1. Marketing & Innovation
Session 02: Business Model Canvas
Marcos LIMA, PhD
Skema Business School

2. Knowledge Management, Innovation and New Products
How are these concepts related?
Do we have an innovative Organization?
Do we have an innovation strategy?
Market Results
Innovation
Business Model Positioning Process Marketing Mix
Targeted Segments
Knowledge Management
New Products & Services
Technology

3. Business Models are ‘Iterative’!
Structure of ‘The BM Generation’ Textbook

4. Business Models Are not New!
Examples of Innovative BM
Diners Club, 1950
Xerox pay-per-copy, 1959

5. What is a Business Model
Your Definition?
Alex Osterwalder’s Definition
A business model describes the rationale of how an organization creates, delivers and captures value.

6. Strategic Marketing and Value Creation
Physical Process: What is wrong here?
Source: Lannings & Michaels 1988 apud Kotler, 2009

7. Source: Lannings & Michaels 1988 apud Kotler, 2009
Strategic Marketing
Physical Process x Value Creation Process
Source: Lannings & Michaels 1988 apud Kotler, 2009

8. Marketing Planning Process
Technological Forces
Economic Forces
Product/Brand Positioning
Cultural Forces
Segmentation /Targeting
Place/ Distribution
Product
Social Forces
Promotion
Price
Marketing Environement
Legal/ Political Forces
Marketing Positioning
Competitive Advantage
Marketing Mix
Competitive Forces
Customer Needs

9. Marketing Planning Process
Technological Forces
Social Forces
Competitive Forces
Legal/Political Forces
Cultural Forces
Economic Forces
Market / Product Positioning
Segmentation /Targeting
Competitive Advantage
Choosing the Value
Place/ Distribution
Product
Promotion
Promotion
Price
Marketing Environement
Marketing Positioning
Providing the Value
Marketing Mix
Customer Needs
Communicating the Value

10. Differen- tiation attribute A Differen- tiation attribute B
Strategic Marketing
Choosing the Value
A. Segmentation
B. Targeting
C. Positioning
Differen- tiation attribute A
Differen- tiation attribute B

11. Strategic Marketing

12. Segmentation

13. Video-Case: The Strategy

14. Targeting

15. Targeting

16. Positioning
Identity: The way a company aims to identify or position itself
Image: The way the public perceives the company or its products
Positioning
Brand
Source:

17. Positioning Map

18. Positioning: The Mountain Dew Case
What do you think is this brand’s positioning?

19. Positioning Positioning Statement draft for Mountain Dew:
To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine.
Source:

20. Positioning Map
Sugar
Caffeine

21. Positioning Value Proposition

22. Positioning & the Mix

23. The BM CANVAS

24. 9 Blocks of BMC WHO do you help? WHO do you deliver value to?
Choose to serve segments whose needs you know well

25. 9 Blocks of BMC How do you help? What value are customers getting?
Seek to solve customer problems and satisfy (unmet) customer needs
Typical Value propositions
Newness
Performance
Customization
‘Getting the job done’: turn-key solutions
Brand / Status
Design
Price
Cost reduction
Risk reduction
Accessibility
Convenience / usability

26. 9 Blocks of BMC How do they know you? How do you deliver value?
Communication, distribution and sales channels
Channel Phases
Awareness
Evaluation
Purchase
Delivery
After Sales

27. 9 Blocks of BMC Channel Phases Channel Phases Awareness Evaluation
Purchase
Delivery
After Sales

28. 9 Blocks of BMC How do you interact with customers ?
Can you earn their loyalty?
Customer relationship motivations:
Customer acquisition
Customer retention
Sales boosting (upselling)
CRM tools
Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation

29. 9 Blocks of BMC CRM tools Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation
Customer relationship motivations:
Customer acquisition
Customer retention
Sales boosting (upselling)
CRM tools
Personal assistance
Dedicated personal assistance
Self-service
Automated services
Communities
Co-creation

30. 9 Blocks of BMC What to you get from the relationships you build?
Revenue (and other benefits!)
One-time transaction revenues
Recurring revenues (subscription)
Types of

