day FOUR: Business Models
The Business Models describe four things:
- The Core Value Proposition
- Sources and Methods of Revenue Generation
- Costs of Revenue Generation
- Planned Growth Trajectory
This becomes useful in articulating the value proposition of a product/service, identfying a target market segment, defining the structure of a value chain, defining the cost structure and profit potential, explaining the position in the value network, and setting forth a competitive strategy.
In class we broke up into our teams and selected our own companies/products to evalute their Business Models against their first four functions. My group and I took a look at the Amazon Kindle and where is what we came up with quickly during class:
Product: Amazon Kindle
- Value Proposition: Access to information/books and data on the go.
- Target Market: Young urban professionals
- Structure of Value Chain:
- Distribution: Amazon.com
- Advertising: Amazon’s Landing page
- Exclusive
- Cost Structure and Profit Potential: High profit margin on the actual device
Looking back at our assessment, we struggled a bit with the last two points: value chain structure and cost structure/profit potential. I think there was some confusion with that they meant and also our lack of knowledge about the product. In retrospect, we should’ve chosen a more common product that we were all more familiar with, but it was a good learning process nonetheless.