Mr. Sohan Babu Khatri, CEO of 3H Management, gave training on Business Development.

1. BUSINESS DEVELOPMENT
MODEL AND STRATEGIES

2. Sohan Babu Khatri CEO Three H Management
Adjunct Faculty Ace Institute of
Management
Kathmandu College of Management

3. Day’s Plan….

4. Six Tough Questions on App Business
Models and Strategies

5. Question No. 1
What are the main business models I can
use to make money and how do I select the
right one for my idea?

8. 8
On Ideas
If a man makes a better mousetrap than his
neighbor, though he builds his house in the
woods, the world will make a beaten path to his
door.
Ralph Waldo Emerson

9. Two Problems
1. He never said it.
2. The research doesn’t support it.

10. • The basic mousetrap (1897)
• How much innovation (better mousetraps) in
mousetraps since then?

11. Mousetrap Innovations
• Since USPTO’s founding in 1828, how many mousetrap
patents in U.S.?
– 4,400 patents (Hargadon, 2010)
• How many new mousetrap patent applications each year
currently?
– 400 as of the mid-1990s (Hope, 1996)
– 40 of these are granted
• How many out of these have made money?
– 20 out of the 4,400

12. Why don’t every innovation succeed ?

13. And then somebody said this….

14. 14
Business Concept
The manufacturer who waits for the world to
beat a path to his door is a great optimist. But
the manufacturer who shows this “mousetrap”
(and its value) to the world, keeps the smoke
coming out his chimney.
O.B. Winters

15. Value
Proposition
Business
Model
Revenue
Model

16. Value
Proposition
Business
Model
Revenue
Model

17. Value
Proposition
Business
Model
Revenue
Model

18. Value
Proposition
Business
Model
Revenue
Model

19. Mind the Difference ….
Do you like my
product ?
Would you pay for
my product ?

20. Value
Proposition
Business
Model
Revenue
Model

21. App Monetization

22. Mobile is a big deal, but that doesn’t mean it
will magically lead to a big deal for you. You
need to build a sustainable mobile business,
not just a one-hit wonder.

23. Think about this statistic: 2% of app
developers claim about 54% of all app
revenues. So, how do you join that alluring
2%? Have a well-thought out plan to profit
from your app. And hash this out before your
app launches.

24. Approach mobile app business model with
the dual mindset of building an awesome
app and an eventual business

25. Answer the Followings
• What problem is your app trying to solve and how would
you do that (in the best way possible) ?
• What is unique about your app and would people pay for
this?
• What else do you think your app users would be willing to
pay for?
• What business models do competing apps use and how
well have they worked?

26. A Good Place to Start
Business Modeling

27. From an economics perspective, a large number of successful
business models these days are built on two-sided networks
and even multi-sided networks.
These are usually services that connect businesses to
consumers or consumers to consumers, such as, for example
AirBnB and eBay type services.
These models exhibit powerful network effects if they manage
to scale up and allow owners to monetize either one side of the
network (e.g. consumers or businesses) or both (e.g.
commission-based) depending on the application.

28. Also, it’s important figure out a balance between your
need to gain users with your need to earn revenue. Some
app business models earn more money right off the bat
at the expense of quickly acquiring tons of users, while
others result in high downloads first and profits later.
What is your timetable? Can you afford to initially forgo
revenue to accumulate users? (It might be worth it,
depending on your users).

29. Top 6 Most Bankable App Business Models
1. Free, But With Ads (In-App Advertising)
2. Freemium (Gated Features)
3. Paid Apps (Cost Money to Download)
4. In-App Purchases (Selling Physical/Virtual Goods)
5. Paywalls (Subscriptions)
6. Sponsorship (Incentivized Advertising)

30. Only the creative and courageous app
marketers make it rain money.

31. Question No. 2
Which sectors have the most potential in
my country / market ?

32. Which is the right question in this regard ?
A. “What works in my local market”
B. “What works in the markets that I want/I am well
placed to reach”

33. Going International / Global

34. Going International / Global with Mobile
App
• The good thing about mobile apps is the fact that the
market is global and the costs and barriers to reach
international markets are very low compared to
other, more traditional businesses.