31. 9 Blocks of BMC Main Revenue Types Asset sale Usage fee
Subscription fee
Lending/ Renting / Leasing
Licensing
Brokerage fees (credit card model)
Advertising
One-time transaction revenues
Recurring revenues (subscription)
Types of Pricing Mechanisms
Fixed menu pricing
Dynamic pricing (based on market conditions; ex.: yield management)

32. 9 Blocks of BMC What you are What you have Your organization
Your resources
Categories of resources:
Physical / Material
Financial
Intellectual / Informational
Human

33. 9 Blocks of BMC
What you do
Critical competences

34. 9 Blocks of BMC Examples of Key Activities: Production Problem solving
Platform / Network
eBay’s business model requires that the company continually develop and maintain its platform: the Web site at eBay.com. Visa’s business model requires activities related to its Visa® credit card transaction platform for merchants, customers, and banks. Microsoft’s business model requires managing the interface between other vendors’ software and its Windows® operating system platform.

35. 9 Blocks of BMC Who helps you Outsourced activities?
Outside resources?

36. 9 Blocks of BMC Types of Partnerships:
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between competitors
3. Joint ventures to develop new businesses
4. Buyer-supplier relationships to assure reliable supplies
Motivations for partnerships
Optmization / economy of scale
Reduction of risk / uncertainty
Acquisition of resources / activities

37. 9 Blocks of BMC
What you give
Financially or otherwise…

38. 9 Blocks of BMC Cost structures Fixed Variable Economies of scale
Economies of scope

39. BMC Overview

40. Competencies Required by the BMC

41. Brainstorming with the BMC

42. ‘Long Tail’ Business Models

43. ‘Long Tail’ Business Models

44. ‘Long Tail’ Business Models

45. Lego Factory: A Case of ‘Long Tail’ BM Failure
LEGO®’s New Long Tail The Danish toy company LEGO started manufacturing its now famous interlocking bricks in Generations of children have played with them, and LEGO has released thousands of kits around a variety of themes, including space stations, pirates, and the Middle Ages. But over time, intensifying competition in the toy industry forced LEGO to seek innovative new paths to growth. It started licensing the rights to use characters from blockbuster movies such as Star Wars, Batman, and Indiana Jones. While such licensing is expensive, it proved to be an impressive revenue generator. In 2005 LEGO started experimenting with user-generated content. It introduced LEGO Factory, which allows customers to assemble their very own LEGO kits and order them online. Using software called LEGO Digital Designer, customers can invent and design their own buildings, vehicles, themes, and characters, choosing from thousands of components and dozens of colors. Customers can even design the box containing the customized kit. With LEGO Factory, LEGO turned passive users into active participants in the LEGO design experience. This requires transforming the supply chain infrastructure, and because of low volumes LEGO has not yet fully adapted its support infrastructure to the new LEGO Factory model. Instead, it simply tweaked existing resources and activities. In terms of a business model, though, LEGO took a step beyond mass customization by entering Long Tail territory. In addition to helping users design their own LEGO sets, LEGO Factory now sells user-designed sets online. Some sell well; some sell poorly or not at all. What’s important for LEGO is that the user-designed sets expand a product line previously focused on a limited number of best-selling kits. Today this aspect of LEGO’s business accounts for only a small portion of total revenue, but it is a first step towards implementing a Long Tail model as a complement—or even alternative—to a traditional mass-market model.

46. ‘Long Tail’ Business Models

47. Multi-Sided Platforms
Platform BM Pattern

48. Multi-Sided Platforms
Multi-sided Platforms: Google

49. Multi-Sided Platforms
Wii x PSP / Xbox

50. Multi-Sided Platforms
Apple’s Evolution into a Platform

51. ‘Free’ or ‘Freemium’ Models
Freemium BM Pattern

52. ‘Free’ or ‘Freemium’ Models
Metro, Free Newspaper

53. ‘Free’ or ‘Freemium’ Models
Flickr

54. ‘Free’ or ‘Freemium’ Models
Skype

55. Marcos Lima limamarcos@gmail.com
Good Luck!
Marcos Lima