phase centers in giving
customer care and support after purchase.

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