1. Chapter 3 Enhanced Lecture Slides Business Models Exhibits and Tables
Copyright © 2000 by Marketspace LLC

2. Exhibit 3-1: Components of a Business Model
Value Cluster
Marketspace Offering
Resource System
Financial Model

3. Supporting Slide 3-A: Point-Counterpoint: Single vs
Supporting Slide 3-A: Point-Counterpoint: Single vs. Cluster of Benefits

4. Percentage of Customers Who Care About Attribute
Exhibit 3-2: Shattering the Myth That Consumers Care Only About Prices Online
Percentage of Customers Who Care About Attribute
Attribute
Source: JP Morgan Report: etailing and the five Cs

5. Table 3-1: Consumer Decision Process — Flower Purchase Example
Disposal
Loyalty
Satisfaction
Purchase Decision
Evaluation of Alternatives
Information Search
Problem - Recognition
Pre-Purchase
Purchase
Post-Purchase

6. Evaluation of Alternatives
Supporting Slide 3-B: Consumer Decision Process — Flower Purchase Example
Flowers
Disposal
Loyalty
Satisfaction
Purchase Decision
Evaluation of Alternatives
Information Search
Problem - Recognition
Pre-Purchase
Purchase
Post-Purchase
Need recognition, potentially triggered by a holiday, anniversary or everyday events
Search for ideas and offerings, including:
Available online and offline stores
Gift ideas and recommendations
Advice on selection style and match
Evaluation of alternatives along a number of dimensions, such as price, appeal, availability, etc.
Purchase decision
Message selection (medium and content)
Post-sales support
Order tracking
Customer service
Education on flowers and decoration
Post-sale perks

7. Exhibit 3-3: Egg Diagram for 1-800-flowers.com
Gift reminder service
Holiday specials
Everyday celebrations suggestions
Special occasion suggestions
Ideas and Information
“Care and handling”
“Do it yourself”
Special events and educational workshops held at stores
Floral ideas
Garden ideas
Home ideas
Gift ideas
Gourmet ideas
Store locator
Recommendations by budget
Bestsellers
Flower / Gift Decision Process
Need Recognition
Product Offering
Gift Recommendations
Education on Flowers and Decoration
Search for Ideas and Offerings
Gift guru
Favorite gifts
Gift frequency
Gift impossible
Gift baskets
Corporate gift services
Post-Sale Support
Order receipt
eQ&A online customer service
FAQ
Customer service inquiry form
Post-Sale Support and Perks
Evaluation of Alternatives
Product price
Product picture
Product description
Delivery information
Delivery availability
Perks
Miles earned with flower purchases
Free gifts
Discounts at AOL & BN.com with flower purchases
Member specials
Message Selection
Purchase Decision
Shopping basket
E-commerce transaction
Special shopping features
Delivery outside US
1-800-lasfloras.com
Gizmo fully-animated greeting cards
Physical cards in gifts

8. Exhibit 3-4: 1-800-flowers.com Resource System
Address Book
BloomNet Network
Third-Party Contractors
Strong Distribution Network
Gift
Recommend-
ations
Fulfillment Center
Stores
Online Gift Center
Gift Reminder
Broad Assortment of Gifts
High Quality of Flowers
Rich Content
Personalization Capabilities
Popular Website
Garden Works
Integrated Partner Offers
Telephone
3,000 Affiliates
Plow & Hearth
Online
Customer Service
Widespread, Easy Access
Great Foods
Multiple Contact Points
Franchise Stores
Catalog
Technology
Strong Brand Name
Wide Reach to Customers
Customer Service Centers
= Core Benefits
Snap
Starmedia
= Activities & assets
Integrated online offline Systems
MSN
AOL
= Capabilities

9. Supporting Slide 3-C: Benefits and Challenges of Hybridization
Persistent connection with customers
New value for customers
Access to new customers
Scalability
Cannibalization
Channel conflict
Customer confusion
Investor confusion

