Business Models?!

As media consumption has evolved over time, businesses have had to develop new and improved methods of understanding their market to ensure the most effective outcomes. Business Models have been developed to do just that.

You might be wondering... What is a Business Model?

Let's get a simple definition to this term. A Business Model can be understood as the a design of activities, planned to result in profit in a place of interest. To assist the planning and executing of actions for a sustainable company.

For a Business Model to be successfully created, it should:

• - Identify a market segment

• Define the structure of the value chain

• Estimate cost of structure and profit potential

• Describe the position of the firm with the value network linking suppliers and customers

• Formulate the competitive strategy
  

I know this is a lot to get your head around! But, I do want to mention that for a business model to work effectively, it has to create customer value. Value can be understood very differently from person to person. However, to give us a little more clarity, Smith and Colgate (2007) have sort customer value into four types:

• Functional/Instrumental value: appropriate performance and outcomes of the product

• Experiential/hedonic Value: sensory, emotional, social and epistemic meaning of the product

• Symbolic/expressive Value: Self identity, personal meaning, self expression, social meaning, conditional meaning of the product

• Cost/sacrifice Value: economic, psychological, personal investment, risk level of the product

Just as media has progressively changed over time, companies must do the same when developing a Business Models to manage effectiveness within the market.

References:

• Smith & Colgate 2007, Customer Value Creation: a practical framework, Journal of Marketing Theory and Practice, vol 15, no. 1, pp. 7-23

Image:

• Fashion United 2018, 88 percent of US consumers research products online to buy in-store, accessed March 2020 <https://fashionunited.com/news/business/88-percent-of-us-consumers-research-products-online-to-buy-in-store/2018010919074>

• Powerslides 2020, BUSINESS MODEL DIAGRAMS FOR POWERPOINT, image, accessed March 2020 <https://www.powerslides.com/powerpoint-business/business-models/business-model-diagrams-for-powerpoint/>