1. Topic 5 Business Models

2. Last lecture - Metrics * Identify common web metrics and how they are used; * Examine server log data and understand what the data represent; * Become familiar with tools for measuring web activity; * Understand the limitations of commonly used measures; * Examine the characteristics of a range of measurement techniques, from passive to cookies; * Learn about trends in web metrics.

3. Google Analytics example – 7 days on Sites tracked OZRURAL and KAZBAAHOZRURAL and KAZBAAH

4. Business Models What is a business model? Nine main web business models

5. Creating Value Internet business models shape the way enterprises are configured to create value for customers and to deliver that value in a profitable way on the Internet.

6. What business models?

7. Main issue - how does an organization creates a sustainable revenue stream that generates a profit? Not much new but the web and other digital technologies (e.g. mobile) have allowed some interesting variations

8. Business Models Focus currently on the web Includes mobile Includes other digital applications

9. 1 brokerage, 2 advertising 3 infomediary, 4 merchant 5 manufacturer 6 affiliate 7 community 8 subscription, and 9 utility models.

10. Group exercise What do all of these terms mean? Give an example of each term

12. Videos Gates V’s Jobs Mac V’s PC World economic forum Amazon – new business models Google

13. Revenue Models Few Internet businesses find it possible to sustain themselves on a single revenue stream; most find it necessary to employ several revenue-generating approaches to achieve sustained profitability. Group Question – What are some common revenue models? Give examples.

14. Web catalog Digital Content Advertising-Supported Revenue Models Web Portals – e.g. YahooYahoo Advertising-Subscription Mixed Revenue Models e.g. Business WeekBusiness Week Fee-for-Transaction Revenue Models e.g. Games Multiple transitions e.g. BritanicaBritanica

15. Revenue Models Mail order or catalog model –Proven to be successful for a wide variety of consumer items Web catalog revenue model –Taking the catalog model to the Web

16. Luxury Goods People are still reluctant to buy luxury goods through a Web site The Web sites of Vera Wang and Versace were constructed to provide information to shoppers, not to generate revenueVera Wang Versace The Evian Web site was designed for a select, affluent group of customersEvian

17. Clothing Retailers Lands’ End –online Web shopping assistance with its Lands’ End Live feature in 1999 Personal shopper –Intelligent agent program that learns a customer’s preferences and makes suggestions Virtual model –Graphic image built from customer measurements

18. Flowers and Gifts 1-800-Flowers Chocolatier Godiva –Offers business gift plans on its site

19. Revenue Strategy Issues Channel conflict –Occurs whenever sales activities on a company’s Web site interfere with existing sales outlets –Also called cannibalization Channel cooperation –Giving customers access to the company’s products through a coordinated presence in all distribution channels

20. Strategic Alliances and Channel Distribution Management Strategic alliance –When two or more companies join forces to undertake an activity over a long period of time Account aggregation services –Increase the propensity of customers to return to a site Channel distribution managers –Companies that take over the responsibility for a particular product line within a retail store

21. Next Week Digital Markets Gates V’s Jobs