Business Model Patterns PDF

Business Model Navigator 5 5 Business Model Patterns This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik Business M o d e l Innovation M a p Business M...

Business Model Navigator 5 5 Business Model Patterns This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik Business M o d e l Innovation M a p Business M o d e l Triangle W h a t d o you offer t o the customer? What? Value Proposition Who? Revenue Value Model Chain H o w is r e v e n u e c r e a t e d ? Value? How? H o w is t h e v a l u e p r o p o s i t i o n c r e a t e d ? W h o is y o u r t a r g e t c u s t o m e r ( s e g m e n t ) ? This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  01 ADD-ON W h o W h a t Va l u e H o w Ryanair (1985), SAP (1992), Sega (1998) The core offering is priced competitively, but there are numerous extras that drive the final price up. In the end, the costumer pays more than he or she initially assumed. Customers benefit from a variable offer, which they can adapt to their specific needs. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  02 AFFILIATION W h o W h a t Va l u e H o w Amazon Store (1995), Cybererotica (1994), CDnow (1994), Pinterest (2010) The focus lies in supporting others to successfully sell products and directly benefit from successful transactions. Affiliates usually profit from s o m e kind of pay-per-sale or pay-per-display compensation. The company, on the other hand, is able to gain access to a more diverse potential customer base without additional active sales or marketing efforts. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  03 AIKIDO W h o W h a t Va l u e H o w Six Flags (1961), The Body Shop (1976), Swatch (1983), Cirque du Soleil (1984), Nintendo (2006) Aikido is a Japanese martial art in which the strength of an attacker is used against him or her. As a business model, Aikido allows a company to offer something diametrically o p p o s e d to the image and mindset of the competition. This n e w value proposition attracts customers w h o prefer ideas or concepts o p p o s e d to the mainstream. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  04 AUCTION W h o W h a t Va l u e H o w eBay (1995), Winebid (1996), Priceline (1997), Google (1998), Elance (2006), Zopa (2005), MyHammer (2005) Auctioning means selling a product or service to the highest bidder. The final price is achieved w h e n a particular end time of the auction is reached or when no higher offers are received. This allows the company to sell at the highest price acceptable to the customer. The customer benefits from the opportunity to influence the price of a product. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  05 BARTER W h o W h a t Va l u e H o w Procter & Gamble (1970), Pepsi (1972), Lufthansa (1993), Magnolia Hotels (2007), Pay with a Tweet (2010) Barter is a method of exchange in which g o o d s are given away to customers without the transaction of actual money. In return, they provide something of value to the sponsoring organization. The exchange does not have to sho w any direct connection and is valued differently by each party. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  06 CASH MACHINE W h o W h a t Va l u e H o w American Express (1891), Dell (1984), Amazon Store (1995), PayPal (1998), Blacksocks (1999), MyFab (2008), Groupon (2008) In the Cash Machine concept, the customer pays upfront for the products sold to the customer before the company is able to cover the associated expenses. This results in increased liquidity which can b e used to amortize debt or to fund investments in other areas. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  07 C R O S S SELLING W h o W h a t Va l u e H o w Shell (1930), IKEA (1956), Tchibo (1973), Aldi (1986), SANIFAIR (2003) In this model, services or products from a formerly excluded industry are added to the offerings, thus leveraging existing key skills and resources. In retail especially, companies can easily provide additional products and offerings that are not linked to the main industry on which they were previously focused. Thus, additional revenue can b e generated with relatively few changes to the existing infrastructure and assets, since m o re potential customer needs are met. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  08 CROWDFUNDING W h o W h a t Va l u e H o w Marillion (1997), Cassava Films (1998), Diaspora (2010), Brainpool (2011), Pebble Technology (2012) A product, project or entire start-up is financed by a c r o w d of investors w h o wish to support the underlying idea, typically via the Internet. If the critical mass is achieved, the idea will b e realized and investors receive special benefits, usually proportionate to the amount of money they provided. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  09 CROWDSOURCING W h o W h a t Va l u e H o w Threadless (2000), Procter & Gamble (2001), InnoCentive (2001), Cisco (2007), MyFab (2008) The solution of a task or problem is adopted by an anonymous crowd, typically via the Internet. Contributors receive a small reward or have the chance to win a prize if their solution is chosen for production or sale. Customer interaction and inclusion can foster a positive relationship with a company, and subsequently increase sales and revenue. