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Chapter 3 Enhanced Version Business Models Exhibits and Tables October 18, 2000.

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Presentation on theme: "Chapter 3 Enhanced Version Business Models Exhibits and Tables October 18, 2000."— Presentation transcript:

1 Chapter 3 Enhanced Version Business Models Exhibits and Tables October 18, 2000

2 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2 Exhibit 3-1: Components of a Business Model Value Cluster Marketspace Offering Resource System Financial Model

3 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 3 Supporting Slide 3-A: Point-Counterpoint: Single Vs. Cluster of Benefits

4 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 4 Exhibit 3-2: Shattering Myth That Consumers Care Only About Prices On-line PERCENTAGE OF CUSTOMERS WHO CARE ABOUT ATTRIBUTE ATTRIBUTE Source: JP Morgan Report: etailing and the five Cs

5 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 5 Table 3-1: Consumer Decision Process — Flower Example Disposal Loyalty Satisfaction Purchase Decision Evaluation of Alternatives Information Search Problem - Recognition PRE-PURCHASE PURCHASE POST-PURCHASE

6 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 6 Supporting Slide 3-B: Consumer Decision Process — Flower 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 on-line and off-line 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 sales perks

7 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 7 Flower / Gift Decision Process Need Recognition Search For Ideas and Offerings Purchase Decision Message Selection Post Sales Support and Perks Education on Flowers and Decoration Exhibit 3-3: Egg Diagram for 1-800-flowers.com Gift reminder service Holiday specials Everyday celebrations suggestions Special occasion suggestions Gift guru Favorite gifts Gift frequency Gift impossible Gift baskets Corporate gift services Ideas and Information Post-Sales Support Product price Product picture Product description Delivery information Delivery availability Gizmo fully-animated greeting cards Physical cards in gifts Order receipt email eQ&A online customer service FAQ Customer service inquiry form Perks Miles earned with flower purchases Free gifts Discounts at AOL & BN with flower purchases Member specials “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 Best sellers Evaluation of Alternatives Gift Recommendations Shopping basket E commerce transaction Special shopping features –Delivery outside U.S. –1-800-lasfloras.com Product Offering

8 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 8 Exhibit 3-4: 1-800-flowers.com Resource System Online Gift Center Integrated Partner Offers Broad Assortment of Gifts Customer Service AOL MSN SNAP Wide Reach to Customers Widespread, Easy Access Multiple Contact Points Popular Web Site High Quality of Flowers Technology Strong Brand Name Strong Distribution Network Telephone On-line Franch ise Stores Catalog Starmedia Gift Recommend- ations Gift Recommend- ations Address Book Gift Reminder Garden Works Plow & Hearth Great Foods = Activities & assets = Capabilities = Core Benefits Custome r Service Centers Integrated on-line off- line systems 3,000 Affiliates Personalization Capabilities Rich Content Third Party Contractors Stores BloomNet Network Fulfillment Center

9 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 9 Supporting Slide 3-C: Benefits and Challenges of Hybridization Benefits Persistent connection with customers New value for customers Acces to new customers Scalability Persistent connection with customers New value for customers Acces to new customers Scalability Challenges Cannibalization Channel conflict Customer confusion Investor confusion Cannibalization Channel conflict Customer confusion Investor confusion

10 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1010 Exhibit 3-5 : On-line/Off-line Egg Diagram for 1-800-flowers.com Off-line Product Offering Special events and educational workshops held at stores Prompts on toll free number recording Suggestions from CSRs* in stores and via phone Prompts on toll free number recording Suggestions from CSRs* in stores and via phone Brochure Suggestions from CSRs in stores via phone Brochure Information from CSRs in store and via phone Brochure Purchase in-store Purchase via phone In-store specials Specials offered via phone *CSR = Customer service representative Flower / Gift Decision Process Need Recognition Search For Ideas and Offerings Purchase Decision Message Selection Post Sales Support and Perks Education on Flowers and Decoration Gift reminder service Holiday specials Everyday celebrations suggestions Special occasion suggestions Gift guru Favorite gifts Gift frequency Gift impossible Gift baskets Corporate gift services Ideas and Information Post-Sales Support Product price Product picture Product description Delivery information Delivery availability Gizmo fully-animated greeting cards Physical cards in gifts Order receipt email eQ&A online customer service FAQ Customer service inquiry form Perks Miles earned with flower purchases Free gifts Discounts at AOL & BN with flower purchases Member specials “Care and handling” “Do it yourself” Floral ideas Garden ideas Home ideas Gift ideas Gourmet ideas Store locator Recommendations by budget Best sellers Evaluation of Alternatives Gift Recommendations Shopping basket E commerce transaction Special shopping features –Delivery outside U.S. –1-800-lasfloras.com On-line Product Offering In-store customer service Customer servifce on toll- free number Select card in-store Select card via phone