10. Exhibit 3-5: Online/Offline Egg Diagram for 1-800-flowers.com
Prompts on toll-free number recording
Suggestions from CSRs* in-store and via phone
Special events and educational workshops held at stores
Prompts on toll-free number recording
Suggestions from CSRs* in-store and via phone
Brochure
Gift reminder service
Holiday specials
Everyday celebrations suggestions
Special occasion suggestions
Offline Product Offering
Ideas and Information
“Care and handling”
“Do it yourself”
Floral ideas
Garden ideas
Home ideas
Gift ideas
Gourmet ideas
Store locator
Recommendations by budget
Bestsellers
Flower / Gift Decision Process
Need Recognition
Online
Product Offering
Gift Recommendations
Education on Flowers and Decoration
Search for Ideas and Offerings
Gift guru
Favorite gifts
Gift frequency
Gift impossible
Gift baskets
Corporate gift services
Suggestions from CSRs in stores via phone
Brochure
Post-Sale Support
In-store customer service
Customer service on toll-free number
Order receipt
eQ&A online customer service
FAQ
Customer service inquiry form
Post-Sale Support and Perks
Evaluation of Alternatives
Product price
Product picture
Product description
Delivery information
Delivery availability
Information from CSRs in-store and via phone
Brochure
Perks
In-store specials
Specials offered via phone
Miles earned with flower purchases
Free gifts
Discounts at AOL & BN.com with flower purchases
Member specials
Message Selection
Purchase Decision
Shopping basket
E-commerce transaction
Special shopping features
Delivery outside US
1-800-lasfloras.com
Gizmo fully-animated greeting cards
Physical cards in gifts
Select card in-store
Select card via phone
Purchase in-store
Purchase via phone
*CSR = Customer service representative

11. Supporting Slide 3-D: Online and Offline Integration for the 1-800-flowers.com Resource System
Address Book
BloomNet Network
Third-Party Contractors
Strong Distribution Network
Gift
Recommend-
ations
Fulfillment Center
Stores
Online Gift Center
Gift Reminder
Broad Assortment of Gifts
High Quality of Flowers
Rich Content
Personalization Capabilities
Popular Website
Garden Works
Integrated Partner Offers
Telephone
3,000 Affiliates
Plow & Hearth
Online
Customer Service
Widespread, Easy Access
Great Foods
Multiple Contact Points
Franchise Stores
Integrated on-line off-line systems
Catalog
Technology
Strong Brand Name
Wide Reach to Customers
Customer Service Centers
= Online Activities & Assets
Snap
Starmedia
= Offline Activities & Assets
Integrated on-line offline systems
MSN
AOL

12. Supporting Slide 3-E: 1-800-flowers.com Partnerships
American Airlines Advantage, Delta Airlines SkyMiles, United Airlines Mileage Plus
Earn frequent-flyer miles with flowers.com purchases
MCI WorldCom
Receive flowers.com gift certificates with long distance sign-up
Receive 10 percent off every flowers.com purchase with MCI WorldCom membership
America Online
First agreement signed in 1994
Exclusive marketer of fresh-cut flowers across key AOL brands until 2003
One-year exclusive agreement to market gardening products commenced November 1999
Microsoft Networks
Premier floral partner and anchor in the MSN home and garden department
Products, advertising and links featured on MSN shopping channel
Snap.com
One of the 45 premier merchants in Snap shopping service (online e-superstore)
Anchor tenant in Snap.com flower shop
To be spotlighted in select Snap.com on-air promotions, scheduled to run on the NBC Television Network during the Valentine’s Day and Mother’s Day periods
Source: flowers.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online

13. Supporting Slide 3-E: 1-800-flowers.com Partnerships (Cont.)
Markets flowers and other gifts through Excite.com and webcrawler.com web sites
Products, advertisments and links featured in the Excite Shopping Channel
Entered second year of marketing relationship in October 1999
Yahoo Inc.
Will run banner advertisements throughout the Yahoo Network, with additional presence in shopping area
StarMedia Network
Developing Spanish and Portuguese language versions of flowers.com website
People PC
Signed one-year agreement to become key floral and gift-provider for PeoplePC as of October 1999
Zapa.com
Offers selection of online greeting cards on flowers.com website
Greeting cards never deleted by Zapa.com
Users will be able to personalize greetings with their own photos, clip art or other multimedia creations
Sears, Roebuck and Co.
Licensing relationship which enables Sears customers to use their store charge cards when shopping with flowers.com
Source: flowers.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online