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  10 C U S TO M E R LOYALTY W h o W h a t Va l u e H o w Sperry & Hutchinson (1897), American Airlines (1981), Safeway Club Card (1995), Payback (2000) Customers are retained and loyalty assured by providing value beyond the actual product or service itself, i.e., through incentive-based programs. The goal is to increase loyalty by creating an emotional connection or simply rewarding it with special offers. Customers are voluntarily bound to the company, which protects future revenue. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  11 DIGITIZATION W h o W h a t Va l u e H o w Spiegel Online (1994), WXYC (1994), Hotmail (1996), Jones International University (1996), CEWE Color (1997), SurveyMonkey (1998), Napster (1999), Wikipedia (2001), Facebook (2004), D r o p b o x (2007),Netflix (2008), Next Issue Media (2011) This pattern relies on the ability to turn existing products or services into digital variants, and thus offer advantages over tangible products, e.g., easier and faster distribution. Ideally, the digitization of a product or service is realized without harnessing the value proposition which is offered to the customer. In other words: efficiency and multiplication by means of digitization does not reduce the perceived customer value. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  12 DIRECT SELLING W h o W h a t Value H o w Vorwerk (1930), Tupperware (1946), Amway (1959), The Body Shop (1976), Dell (1984), Nestle Nespresso (1986), First Direct (1989), Nestlé Special.T (2010), Dollar Shave Club (2012),Nestlé BabyNes (2012) Direct selling refers to a scenario whereby a company's products are not sold through intermediary channels, but are available directly from the manufacturer or service provider. In this way, the company skips the retail margin or any additional costs associated with the intermediates. These savings can be forwarded to the customer and a standardized sales experience established. Additionally, such close contact can improve customer relationships. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  13 E-C O M M E R C E W h o W h a t Va l u e H o w Dell (1984), Asos (2000), Zappos (1999), A ma z on Store (1995), Flyeralarm (2002), Blacksocks (1999), Dollar Shave Club (2012), Winebid (1996), Zopa (2005) Traditional products or services are delivered through online channels only, thus removing costs associated with running a physical branch infrastructure. Customers benefit from higher availability and convenience, while the company is able to integrate its sales and distribution with other internal processes. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  14 EXPERIENCE SELLING W h o W h a t Value H o w Harley Davidson (1903), IKEA (1956), Trader Joe's (1958), Starbucks (1971), Swatch (1983), Nestlé Nespresso (1986), Red Bull (1987), Barnes & Noble (1993), Nestlé Special.T (2010) The value of a product or service is increased with the customer experience offered with it. This opens the door for higher customer demand and commensurate increase in prices charged. This means that the customer experience must be adapted accordingly, e.g., by attuning promotion or shop fittings. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  15 FLAT RATE W h o W h a t Va l u e H o w SBB (1898), Buckaroo Buffet (1946), Sandals Resorts (1981), Netflix (1999), Next Issue Media (2011) In this model, a single fixed fee for a product or service is charged, regardless of actual usage or time restrictions on it. The user benefits from a simple cost structure while the company benefits from a constant revenue stream. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  16 FRACTIONAL OWNERSHIP W h o W h a t Va l u e H o w Hapimag (1963), Netjets (1964), Mobility Carsharing (1997), écurie25 (2005), H o m e B u y (2009) Fractional ownership describes the sharing of a certain asset class amongst a group of owners. Typically, the asset is capital intensive but only required on an occasional basis. While the customer benefits from the rights as an owner, the entire capital does not have to b e provided alone. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  17 FRANCHISING W h o W h a t Va l u e H o w Singer Sewing Machine (1860), McDonald's (1948), Marriott International (1967), Starbucks (1971), Subway (1974), Fressnapf (1992), Naturhouse (1992), McFit (1997), BackWerk (2001) The franchisor o w n s the brand name, products, and corporate identity, and these are licensed to independent franchisees w h o carry the risk of local operations. Revenue is generated as part of the franchisees’ revenue and orders. The franchisees benefit from the usage of well known brands, know- how, and support. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  18 FREEMIUM W h o W h a t Va l u e H o w Hotmail (1996), SurveyMonkey (1998), LinkedIn (2003), Skype (2003), Spotify (2006), D r o p b o x (2007) The basic version of an offering is given away for free in the hope of eventually persuading the customers to pay for the premium version. The free offering is able to attract the highest volume of customers possible for the company. The generally smaller volume of paying ‘premium customers’ generate the revenue, which also cross-finances the free offering. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  19 F R O M P U S H TO PU LL W h o W h a t Va l u e H o w Toyota (1975), Zara (1975), Dell (1984), Geberit (2000) This pattern describes the strategy of a company to decentralize and thus add flexibility to the company's processes in order to b e more customer focused. To quickly and flexibly respond to n e w customer needs, any part of the value chain - including production or even research and development - can b e affected. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  20 H I D D E N REVENUE W h o W h a t Va l u e H o w JCDecaux (1964), Sat.1 (1984), Me t ro N e w s p a p e r (1995), Google (1998), Facebook (2004), Spotify (2006), Zattoo (2007) The logic that the user is responsible for the income of the business is abandoned. Instead, the main source of revenue c o m e s from a third party, which cross- finances whatever free or low-priced offering attracts the users. A very c o m m o n case of this model is financing through advertisement, where attracted customers are of value to the advertisers w h o fund the offering. This concept facilitates the idea of 'separation b e t w e e n revenue and customer'. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  21 GUARANTEED AVAILABILITY W h o W h a t Va l u e H o w NetJets (1964), PHH Corporation (1986), IBM (1995), Hilti (2000), MachineryLink (2000), ABB Turbo Systems (2010) Within this model, the availability of a product or service is guaranteed, resulting in almost zero downtime. The customer can use the offering as required, which minimizes losses resulting from downtime. The company uses expertise and economies of scale to lower operation costs and achieve these availability levels. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  22 INGREDIENT BRANDING W h o W h a t Va l u e H o w DuPont Teflon (1964), W.L. Gore & Associates (1976), Intel (1991), Carl Zeiss (1995), Shimano (1995), Bosch(2000) Ingredient branding describes the specific selection of an ingredient, component, and brand originating from a specific supplier, which will b e included in another product. This product is then additionally branded and advertised with the ingredient product, collectively adding value for the customer. This projects the positive brand associations and properties on the product, and can increase the attractiveness of the end product. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  23 INTEGRATOR W h o W h a t Va l u e H o w Carnegie Steel (1870), Ford (1908), Zara (1975), Exxon Mobil (1999), BYD Auto (1995) An integrator is in c o m m a n d of the bulk of the steps in a value-adding process. The control of all resources and capabilities in terms of value creation lies with the company. Efficiency gains, economies of scope, and lower dependencies from suppliers result in a decrease in costs and can increase the stability of value creation. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  24 LAYER PLAYER W h o W h a t Va l u e H o w Dennemeyer (1962), Wipro Technologies (1980), TRUSTe (1997), PayPal (1998), Am az o n We b Services (2002) A layer player is a specialized company limited to the provision of one value-adding step for different value chains. This step is typically offered within a variety of independent markets and industries. The company benefits from economies of scale and often produces m or e efficiently. Further, the established special expertise can result in a higher quality process. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  25 LEVERAGE CUSTOMER DATA W h o W h a t Va l u e H o w Amazon Store (1995), Google (1998), Payback (2000), Facebook (2004), PatientsLikeMe (2004), 2 3 a n d M e (2006), Twitter (2006), Verizon Communications (2011) N e w value is created by collecting customer data and preparing it in beneficial ways for internal usage or interested third-parties. Revenues are generated by either selling this data directly to others or leveraging it for o w n purposes, i.e., to increase the effectiveness of advertising. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  26 LICENSE W h o W h a t Va l u e H o w BUSCH (1870), IBM (1920), DIC 2 (1973), ARM (1989), Duales System Deutschland (1991), M ax Havelaar (1992) Efforts are focused on developing intellectual property that can b e licensed to other manufacturers. This model, therefore, relies not on the realization and utilization of knowledge in the form of products, but attempts to transform these intangible g o o d s into money. This allows a company to focus on research and development. It also allows the provision of knowledge, which would otherwise b e left unused and potentially b e valuable to third parties. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  27 L O C K - IN W h o W h a t Va l u e H o w Gillette(1904), L e g o (1949), Microsoft (1975), Hewlett-Packard (1984), Nestlé Nespresso (1986), Nestlé BabyNes (2012), Nestlé Special.T (2010) Customers are locked into a vendor's world of products and services. Using another vendor is impossible without incurring substantial switching costs, and thus protecting the company from losing customers. This lock-in is either generated by technological mechanisms or substantial interdependencies of products or services. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  28 L O N G TAIL W h o W h a t Va l u e H o w Amazon Store (1995), eBay (1995), Netflix (1999), Apple iPod/iTunes (2003), YouTube (2005) Instead of concentrating on blockbusters, the main bulk of revenues is generated through a 'long tail' of niche products. Individually, these neither demand high volumes, nor allow for a high margin. If a vast variety of these products are offered in sufficient amounts, the profits from resultant small sales can add up to a significant amount. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  29 M A K E M O R E OF IT W h o W h a t Va l u e H o w Porsche (1931), Festo Didactic (1970), BASF (1998), Amazon We b Services (2002), Sennheiser Sound A c a d e m y (2009) K n o w - h o w and other available assets existing in the company are not only used to build o w n products, but also offered to other companies. Slack resources, therefore, can b e used to create additional revenue besides those generated directly from the core value proposition of the company. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  30 M A S S CUSTOMIZATION W h o W h a t Va l u e H o w Dell (1984), Levi's (1990), Miadidas (2000), PersonalNOVEL (2003), Factory121 (2006), mymuesli (2007), M y Unique Bag (2010) Customizing products through mass production once se e me d to b e an impossible endeavor. The approach of modular products and production systems has enabled the efficient individualization of products. As a consequence, individual customer needs can b e met within mass production circumstances and at competitive prices. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  31 N O FRILLS W h o W h a t Va l u e H o w Ford (1908), Aldi (1913), McDonald's (1948), Southwest Airlines (1971), Aravind Eye care System (1976), Accor (1985), McFit (1997), D o w Corning (2002) Value creation focuses on what is necessary to deliver the core value proposition of a product or service, typically as basic as possible. Cost savings are shared with the customer, usually resulting in a customer base with lower purchasing p o w e r or purchasing willingness. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  32 OPEN BUSINESS M O D E L W h o W h a t Va l u e H o w Valve Corporation (1998), Abril (2008) In open business models, collaboration with partners in the ecosystem b e c o m e s a central source of value creation. Companies pursuing an open business model actively search for novel ways of working together with suppliers, customers, or complementors to open and extend their business. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  33 O P E N SOURCE W h o W h a t Va l u e H o w IBM (1955), Mozilla (1992), Red Hat (1993), mondoBIOTECH (2000), Wikipedia (2001), Local M ot o rs (2008) In software engineering, the source c o d e of a software product is not kept proprietary, but is freely accessible for anyone. Generally, this could b e applied to any technology details of any product. Others can contribute to the product, but also use it free as a sole user. Money is typically earned with services that are complimentary to the product, such as consulting and support. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  34 ORCHESTRATOR W h o W h a t Va l u e H o w Procter & Gamble (1970), Li & Fung (1971), Nike (1978), Bharti Airtel (1995) Within this model, the company's focus is on the core competencies in the value chain. The other value chain segments are outsourced and actively coordinated. This allows the company to reduce costs and benefit from the suppliers' economies of scale. Furthermore, the focus on core competencies can increase performance. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  35 PAY PER USE W h o W h a t Va l u e H o w Hot Choice (1988), Google (1998), Ally Financial (2004), Better Place (2007), Car2Go (2008) In this model, the actual usage of a service or product is metered. The customer pays on the basis of what he or she effectively consumes. The company is able to attract customers w h o wish to benefit from the additional flexibility, which might b e priced higher. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  36 PAY W H AT Y O U WA N T W h o W h a t Value H o w One World Everbody Eats (2003), NoiseTrade (2006), Radiohead (2007), Humble Bundle (2010), Panera Bread Bakery (2010) The buyer pays any desired amount for a given commodity, sometimes even zero. In some cases, a minimum floor price may be set, and/or a suggested price may be indicated as guidance for the buyer. The customer is allowed to influence the price, while the seller benefits from higher numbers of attracted customers, since individuals’ willingness to pay is met. Based on the existence of social norms and morals, this is only rarely exploited, which makes it suitable to attract new customers. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  37 PEER TO PEER W h o W h a t Va l u e H o w eBay (1995), Craigslist (1996), Napster (1999), Couchsurfing (2003), LinkedIn (2003), Skype (2003), Zopa (2005), SlideShare (2006), Twitter (2006), D r o p b o x (2007), Airbnb (2008), TaskRabbit (2008), RelayRides (2010), Gidsy (2011) This model is based on a cooperation that specializes in mediating between individuals belonging to an homogeneous group. It is often abbreviated as P2P. The company offers a meeting point, i.e., an online database and communication service that connects these individuals (these could include offering personal objects for rent, providing certain products or services, or the sharing of information and experiences). This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  38 PERFORMANCE-BASED CONTRACTING W h o W h a t Va l u e H o w Rolls-Royce (1980), Smartville (1997), BASF (1998), Xerox (2002) A product's price is not based upon the physical value, but on the performance or valuable o u t c o m e it delivers in the form of a service. Performance based contractors are often strongly integrated into the value creation process of their customers. Special expertise and economies of scale result in lower production and maintenance costs of a product, which can b e forwarded to the customer. Extreme variants of this model are represented by different operation schemes in which the product remains the property of the company and is operated by it. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  39 RAZOR A N D BLADE W h o W h a t Va l u e H o w Standard Oil C o m p a n y (1880), Gillette (1904), Hewlett-Packard (1984), Nestlé Nespresso (1986), Apple iPod/iTunes (2003), Amazon Kindle (2007), Better Place (2007), Nestlé Special.T (2010), Nestlé BabyNes (2012) The basic product is cheap or given away for free. The consumables that are needed to use or operate it, on the other hand, are expensive and sold at high margins. The initial product's price lowers customers’ barriers to purchase, while the subsequent recurring sales cross-finance it. Usually, these products are technologically bound to each other to further enhance this effect. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  40 RENT INSTEAD OF BUY W h o W h a t Va l u e H o w Saunders System (1916), Xerox (1959), Blockbuster (1985), Rent a Bike (1987), Mobility Carsharing (1997), MachineryLink (2000), C W S - boco (2001), Luxusbabe (2006), Flexpetz (2007), Car2Go(2008) The customer does not buy a product, but instead rents it. This lowers the capital typically needed to gain access to the product. The company itself benefits from higher profits on each product, as it is paid for the duration of the rental period. Both parties benefit from higher efficiency in product utilization as time of non- usage, which unnecessarily binds capital, is reduced on each product. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  41 REVENUE S H A R I N G W h o W h a t Va l u e H o w C D n o w (1994), HubPages (2006), Apple iPhone/AppStore (2008), Groupon (2008) Revenue sharing refers to firms’ practice of sharing revenues with their stakeholders, such as complementors or even rivals. Thus, in this business model, advantageous properties are me rg e d to create symbiotic effects in which additional profits are shared with partners participating in the extended value creation. One party is able to obtain a share of revenue from another that benefits from increased value for its customer base. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  42 REVERSE ENGINEERING W h o W h a t Va l u e H o w Bayer (1897), Pelikan (1994), Brilliance China Auto (2003), Denner (2010) This pattern refers to obtaining a competitor's product, taking it apart, and using this information to produce a similar or compatible product. Because no huge investment in research or development is necessary, these products can b e offered at a lower price than the original product. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  43 REVERSE INNOVATION W h o W h a t Va l u e H o w Logitech (1981), Haier (1999), Nokia (2003), Renault (2004), General Electric (2007) Simple and inexpensive products, that were developed within and for emerging markets, are also sold in industrial countries. The term ‘reverse’ refers to the process by which n e w products are typically developed in industrial countries and then adapted to fit emerging market needs. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  44 ROBIN HOOD W h o W h a t Va l u e H o w Aravind Eye Care System (1976), One Laptop per Child (2005), TOMS Shoes (2006), Warby Parker (2008) The same product or service is provided to ‘the rich’ at a m u c h higher price than to ‘the poor ’. Thus, the main bulk of profits are generated from the wealthy customer base. Serving ‘the poor ’ is not profitable per se, but creates economies of scale, which other providers cannot achieve. Additionally, it has a positive effect on the company's image. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  45 SELF SERVICE W h o W h a t Va l u e H o w McDonald's (1948), IKEA (1956), Accor (1985), Mobility Carsharing (1997), BackWerk (2001), Car2Go (2008) A part of the value creation is transferred to the customer in exchange for a lower price of the service or product. This is particularly suited for process steps that add relatively little perceived value for the customer, but incur high costs. Customers benefit from efficiency and time savings, while putting in their o w n effort. This can also increase efficiency, since in s o m e cases, the customer can execute a value adding step m o r e quickly and in a m or e target-oriented manner than the company. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  46 S H O P IN S H O P W h o W h a t Va l u e H o w Tim Hortons (1964), Tchibo (1987), Deutsche Post (1995), Bosch (2000), MinuteClinic (2000) Instead of opening n e w branches, a partner is chosen whose branches can profit from integrating the company's offerings in a way that imitates a small shop within another shop (a win-win situation). The hosting store can benefit from more attracted customers and is able to gain constant revenue from the hosted shop in the form of rent. The hosted company gains access to cheaper resources such as space, location, or workforce. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  47 S O L U T I O N PROVIDER W h o W h a t Va l u e H o w Lantal Textiles (1954), Heidelberger Druckmaschinen (1980), Tetra Pak (1993), Geek Squad (1994), C W S - boco (2001), Apple iPod/iTunes (2003), 3 M Services (2010) A full service provider offers total coverage of products and services in a particular domain, consolidated via a single point of contact. Special k n ow - h o w is given to the customer in order to increase his or her efficiency and performance. By becoming a full service provider, a company can prevent revenue losses by extending their service and adding it to the product. Additionally, close contact with the customer allows great insight into customer habits and needs which can b e used to improve the products and services. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  48 SUBSCRIPTION W h o W h a t Va l u e H o w Blacksocks (1999), Netflix (1999), Salesforce (1999), J a m b a (2004), Spotify (2006), Next Issue Media (2011), Dollar Shave Club (2012) The customer pays a regular fee, typically on a monthly or an annual basis, in order to gain access to a product or service. While customers mostly benefit from lower usage costs and general service availability, the company generates a more steady income stream. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  49 SUPERMARKET W h o W h a t Va l u e H o w King Kullen Grocery C o m p a n y (1930), Merrill Lynch (1930), Toys“R”Us (1948), The H o m e D e p o t (1978), Best Buy (1983), Fressnapf (1985), Staples (1986) A company sells a large variety of readily available products and accessories under one roof. Generally, the assortment of products is large but the prices are kept low. More customers are attracted due to the great range on offer, while economies of scope yield advantages for the company. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  50 TARGET T H E P O O R W h o W h a t Va l u e H o w Grameen Bank (1983), Arvind Mills (1995), Bharti Airtel (1995), Hindustan Unilever (2000), Tata Nano (2009), Walmart (2012) The product or service offering does not target the premium customer, but rather, the customer positioned at the base of the pyramid. Customers with lower purchasing p o w e r benefit from affordable products. The company generates small profits with each product sold, but benefits from the higher sales numbers that usually c o m e with the scale of the customer base. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  51 T R A S H TO C A S H W h o W h a t Va l u e H o w Duales System Deutschland (1991), Freitag lab.ag (1993), Greenwire (2001), E m e c o (2010), H & M (2012) Used products are collected and either sold in other parts of the world or transformed into n e w products. The profit scheme is essentially based on low-to-no purchase prices. Resource costs for the company are practically eliminated, whilst the supplier's waste disposal is either provided, or associated costs are reduced. This also addresses customers’ potential environmental awareness ideals. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  52 TWO-SIDED MARKET W h o W h a t Va l u e H o w Diners Club (1950), JCDecaux (1964), Sat.1 (1984), Amazon Store (1995), eBay (1995), M e t r o N e w s p a p e r (1995), Priceline (1997), Google (1998), Facebook (2004), MyHammer(2005), Elance (2006), Zattoo (2007), Groupon (2008) A two-sided market facilitates interactions between multiple interdependent groups of customers. The value of the platform increases as mo re groups or as more individual m e m b e r s of each group are using it. The t w o sides usually c o m e from disparate groups, e.g., businesses and private interest groups. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  53 ULTIMATE LUXURY W h o W h a t Va l u e H o w Lamborghini (1962), Jumeirah Group (1994), MirCorp (2000), The World (2002), A b b o t Downing (2011) This pattern describes the strategy of a company to focus on the upper side of society's pyramid. This allows a company to distinguish its products or services greatly from others. High standards of quality or exclusive privileges are the main focus to attract these kinds of customers. The necessary investments for these differentiations are m e t by the relatively high prices that can b e achieved – which usually allow for very high margins. This presentation is adapted and based o n working Paper “The St.Gallen Business Model Navigator” b y Oliver Gassmann, Karolin Frankenberger, Michaela Csik  54 USER DESIGNED W h o W h a t Va l u e H o w Spreadshirt (2001), Lulu (2002), L e g o Factory (2005), Amazon Kindle (2007), Po nok o (2007), AppleiPhone/AppStore (2008), Createmytattoo (2009), Quirky (2009) Within user manufacturing, a customer is b o t h the manufacturer and the consumer. As an example, an online platform provides the c ust o me r with the necessary support in order t o design and merchandise the product, e.g., product design software, manufacturing services, or an online s hop to sell the product. Thus, the c o m p a n y only supports the customer s in their undertakings and benefits from their