35. But….
• Do we know international market and the opportunities
posed by it ?
– Gaps ?
– Problems ?
– Issues ?
• Do we know “consumers” well ?
• Are we well placed to reach them ?

36. Does you app rely on local content,
services, businesses, stakeholders,
intermediaries, value chain ?

37. Scalability ?
For most apps, scale is critical and thinking
locally can only get you so far

42. Activity: Opportunity Mapping

43. Question No. 3
What is more difficult? Coding or marketing
the app?

44. The consensus among developers says
marketing.
Constant experimentation (in other words
trial-and-error) is one of the strategies most
frequently used in order to find out what
works best in your case.

47. Question No. 4
What are the best ways to do marketing for
my app and acquire users/downloads etc?

48. Starting Point
Decision
Process
Customer
Analysis
Type
Value
Drivers
Number
Customer
Base
Products

53. #1 Cross-promotion
#2 Become part of an ecosystem/platform
#3 Do some PR

55. Question No. 5
What are the most common mistakes that
mobile app developers do and how can I
avoid them?

56. #1 Failing to see app development as a
business
• The best technology solution is not good enough
without the right business models and execution.
• This is one of the best known principles in the area of
technology strategy.
• Developers that lack business acumen/experience
often fail on the commercial side of the business.

58. #2 Failing to prepare for success
• The nature, scale and pace of the app economy is such that in a matter
of days your user based may grow from tens to tens of thousand users.
• Will your back-end cope?
• Will you be able to pay for third-party API calls utilized in your app?
• If not, what may have been initially a great service, will fail due to poor
customer experience or you may run out of money.
• A proper business case should anticipate success.

59. #3 Failing to pivot/adapt
• A common advice in the startup world is “pivot till
you die”.
• If your idea is not working try applying it on a
different market, adapt it to the current market, flip it
on its head or scrap it altogether and go for
something else.

60. #4 Failing to know and listen to your users
• In a market where consumer switching costs are so low and a
user can easily replace your app with the competitor’s app, user
experience and customer support are critical success factors.
• Your app will be deleted if it crashes repeatedly, if it is poorly
designed, or does not deliver what it says on the tin.
• Test your app, test it again, use crash-reporting and user-analytics
services and keep it up to date, implementing new
features and listening to user feedback.

62. Question No. 6
Is it better to try to innovate with a never-seen
app, or is it better to be a follower?

63. Neither is easy and both can work.

64. The advantage of being a
follower is that you learn from
others’ mistakes and failures.
You may for example see what is
not so good or what is missing
from an app and fill the gap, or
extend it into another market.
• The downside is that by the time you do it, others will probably be trying to do
it too, so there will be more competition.
• You don’t just need a better app, you also need better execution, i.e. a
better business model and marketing, in order to topple the leader.

65. On the other hand,
a new, innovative
idea can take you a
long way before the
competition catches
up (although never
at a safe distance)
but it is more
difficult to create a
niche and then
expand it.

68. In the app economy innovation is not
limited to technology but extends to
business models, strategies and business
functions too.

69. END OF PART I

70. BUSINESS MODELING
BUSINESS MODEL CANVAS

71. Why do I (Technologist) need (to waste time
developing) a business model?

72. • Because technologists think like technologists
• Technologists are notoriously:
– Smart
– Logical
– Rational
– Practical
– Fair-minded
– Proud of their work

73. • Because technologists ONLY think like technologists
• Technologists are notoriously:
– Smart
– Logical
– Rational
– Practical
– Fair-minded
– Proud of their work

