Product Life-Extension Business Models PDF

Product life cycle extension Dipartimento di Scienze Economiche e Aziendali Management for Sustainable Firms Product Life-Extension business model extends the useful life of products by generating revenue through longevity rather than volume. Product features such as durability, quality, and fu...

Product life cycle extension Dipartimento di Scienze Economiche e Aziendali Management for Sustainable Firms Product Life-Extension business model extends the useful life of products by generating revenue through longevity rather than volume. Product features such as durability, quality, and functionality are more valued. The longer and more intensively a product is used, the better it is for the company providing it. A different revenue model One example: the "freemium" model in the digital world. Give the product for free, and then generate all revenue from updates and content and the sale of additional items. Six main activities 01 02 03 Build to last Refurbish ReCommerce 04 05 06 Upgrade Refill Repair Six main activities Build to last Refurbish ReCommerce Create high-quality and Restore used products to their collection of used goods to extremely durable products; original, "like-new" state; exchange or resell them, target customers who are targeting customers who are targeting customers looking willing to pay a premium for price-sensitive and do not for "good deals." This is quality, or those who more mind buying "like-new" typically handled by durable products through products, which are often sold specialized companies rather alternative revenue models, with warranties and services than primary manufacturers such as pay per service. similar to those of new and retailers, although products; or remanufacturing, primary suppliers are which involves remaking the increasingly interested in product in an "industrial-like" tapping into second-, third-, environment. and fourth-life markets and integrating resale into the product range.  Six main activities Upgrade Refill Repair Addition of new features, Replacement of a function Repair of a broken product; functionality or fashion that wears out more quickly targets customers who are instead of replacing the main than the product itself, such as satisfied with the performance product; targeting customers refillable packaging; targeting of the product and have more interested in consuming customer segments where the limited interest in replacing an content, functions and style real demand is for a item. rather than the products disposable part of the product, themselves. not for the physical "medium."  Critical issues and opportunities Extending life does not always generate natural resource reduction and new E.g., home appliances revenue generation, unless the customer characterized by saturated has an incentive to engage with the markets and replacement supplier at many points in the life cycle demand. Designing for repair New revenues associated with Service network and partners for effective upgrading energy efficiency repairs modules. Benefits: financially and in terms of Interchangeable product: design. customer relationships and loyalty Internet connectivity to purchase Managing the customer relationship new features or software becomes a critical element (touch point, frequency) upgrade. New roles and key factors Manufacturers play new roles in value chains Channel intermediaries or "channel players“ Specialized "field service" firms Managing the high cost of labor, but opportunities related to the relationship with social enterprises At zero km / short supply chains Local production ecosystems Digitization  New competencies Producers: "Field" service providers: Investment in effective and efficient Privileged stakeholders of customer relationship management manufacturers From production to direct sales Predictive Relevant technological leadership maintenance Expertise in identifying the most Network of repair partners and recall suitable situations (contexts) and chain uses on which to intervene Chanel’s intermediary: Broker (connecting communities of buyers and sellers on a large scale) Verification of product quality to maximize value Attention to cost control Sharing (Collaborative) Economy  The origin In 2008, the co-riding platform Uber, focusing on coordinating parties travelling to the same destination, and the accommodation platform Airbnb, aiming to connect individuals providing floor space in their homes with parties temporarily visiting the area, were launched in San Francisco. This marked the origin of the sharing economy What? The sharing economy is the socio-economic system of information-technological intermediated exchanges idealised as non- ownership transfer utilisation of free- capacity goods or services (cf. Schlagwein et al., 2019) Schlagwein, D., Schoder, D., & Spindeldreher, K. (2020). Consolidated, systemic conceptualization, and definition of the “sharing economy”. Journal of the Association for Information Science and Technology, 71(7), 817-838. Increasing market A new consumption model Sharing Business Model  Key features Consumer-centered model with a dual role: users and providers (relevant social dimension) Focus on resource sharing Reuse of resources (demand reduction for new products) Flexibility and increased product variety (access) New revenue sources for providers Advantages for users Convenience Expansion of the range of resources available; simple and secure payment system; accessibility Price Cheaper access to products that customers would otherwise have to own or rent; customers can access a variety of offerings at different price points to suit their needs Quality “Tailored” personal experience; good user interface; peer evaluation Trust is king Although most sharing platforms work hard to create a sense of security, fraud and trust issues are a key challenge to building critical mass within this model. Users need to sufficiently trust each other for the model to work, and they turn to outlets like social media and customer reviews to build that trust. Many platforms now even offer their services with insurance to further put users’ minds at ease Sometimes companies host live events to strengthen their community and build greater trust among users  Key challenges One criticism is that sharing economy companies operate like typical profit-seeking companies when they should be motivated by community-building A second criticism is that the sharing economy is creating a new category of working poor with insecure income and few benefits. Finally, some argue that the sharing economy is not competing fairly and is threatening companies and jobs in the formal economy by avoiding taxes and regulation. Product- as-a- service Different PaaS options Typology Description Customers purchase output rather than a product and pay based on Pay for use usage metrics such as miles driven, hours of use, pages printed, or data transferred Customers purchase contractual rights to use a product for a longer Leasing period of time, usually with exclusive, individual access rights. Customers purchase the rights to use a product for a short period of time, usually less than 30 days. A rental configuration is generally Rental more flexible than a lease, and customers may not have guaranteed unlimited access. Customers purchase a predefined service and level of quality, and Performance- companies commit to a specific outcome. For example, this could be a based contract “clean and snow-free street,” a “healthy indoor climate,” or a “well-lit city street.”  Philips Lighting Service Just buy the light you use instead of owning the lighting system, giving you financial flexibility from the start. Main Benefits? Products that offer exceptional long-term performance. Energy-efficient lighting technologies can reduce costs by 50-70%, and intelligent controls increase savings by up to 80%. The potential for CO2 savings is equal to the emissions of 260 million cars. Opportunities and Challenges for PaaS Consider the company your team assignment is focused on Identify which product may be offered as PaaS List the opportunities and challenges Discussion Opportunities and Challenges for PaaS Scale-up the service Going beyond niche industries Car rental, construction equipment rental, and airplane leasing and servicing are the most popular... Explore consumer markets PaaS is concentrated in industrial segments (B2B) New customer profiles New generation of economically challenged and environmentally conscious consumers. New business profiles The generation of people who prefer ownership will be replaced by those who prefer access