14. Supporting Slide 3-F: 1-800-flowers.com Activity System
Both
Online
Offline
Key
Introduction of
New Product
Categories
Electronic
Greeting Cards
Gift
Recommendations
Gift Reminder
Program
Broad Product Line
Online Gift Center
Address Book
Nationwide
Presence
Florist
Participation
BloomNet Network
Partnership With Associated Product Lines
Company
Offline
Stores
Company
Franchise Stores
MSN
Multiple
Customer Contacts
Strategic Alliances
Online BN
In-Store
AOL
Alliance With Distribution Carrier
Telephone
Affiliate Programs

15. Supporting Slide 3-G: 1-800-flowers.com Value System
Address Book
Gift
Recommend-
ations
Online Gift Center
Logistics
Gift Reminder
Broad Assortment of Gifts
Fresh Flowers
Sourcing
Garden Works
Product Partnerships
Brand Name
Telephone
Plow & Hearth
Online
Reasonable Prices
Widespread, Easy Access
Great Foods
Multiple Contact Points
Stores
Affiliates
Logistics
BloomNet Network
Media Partnerships
= Core Benefits
Snap
Starmedia
= Actions
MSN
AOL
= Capabilities

16. Supporting Slide 3-H: 1-800-flowers.com Value System
Address Book
Gift
Recommend-
ations
Online Gift Center
Logistics
Gift Reminder
Broad Assortment of Gifts
Fresh Flowers
Sourcing
Garden Works
Product Partnerships
Brand Name
Telephone
Plow & Hearth
Online
Reasonable Prices
Widespread, Easy Access
Great Foods
Multiple Contact Points
Stores
Affiliates
Logistics
BloomNet Network
Media Partnerships
= Core Benefits
Snap
Starmedia
= Activities & assets
MSN
AOL
= Capabilities

17. Supporting Slide 3-I: Point-Counterpoint: Competencies vs
Supporting Slide 3-I: Point-Counterpoint: Competencies vs. Resource Systems

18. Table 3-2: Alternative Shareholder Value Models (Company - and User - Derived)

19. Table 3-3: Alternative Shareholder Value Models (Company-Derived)

20. Exhibit 3-6: Revenue Growth Choices: 1-800-flowers.com
Gardenworks
Plans to branch into a wide variety of product categories
Greatfoods.com
Plow & Hearth
Home Decor
New
Plants
Gourmet Treats
In-Store Seminars
Greeting Cards
Products
Existing
Corporate Gift
Services
Existing
New
Existing
New
Online Markets
Offline Markets

21. Supporting Slide 3-J: Point-Counterpoint: Does Profit Matter
Supporting Slide 3-J: Point-Counterpoint: Does Profit Matter? Build Profit or Build User Base?

22. Exhibit 3-7: Sawhney and Kaplan — Classification of B2B Models
Vertical Hubs
Paper
Chemicals
Plastics
Steel
Logistics Management
Media Buying
Advertising
Energy Management
Functional Hubs
Source: Adopted from Business 2.0, September 1999, page 88

23. Table 3-4: RJS Model Summary
Sources of Content Origination
Single Brand
Multiple Brands
Supply Side
Demand Side
Hybrid Integrator
(Cisco.com)
Hybrid Aggregator
(Amazon.com)
Forward-Integrated Producer
(Walmart.com)
Supply-Side Aggregator
(Surplusdirect.com)
Demand-Side Aggregator
(Accompany.com)
Backward Integrated User
(Dellonline.com) - B2B
Focus of Strategy