74. … and that exactly might be the problem

75. Business development is different than
technology
development and requires a (slightly)
different skill set

76. BUSINESS SENSE
+
TECHNICAL SENSE =
COMMON SENSE

77. Common Sense =
AND SOME MORE……

78. Three Foundations of Successful Venture

80. …. Answering these three questions

82. The BUSINESS MODEL is the logic by which
you answer these three questions

83. BUSINESS MODEL CANVAS
The 9 Building Blocks

84. Activity: Value Proposition

85. For whom are we creating value?
Who are our most important customers?

86. Customer Segmentation
• Demography
• Geography
• Psychograph
• Behavior
• User type
• Usage
• Benefits sought
• Price sensitivity
• Competitor
• Application
• Brand loyalty

87. Segmentation
and Market-
Driven
Strategy
Segments
Value
Opportunities
Capabilities
/Segment
Match
Targets
Positioning
Strategy

88. Illustrative Segmentation Variables
Characteristics
of people/
organizations
Consumer
Markets
Industrial/
Organizational
Markets
Age, gender, income,
family size, lifecycle stage,
geographic
location, lifestyle
Type of industry , size, geographic
location, corporate culture, stage of
development, producer/
intermediary
Use situation
Occasion, importance of purchase,
prior experience with
product, user status
Application, Purchasing procedure
(new task, modified
rebuy, straight rebuy
Buyers’ needs/
preferences
Brand loyalty status, brand
preference, benefits sought,
quality, proneness to make a deal
Performance requirements, brand
preferences, desired features,
service requirements
Purchase
behavior
Size of purchase, frequency
of purchase
Volume, frequency
of purchase

89. Segmentation
Requirements
Identifiable
Customer
Segment
Actionable
Favorable
Stability over
time
Response
Differences

90. Are you serving……… ??
• Mass market
– one large group of customers with broadly similar needs and problems.
• Niche market
– Business models targeting niche markets cater to specific, specialized Customer Segments.
• Multi- Segmented
– Market segments with slightly different needs and problems
– Segments have similar but varying needs and problems.
• Diversified (unrelated)
– Two unrelated Customer Segments with very different needs and problems. For example, in 2006 Amazon.com
decided to diversify its retail business by selling “cloud computing” services: online storage space and on-demand
server usage.
– Thus it started catering to a totally different Customer Segment—Web companies—with a totally different Value
Proposition
• Multi-sided platforms (or multi-sided markets)
– Two or more interdependent Customer Segments. A credit card company, for example, needs a large base of credit
card holders and a large base of merchants who accept those credit cards.

91. What value do we deliver to the customer?
Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying?
What bundles of products and services are we offering to each Customer Segment?

92. Value Propositions
• The Value Proposition is the reason why customers turn
to one company over another.
• It solves a customer problem or satisfies a customer
need.
• Value Proposition is an aggregation, or bundle, of
benefits that a company offers customers.

93. A Value Proposition creates value for a
Customer Segment through a distinct mix of
elements catering to that segment’s needs.
Values may be quantitative
(e.g. price, speed of service) or qualitative
(e.g. design, customer experience).

94. Some possible elements of value
• Newness / Novelty
• Performance
• Customization
• Getting the Job Done
• Design
• Brand / Status
• Price
• Cost Reduction
• Risk Reduction
• Accessibility
• Convenience / Usability

95. Sohan B. Khatri

96. Selling Benefits
Feature
Advantage
Benefit
Specific characteristic inbuilt in the product
What the feature does /
The function of the feature
What the feature can do for the customer
Sohan B. Khatri

97. Feature Advantage Benefit
Wrinkle-free
Attached water bottle
holder
3X Zoom
No need for ironing Saves time, energy and
Can hold a water bottle
electricity
Don’t have to stop for drinking
water, hence time saved
Better and more close-up
pictures, fond memories
Can capture images from a
distance
Sohan B. Khatri

98. Through which Channels do our Customer Segments want to be reached?
How are we reaching them now?
How are our Channels integrated? Which ones work best?
Which ones are most cost-efficient? How are we integrating them with customer routines?

