The article mis-quoted the iPod launch-> It’s actually 2001 not 2003The iPod is a portable media player designed and marketed by Apple and launched on October 23, 2001->http://en->wikipedia->org/wiki/IpodThe iTunes Store, formerly iTunes Music Store is a software-based online digital media store operated by Apple Inc-> Opening as the iTunes Music Store on April 28, 2003, with over 200,000 items to purchase
Gillette offers the razors fairly cheaply then charges a lot for the replacement blades, locking consumers into a cycle of continuous purchases on high-margin products->
Apple did the Gilette razor-and-blades model in reverse:Apple essentially gave away the “blades” (low-margin iTunes music) to lock in purchase of the “razor” (the high-margin iPod)-> “Stories of business model innovation from well-established companies like Apple, however, are rare” –article quote, pg 52->The Rio MP3 player, introduced by Diamond in 1998, was the real new market disruptive innovation compared to Apple's iPod-> But what Apple did differently is that they serviced nonconsumers of digital downloads-> The real disruptive innovation was iTunes - creating an easy, relatively cheap way to consume music-> Users did not even have to purchase an entire CD; songs were available as true singles for the first time-> The consumption of digital music downloading created a need for MP3 players - and the iPod took off->
CVP: A description of the value that a product, service or process will provide a customer-> Should be defined abstractly to assure one understands who all the competitors are-> Thus, rather than saying one provides customers with books, one should consider saying that one provides education or entertainment->A clear statement of who the target market for a particular product is, of what key benefits the product will deliver, and of the price that will be charged-> A value proposition is a clear, concise series of factual statements on tangible results from your products or services->The unique added value an organization offers customers through their operations-> The logical link between action and payoff that knowledge management must create to be effective; e->g->, customer intimacy, product-to-market excellence, and operational excellence [Carla O'Dell & C->Jackson Grayson]->The primary and essential benefit of a product or service-> For a company, it is the reason for being-> All of the definitions reiterate the importance of the customer/client-> Take away all the individualization and personal interpretation and the value proposition is a clearly defined statement that identifies value: value that your client wants, value that you can deliver-> The client is key to the entire process – the client drives the ‘value proposition’ There are as many ‘value propositions’ as there are clients-> Each client is unique and has different needs-> There is no one blanket value proposition-> In order for a value proposition to be effective it has to be customized to each client’s specific needs->
Business Model – comprised of 4 main elements – the other 3 elements necessary of course, but we’re focusing on CVP – 1-> CVP 2-> Profit Formula (made up of Revenue model; cost structure; margin model; resource velocity)3-> Key Resources (people, technologies, products, facilities, equipment, channels, and BRAND) – required to deliver the value proposition to the customer4-> Key Processes (training; development; manufacturing; budgeting; planning; sales; service; rules/metrics/norms)
The other remarkable example of leveraging nonconsumers to create an effective product offering (and business model) was that of Tata in Mumbai-> The people who could not afford cars were locked out of the marketplace due to wealth constraints-> They instead consumed scooters – sometimes an entire family atop a motor-scooter built for two max-> By creating a relatively affordable car (only ~$2500 USD), a new group of consumers were also created->
WalMart – Customers want LOW prices, we provide them with that->BMW – Customers want a car that provides with the ultimate driving experience – willing to pay top-dollar for it