24. Table 3-5: Implications of “Pure Play” Business Approaches

25. Exhibit 3-8: Schwab Egg Diagram
Schwab Learning Center
Live events
Principles of investing
Understanding market cycles
“Did You Know” Q&A
Overall
General Goal Planner
Investor Profile
Sample Investment Plans
Retirement
Retirement Planner
IRA Analyzer
Product Offering
Estate
Estate Tax and Probate Calculator
Alternatives Comparison
College
College Planner
Tax
Tax Strategies
IRS Withholding Calculator
Online Investment Process
Get educated about investing
Online chat with customer service representatives
Customer service via phone
Customer service via
Customer service at branch
My Watch List
Plan investments
Post - Investment Support
Overall
Quotes and Charts
Analyst Center
Stocks and Options
Stock Analyzer
Bonds and Treasuries
Schwab BondSource services
CDs and Money Markets
SchwabOne
Perform Research
Margin loans
Money transfers
Automatic investing
Options service
After-hours trading
Account protection
Bill payment
Perform Investment
Decide on Investment
Annuities
Schwab Select Annuity
Life Insurance
Insurance-needs calculator
Schwab signature services
Schwab AdvisorSource
Options service
Global investing service

26. Exhibit 3-9: Schwab Resource System
Learning Center
OneSource
Invest in CSR Training
Align CSR
Compensation
with Quality
of Service
Center of Knowledge and Innovation
Customer Service
Innovative Products
Superior Service
Hire IT Staff
Invest-ment in R&D
Train IT Staff
24/7 Access
Cutting-Edge Technology
Investment in IT
System Reliability
Partnerships with Content Providers
Multiple Points of Access
Optimize Staff in Branches
Hoovers
Online
Lower Prices
Streamlined Operations
Charge for Value- Added Services
S&P
Phone
Media General
Branch
Provide
Lower
Commission
for Frequent
Traders
Competitive Commission Rates
= Core Benefits
= Capabilities
= Resources

27. Exhibit 3-10: Schwab Resource System
Optimize Staff in Branches
Lower Prices
Train IT Staff
Capable IT Staff
24/7 Access
Media General
S&P
Hoovers
Phone
Branch
Online
Charge for Value Added Services
Provide
Lower
Commission
for Frequent
Traders
Innovative Products
Center of Knowledge and Innovation
Invest-ment in R&D
Cutting-Edge Technology
Investment
in IT
System Reliability
Multiple Points of Access
Hire IT Staff
Competitive Commission Rates
Streamlined Operations
Learning Center
Superior Service
Partnerships with Content Providers
Invest in CSR Training
Align CSR
Compensation
with Quality
of Service
Well-Trained CSRs
OneSource
= Company needs to outsource or partner
= Company can perform in-house

28. Supporting Slide 3-K: Schwab Activity System
Large
investment in R&D
Exceptional
team of engineers
Innovative products
Increase in trade volume
System able to handle large volume
In-house technology development
Low price
Downsized
branch staff
Technology leadership
Investment in IT
Increase in non-trade revenue
24/7
Customer service
High-quality
investment
information
Large,
well-trained
sales force
Superior service
Hoovers Online
Multiple points of access
Partnerships with content providers
S&P Comstock
Comprehensive
information
Online
Phone
Branch
Media General

29. Supporting Slide 3-L: Schwab Value Proposition
“Use technology to offer innovative products and superior service at lower prices to investors unwilling to pay for investment advice”

30. Table 3-6: Partners Give/Get Matrix

31. Exhibit 3-11: Schwab Revenue Growth Choices
Advanced Software Tools
After-Hours Trading
International Expansion
New
International Expansion
Learning Center
In-Branch Seminars
New Online Investment Bank
Products
Existing
Existing
New
Existing
New
Online Markets
Offline Markets

32. Supporting Slide 3-M: Point-Counterpoint: Who Would You Rather Be - a Dot-Com or a Bricks-and-Mortar Business?

33. Supporting Slide 3-N: Business Model Choices Must be Consistent With Sources of Competitive Advantage
Business Model Options (Not Mutually Exclusive)
Forward-Integrated Producer
Content Production
E-Business Interface
Content Utilization
Backward-Integrated User
Content Production
E-Business Interface
Content Utilization
Content Production
Content Production
Supply Aggregator
Content Production
E-Business Interface
Content Utilization
Content Production
Content Production
Content Production
Content Utilization
Content Utilization
Demand Aggregator
Content Production
E-Business Interface
Content Utilization
Content Utilization
Content Utilization
Content Utilization