99. …….
• Finding the right mix of Channels to satisfy how customers want to
be reached is crucial in bringing a Value Proposition to market.
• Own Channels, through partner Channels, or through a mix of
both.
• Partner Channels lead to lower margins, but they allow an
organization to expand its reach and benefit from partner
strengths.
• Owned Channels and particularly direct ones have higher margins,
but can be costly to put in place and to operate.
• The trick is to find the right balance between the different types of
Channels, to integrate them in a way to create a great customer
experience, and to maximize revenues.

101. What type of relationship does each of our Customer
Segments expect us to establish and maintain with them?
Which ones have we established? How costly are they?
How are they integrated with the rest of our business model?

102. Can be driven by following motivations
• Customer acquisition
• Customer retention
• Boosting sales (upselling)
• In the early days, for example, mobile network operator
Customer Relationships were driven by aggressive acquisition
strategies involving free mobile phones. When the market
became saturated, operators switched to focusing on customer
retention and increasing average revenue per customer.

103. The Target ….. To Enhance Overall
Customer Experience

104. Types / Categories/ Ways/ Strategies
• Personal Assistance
• Dedicated Personal Assistance
• Self – Service
• Automated Services
• Communities
• Co-creation

105. • For what value are our customers
really willing to pay?
• For what do they currently pay? How
are they currently paying?
• How would they prefer to pay?
• How much does each Revenue
Stream contribute to overall
revenues?
If
customers
comprise
the heart
of a
business
model,
Revenue
Streams
are its
arteries.

106. A business model can involve two
different types of Revenue Streams:
1. Transaction revenues resulting from one-time
customer payments
2. Recurring revenues resulting from ongoing
payments to either deliver a Value Proposition to
customers or provide post-purchase customer
support

107. Pricing Mechanisms

108. Set Pricing Objectives ….
1. Survival
2. Customer Acquisition
3. Impacting Customer Perception of Value
4.Maximum Current Profit
5.Maximum Market Share
6.Maximum Market Skimming
7. Product-Quality Leadership

109. Pricing Strategies

110. App Monetization
Concepts, Ideas and Strategies

111. Top 6 Most Bankable App Business Models
1. Free, But With Ads (In-App Advertising)
2. Freemium (Gated Features)
3. Paid Apps (Cost Money to Download)
4. In-App Purchases (Selling Physical/Virtual Goods)
5. Paywalls (Subscriptions)
6. Sponsorship (Incentivized Advertising)

112. 1. Free, But With Ads (In-App
Advertising)
• In this business model, you remove the cost-barrier
to purchasing your app and allow free downloads.
• Goal is to accumulate a sizeable user base and gather
information on the people interacting with your app.
• Then, this data gets sorted and sold to app publishers
who pay you to place targeted ads in your app.

113. ……
• This monetization strategy has proven quite effective for
Facebook. The social behemoth reported a 151% increase
in their mobile advertising revenue during the second-quarter
of this year.
• Essentially, you make money by selling data-driven
advertising space in your app. You can do this
independently or work with a mobile ad partner.

114. • According to statistics released from the Interactive
Advertising Bureau, mobile advertising spend rose to
$3.4 billion in 2012, up 111 percent from the prior
year’s record levels, and mobile advertising now
accounts for 9 percent of all digital revenue.

115. Pros
• Mobile apps are in a prime position to collect tons of data
on their users (such as their in-app behavior and their
location)
• Allows you to gain users quickly because people love free
apps
• Can be effective if moderate and targeted advertising is
used (ads are interesting yet limited)
• Mobile advertising spend will surpass radio, magazines,
and newspapers in 2014 (lucrative and growing industry)

116. Cons
• Not an innovative model and people can get annoyed of
ads, which may lead to app churn
• Mobile ads can comprise your app experience by claiming
a portion of the already limited screen size
• This model won’t work for niche or utility apps that are
designed to help users perform important functions (ads
will be too unnatural and intrusive in this setting when
people just want to do something quickly)

117. 2. Freemium (Gated Features)
• Similar to in-app advertising, the app is also offered for free in a
freemium business model, but certain features are gated and cost
money to be unlocked.
• In other words, people have access to an app’s basic functionality,
but there is a charge for premium or proprietary features.
• The premise of this model is that you attract people to your app
and give them a rich preview of what your app can do (without
giving them everything).
• The goal is to accumulate and engage app users until they are
willing to pay for additional in-app tools.