11 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1 Supporting Slide 3-D: On-line and Off-line Integration for the 1-800-FLOWERS Resource System Online Gift Center Integrated Partner Offers Broad Assortment of Gifts Customer Service AOL MSN SNAP Wide Reach to Customers Widespread, Easy Access Multiple Contact Points Popular Web Site High Quality of Flowers Technology Strong Brand Name Strong Distribution Network Telephone On-line Franch ise Stores Catalog Starmedia Gift Recommend- ations Gift Recommend- ations Address Book Gift Reminder Garden Works Plow & Hearth Great Foods = On-line Activities & Assets Custome r Service Centers 3,000 Affiliates Personalization Capabilities Rich Content Third Party Contractors Stores BloomNet Network Fulfillment Center = Off-line Activities & Assets Integrated on-line off-line systems

12 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1212 Supporting Slide 3-E: 1-800-FLOWERS Partnerships American Airlines® Advantage®, Delta Airlines SkyMiles®, United Airlines Mileage Plus –Earn frequent flyer miles with 1-800-FLOWERS.com purchases MCI Worldcom –Receive 1-800-FLOWERS.com gift certificates with long distance sign-up –Receive 10% off every 1-800-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 commencing Nov. 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 (on-line 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: 1-800-FLOWERS.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online

13 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1313 Supporting Slide 3-E : 1-800-FLOWERS Partnerships (Cont.) Excite@Home –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 1-800-FLOWERS.com web site People PC –Signed one year agreement to become key floral and gift-provider for PeoplePC commencing October 1999 Zapa.com –Offers selection of online greeting cards on 1-800-FLOWERS.com web site –Greeting cards never deleted by Zapa.com –Users will be able to personalize greetings with their own photos, clip-art or other multi-media creations Sears, Roebuck and Company –Licensing relationship which enables Sears customers to use their store charge cards when shopping with 1-800-FLOWERS.com Source: 1-800-FLOWERS.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online

14 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1414 Supporting Slide 3-F: 1-800-Flowers Activity System BothOn-lineOff-line Key Note: Source: Broad Product Line Strategic Alliances Online Gift Center Multiple Customer Contacts Multiple Customer Contacts Nationwide Presence Nationwide Presence BloomNet Network Florist Participation Florist Participation Company Off-Line Stores Company Off-Line Stores Company Franchise Stores Company Franchise Stores Introduction of New Product Categories Introduction of New Product Categories Electronic Greeting Cards Electronic Greeting Cards Gift Recommendations Gift Recommendations Gift Reminder Program Gift Reminder Program Address Book BN AOL Affiliate Programs On-Line In-Store Telephone MSN Alliance With Distributio n Carrier Partnership With Associated Product Lines

15 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1515 Supporting Slide 3-G: 1-800-FLOWERS Value System Online Gift Center Product Partnerships Broad Assortment of Gifts Reasonable Prices AOL MSN SNAP Media Partnerships Widespread, Easy Access Multiple Contact Points Brand Name Fresh Flowers Logistics Bloomnet Network Sourcing Logistics Telephone Online Stores Affiliates Starmedia Gift Recommend- ations Gift Recommend- ations Address Book Gift Reminder Garde n Works Plow & Hearth Great Foods = Actions = Capabilities = Core Benefits

16 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1616 Supporting Slide 3-H: 1-800-FLOWERS Value System Online Gift Center Product Partnerships Broad Assortment of Gifts Reasonable Prices AOL MSN SNAP Media Partnerships Widespread, Easy Access Multiple Contact Points Brand Name Fresh Flowers Logistics Bloomnet Network Sourcing Logistics Telephone Online Stores Affiliates Starmedia Gift Recommend- ations Gift Recommend- ations Address Book Gift Reminder Garden Works Plow & Hearth Great Foods = Activities & assets = Capabilities = Core Benefits

17 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1717 Supporting Slide 3-I: Point-Counterpoint: Competencies Vs. Resource Systems

18 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1818 Table 3-2: Alternative Shareholder Value Models (Company and User Derived)

19 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 1919 Table 3-3: Alternative Shareholder Value Models (Company Derived)

20 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2020 Exhibit 3-6: Revenue Growth Choices: 1-800-flowers New Existing PRODUCTS ExistingNewExistingNew Plans to branch into a wide variety of product categories Gardenworks Greatfoods.com Home Decor Plow & Hearth ON-LINE MARKETS OFF-LINE MARKETS Plants Gourmet Treats Greeting Cards Corporate Gift Services Corporate Gift Services In-Store Seminars

21 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2121 Supporting Slide 3-J: Point-Counterpoint: Does Profit Matter? Build Profit Or Build User Base?

