Antoine
HARFOUCHE, PHD
www.antoineharfouche.webs. com
icto.info
e-marketing. webs.com
Tel 0651442331
The impact of SIS on firm’s
Business Models
THE IMPACT OF SIS ON THE
PILLARS OF THE BUSINESS
MODEL
ISI impact on the customer
relation and on the cost
structure
Topics
• Customization
• Pitfalls of Customization
• SIS can Blend the BOS Framework with the BMC
Customer Segments &
targets
For whom are we creating value?
 Who are the most important customers?





Mass Market
Niche Market
Segmented
Diversified
Multi-sided platform
Channels of communication
and Information strategy
Value Propositions are delivered to customers through
communication, distribution and sales channels.
 How a company communicates with and reaches its
customer segments to deliver a value proposition.
 Which Channels do our Customer Segments want to
be reached? How are we reaching them now?
Which are working best (or not working)?
 Enabling customers to evaluate a firm’s products
 Allowing customers to purchase
 Providing post-purchase customer support
Channels
Channel Phases
Direct
Own
Channel Types
Sales force
Web sales
Indirect
Partner
Own stores
Partner stores
Partner web sales
Wholesaler
1. Awareness
2. Evaluation
3. Purchase
How to raise
awareness about
the product?
How to help
customers
evaluate the
product's value
proposition.
How do we allow
customers to
purchase specific
products and
services?
4. Delivery
5. After Sales
How do we
How to provide
deliver a Value
post-purchase
Proposition to customer support?
Customers?
Customer Relationships, Trust
and Loyalty
The types of relationships the firm establishes
with its customers.
What types of relationships does our customer
expect and how much does this cost?
How does this support the value proposition?
 Personal Assistance
 Dedicated Personal Assistance
 Self-service
Automated
Services
Communities
Co-Creation
Customization
Augmented Product
Customization
•
•
•
•
•
Pure standardization
Segmented standardization
Customized standardization
Tailored customization
Pure customization
Customized standardization
Kickers :
Tailored customization
Longcha
mp bag :
Pure customization
Modularity
Pitfalls of Customization
Pitfalls of Customization
• Although some consumers express an interest
in customized products, other large groups
view them as costly distractions.
• Some companies believe they can increase
profits margins and customer loyalty by
customizing products, but they must be
careful to monitor the market to figure out
which customers do and which do not.
SoC406
Pitfalls of Customization
• Customization can be off-putting and an inefficient use of
scarce resources.
– The British Broadcasting Corporation discontinued the
option to customize the BBC Web site because users do
not have the time to customize it and found it more
annoying than a generic Web site is. It also caused BBC
technical complications, copyright and legal issues, and
advertisement integration problems.
– Some consumers believe customization has a negative
impact on the environment and prefer conservation
– An increasing number of consumers participate in
community rentals and leases of products and sharing, in
order to avoid the personal monetary cost and time
consumption in the ownership of some personal items
Conclusion
•
•
•
•
•
•
Technology will change how people create, innovate and
compete.
Globalization will bring new competitors and new partners.
Competitors will try every approach, explore every opportunity,
exploit every weakness.
No single approach to innovation will guarantee success.
Each change reminds us that the future is uncertain; Scan
provides early alerts to potential change.
Opportunity Discovery, Scenarios, and Roadmapping help each
competitive challenge to have an optimum approach and a
strategic fit.
SIS CAN IMPACT THE PRICING
Revenue Streams
For what value are our customers really willing
to pay?
 Asset sale [product sale]
 Usage fee
 Subscription fee
 Lending / Renting / Leasing
 Licensing
 Brokerage fees
 Advertising
Revenue Streams
Pricing Mechanism
Fixed Menu Pricing
Dynamic Pricing
Predefined prices are based on static variables
Prices change based on market conditions
List Price
Product
Feature
Customer
Segment
Volume
dependent
Price set by product, service, or other
Value Propositions
Price depends on the number and quality
of Value Proposition features
Price depends on the type and
characteristic of a Customer Segment
Price as a function of quantity purchased
Negotiation Price determined by bargaining skills and
leverage
Yield Price depends on inventory and time of
Management purchase
Price is determined dynamically based on
Real-time-market supply and demand
Auctions
Price determined by outcome of
competitive bidding
Cost Structure
What are the most important costs
inherent in delivering the value
proposition? Which key resources are most
expensive? Which key activities are most
expensive?
 Is our business model more Cost
driven or Value driven?
 Types of costs
 Fixed
 Variable
 Economies of scale
 Economies of scope
Some business models,
are more cost-driven
than others. “No frills”
airlines, for instance,
have built business
models entirely around
Low Cost Structures.
Revenue Management
• Set of techniques use to manage
– Constrained, perishable inventory (time)
• When customer willingness to pay
increases towards departure
• Applications:
– Airlines, Hotels, Car Rentals, News Vendors
• Main techniques: Open and close certain
rate categories (rate fences) based on
historical probabilities and forecasts of
future demand
Fixed Prices
P
P
Consumers Surplus
Dead Weight Loss
Q
MC
Q
Get a little more revenue
P
P1
P2
P3
Q1
Q2
Q3
Q
Maximize the Revenue !
Perfect (1st degree) Price Disc.
P
Q
SIS CAN BLEND THE BOS
FRAMEWORK WITH THE BMC
The BMC
Business Model Canvas
COST-SIDE
VALUE-SIDE
 The BMC consists of a right-hand value and customer-focused
side, and a left-hand cost and infrastructure side.
 Changing elements on the right side has implications for the lefthand side.
Value Innovation
ELIMINATE
REDUCE
RAISE
CREATE
BOS is about simultaneously increasing value while
reducing costs.
This is achieved by identifying which elements of the
value proposition can be eliminated, reduced, raised or
newly created.
Blending the BOS Framework with the BMC
Business Model Canvas
COST-SIDE
VALUE-SIDE
Value Innovation
ELIMINATE
RAISE
REDUCE
CREATE
Blended Approaches
Blended Approaches
Blending BOS and the BMC lets you systematically
analyse a business model innovation in its entirety.
You can ask the Four Actions Framework questions
for each business model building block and
immediately recognize implications for the other
parts of the business model.
Example: Nintendo
With stiff competition from Xbox and Playstation,
Nintendo pursued a fundamentally different strategy and
business model with Wii.
The heart of Nintendo’s strategy was the radical
assumption that consoles do not necessarily require
leading-edge power and performance.
Nintendo shifted its focus to providing a new form of
player interaction targeted at a wider demographic than
the traditional gamer audience
Example: Nintendo
ELIMINATE
RAISE
 Narrow market of hard core
gamers
 Console subsidies
 New proprietary technology
 High end console performance
REDUCE
 Console production price
 Technology development cost
CREATE
 Motion control technology
 Large market of casual gamers
and families
 Fun factor and group [family]
experience
 Motion controlled games
 Off the shelf hardware component
manufacturers
Example: Nintendo
Off the shelf
hardware
component
manufacture
rs
Game
developers
State of the
art chip
developmen
t
New
proprietary
technology
High end
console
performance
Motion
control
technology
Fun factor &
group
experience
Narrow
market of
hard core
gamers
Large
Motion
controlled
games
Retail
distribution
market of
casual
gamers &
families
Game
developers
Console production price
Profit on console sales
Technology costs
Narrow market of hard core
gamers
Console subsidies
Royalties from game developers
QUESTION
HOW CAN CAN SIS LINK BOS WITH
BMC?