118. …….
• A great example of a brand that capitalizes on this
strategy is Angry Birds. The Rovio team (the creator
of Angry Birds) released a free version of their
addictive app. However, the app keeps certain
features hidden (like being able to juice up your bird,
additional levels, etc.) until users upgrade (for a small
fee) to the full version.

119. His monetization
strategy allows
you to tease
users with a
stripped down
version of your
app until they
are hooked
enough to
happily buy
additional
features.

120. Pros
• This mobile business model makes it easy to build up
a large user base and showcases your app so people
get hooked (and then you can upsell)
• People who “try before they buy” are more likely to
become engaged and loyal users later on
• Flexible model because it can be adapted to almost
any vertical

121. Cons
• If you offer too few features for free, app churn will be
high
• If you offer too many features for free, it will be
difficult/complex to convince your existing user base to
pay for an upgrade (upgrade won’t have much
incremental value)
• App marketers must be careful not to provide a large
segment of their users (the free ones) with an inferior
app experience

122. 3. Paid Apps (Cost Money to Download)
• App is not free to download.
• If people want to use your app they must first purchase it
from the app store.
• They key to finding success with this model is in your ability
to showcase the perceived value of your app with a killer
app listing (which includes screenshots, five star reviews,
etc.) that differentiates it from similar free apps.
• Put another way, the most profitable paid apps do a great
job of selling their app’s unique features, be it design or
functionality or brand.

123. …..
• For example, let’s look at Calendars 5, which is a paid productivity
app that costs $4.99 in Apple's app store.
• When you check out Calendars 5’s iTunes listing, the app
immediately positions itself as a “smart calendar” that
incorporates tasks, human language, and reminders in a clean
and colorful layout.
• The app’s listing page includes rich screenshots that highlight its
sleek design and stellar reviews about its superior functionality.
• Within a few seconds, the app is able to make a compelling case
that it’s better than Apple’s default calendar and thus, worth the
monetary investment.

124. The paid app
business model
is like a “pay
then play”
strategy that is
propped up by
your mobile
marketing
team’s ability to
convince users
to buy your app
instead of free
substitutes.

125. Pros
• App developers and app marketers earn revenue upfront
with every new download
• People who have paid for an app are more likely to turn into
engaged users (since they spent money to purchase your
app vs. choosing a free one)
• In this model, the app does not usually have any in-app
advertising thus allowing it to have a cleaner interface
• This model motivates app developers to focus on innovation
since people expect paid apps to be the crème of the crop

126. Cons
• Selling an app is hard because app stores are so
overcrowded (stiff competition from many free apps)
• App stores take a cut of the revenue from paid apps
(Apple gets approximately 30%)
• Paid models are a shrinking part of app store revenue
• 90% of paid apps are downloaded less than 500 times per
day (cost-barrier to gaining a large number of users)

127. 4. In-App Purchases (Selling Physical/Virtual
Goods)
• In-app purchases are exactly what they sound like.
• In a nutshell, this app monetization strategy involves selling
physical or virtual goods within your app, and then retaining the
profits.
• In-app purchases can include a wide variety of consumer goods
such as clothes and accessories.
• However, in-app purchases can also be virtual goods such as extra
lives or in-game currency.
• Whatever your app is selling, make sure the in-app purchases feel
like a natural part of your app.

128. ………
• MeetMe is an example of an app that has creatively
incorporated in-app purchases into their social app.
• People can download MeetMe for free and use it to
browse profiles, chat with people, and connect with
locals.
• However, you can also purchase credits to enhance your
visibility and gain new ways to interact with people.
• MeetMe’s purchase model has is lucrative because the
app is able to clearly highlight the benefits of in-app
currency.

129. The in-app purchases
model is about
turning your app into
another sales
channel (for physical
products that are
used in the real
world) or a mobile
storefront (for virtual
goods which can only
be used inside the
app).