22 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2 Exhibit 3-7: Sawhney and Kaplan — Classification of B-to-B Models VERTICAL HUBS Paper Chemicals Plastics Steel FUNCTIONAL HUBS Logistics Management Media Buying Advertising Energy Management Source: Adopted from Business 2.0, September 1999, p.88

23 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2323 SOURCES OF CONTENT ORIGINATION Table 3-4: RJS Model Summary FOCUS OF STRATEGY Single Brand Multiple Brands Supply- Side Demand- Side Hybrid Integrator (Cisco.com) Hybrid Aggregator (Amazon.com) Forward-Integrated Producer (Wal-Mart.com) Supply-Side Aggregator (Surplusdirect.com) Demand-Side Aggregator (Accompany.com) Backward Integrated User (Dellonline.com) - B2B

24 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2424 Table 3-5: Implications of “Pure Play” Business Approaches

25 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2525 Exhibit 3-8: Schwab Egg Diagram Schwab Learning Center Live Events Principles of Investing Understanding Market Cycles “Did You Know” Q&A Schwab Signature Services Schwab AdvisorSource Options Service Global Investing Service Online chat with Customer Service Representatives Customer Service via phone Customer Service via email Customer Service at Branch My Watch List Margin Loans Money Transfers Automatic Investing Options Service After Hours Trading Account Protection Bill Payment Overall General Goal Planner Investor Profile Sample Investment Plans Retirement Retirement Planner IRA Analyzer Product Offering On-Line Investment Process Get educated about investing Plan investments Decide on Investment Perform Investment Post Investment Support Perform Research Estate Estate Tax and Probate Calculator Alternatives Comparison College College Planner Tax Tax Strategies IRS Withholding Calculator Overall Quotes and Charts Analyst Center Stocks and Options Stock Analyzer Bonds and Treasuries Schwab BondSource Services CDs and Money Markets SchwabOne Annuities Schwab Select Annuity Life Insurance Insurance Needs Calculator

26 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2626 Exhibit 3-9: Schwab Resource System Optimize Staff in Branches Lower Prices Train IT Staff 24x7 Access Media General S&P Hoover s Phone Branch Online Charge For Value Added Services Provide Lower Commission for Frequent Traders Provide Lower Commission for Frequent Traders Innovative Products Center of Knowledge and Innovation Investm ent in R&D Cutting Edge Technology Investment in IT System Reliability Multiple Points of Access Hire IT Staff Competitive Commission Rates Streamlined Operations Learnin g Center = Resources = Capabilities = Core Benefits Superior Service Partnerships with Content Providers Invest in CSR Trainin g Align CSR Compensation with Quality of Service Align CSR Compensation with Quality of Service Customer Service Onesource

27 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2727 Exhibit 3-10: Schwab Resource System = Company needs to outsource or partner = Company can perform in- house Optimize Staff in Branches Lower Prices Train IT Staff Capable IT Staff 24x7 Access Media Genera l S&P Hoover s Phone Branch Online Charge For Value Added Services Provide Lower Commission for Frequent Traders Provide Lower Commission for Frequent Traders Innovativ e Products Center of Knowledge and Innovation Investme nt in R&D Cutting Edge Technology Investment in IT Investment in IT System Reliability Multiple Points of Access Hire IT Staff Competitive Commission Rates Streamlined Operations Learnin g Center Superior Service Partnerships with Content Providers Invest in CSR Trainin g Align CSR Compensation with Quality of Service Align CSR Compensation with Quality of Service Well-Trained CSRs Onesource

28 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2828 Downsized branch staff Downsized branch staff High quality Investment Information High quality Investment Information Innovative products Low price Large, well trained sales force Large, well trained sales force Technology Leadership Supporting Slide 3-K: Schwab Activity System Superior service Investment in IT 24 x 7 Customer service 24 x 7 Customer service Exceptional team of engineers Exceptional team of engineers In-house technology developmen t Large investment in R&D Large investment in R&D System able to handle large volume Increase in trade volume Increase in non-trade revenue Multiple points of access On-line Phone Branch Comprehensive information Comprehensive information Partnership s with content providers Hoover s Online S&P Comstock Media General

29 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 2929 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 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 3030 Table 3-6: Partners Give/Get Matrix

31 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 3131 Exhibit 3-11: Schwab Revenue Growth Choices New Existing PRODUCTS ExistingNewExistingNew Advanced Software Tools After-hours trading International Expansion ON-LINE MARKETS OFF-LINE MARKETS International Expansion Learning Center In-Branch Seminars New Online Investment Bank

32 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 3232 Supporting Slide 3-M: Point-Counterpoint: Who Would You Rather Be? A Dot-Com Or Brick-And-Mortar Business?

33 ZOP-BOK-StrategyChapterFigures-3-16-00 Confidential 3 Supporting Slide 3-N : Business Model Choices Must Be Consistent With Sources of Competitive Advantage Content Production eBusiness Interface Content Utilization Content Production eBusiness Interface Content Utilization Content Production eBusiness Interface Content Utilization Content Production eBusiness Interface Content Utilization Content Production Content Utilization Business Model Options (Not Mutually Exclusive) Forward- Integrated Producer Backward- Integrated User Supply Aggregator Demand Aggregator

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