130. Affiliate and Referral Marketing
• New services are automatically transforming existing mobile links
into revenue-generating links by directing the user to one of
thousands of retailers.
• Instead of an ad, viewers are unobtrusively presented links within
relevant content.
• The popular mobile and social shopping app Wanelo (also
available as a web app) showcases products available for sale ,
each of which is shared by a member of the Wanelo community.
The app lets users follow certain stores or individuals and discover
products they love. These discoveries turn into purchases, and
these purchases provide Wanelo with referral revenue.

131. ………
• Another form of affiliate marketing for apps is to promote
other mobile apps with the goal of earning commissions
when the app is purchased and downloaded.
• These types of ads typically have a more integrated and
natural feel within the app, especially if the content or
style (for example a skiing game referring a mountain
weather application) of both applications are natural
complements.

132. Pros
• This app business model works particularly well for
eCommerce/mCommerce brands and is flexible enough for other
verticals too
• In-app purchases can help app marketers make comfortable profits with
the lowest amount of risk
• Buying virtual goods can lead to deeper levels of engagement (growing
monetization strategy)
• The profit margin is usually high with this model because brands don’t
have the traditional expenses on mobile that brick-and-mortar stores do
(like staffing and rent)
• Flexible model which can also be adapted to include affiliate programs
and partnerships that drive referral revenue

133. Cons
• App stores usually take a cut of the revenue for virtual
goods (but not physical goods or services) purchased inside
an app
• Recently, this model has received bad publicity because
government officials are pressuring Apple and Google to
add stricter regulations to prevent children from making
accidental in-app purchases
• Apps will need to be more transparent on their app store
listing page if they include in-app purchases (which may
prevent some people from downloading)

134. 5. Paywalls (Subscriptions)
• The paywall app business model is similar to the
freemium model except that it focuses on
gating content, not features.
• Paywalls allow an app user to view a predetermined
amount of content for free and then prompts them
to sign up for a paid subscription to get more.
• This model is best suited for service focused apps and
allows brands to earn revenue on a recurring basis.

135. ………
• An example of an app that utilizes this app business
model is Umano, which transforms news stories into
podcasts.
• Umano allows users to listen to a limited number of
stories until they sign up for a premium subscription.
• With this strategy, people get to use all of Umano’s best
features, but for a fixed amount of time until they are
engaged enough to pay for unlimited use and content.

136. At its core, this model
is like a “pay later” or
“free trial” model
because users get to
test drive the app, but
then need to sign up
for a subscription to
bypass certain
content limits and
restrictions.

137. Pros
• People get to experience all of your app’s features which
increases session lengths and lowers app churn
• This app business model results in a continual
weekly/monthly/yearly (depending on your setup) flow of
revenue since subscriptions usually auto-renew
• Subscribers are more likely to be loyal and engaged app
users
• Subscriptions and content gating also motivate app
developers and app marketers to ensure they curate high-quality
content that is worth paying for

138. Cons
• Does not easily translate to all verticals (most suited
for news, lifestyle, and entertainment apps since they
can limit content like articles read or videos watched)
• It can be hard to determine where and when to place
a paywall (what is the right limit to place?)

139. 6. Sponsorship (Incentivized Advertising)
• Of all the app business models listed in this post, this is probably
the newest entrant in the mobile world.
• Sponsorship entails partnering with advertisers, who provide
your users with rewards for completing certain in-app actions.
• In this model, brands and agencies pay to be part of an incentive
system.
• Your app earns money by taking a share of the revenue from
redeemed rewards.
• This way, you can incorporate advertising into your app that
actually enhances your app’s ability to engage users.

140. ……
• An early adopter of this app business model is
RunKeeper. RunKeeper uses incentivized advertising
to motivate its users to track their running activity
with their app to unlock exclusive rewards and
promotions. This strategy lets RunKeeper monetize
their app without disrupting their app’s experience
with banner ads.

141. In the sponsorship
app business
model, advertisers
gain inclusion in
your app by
funding rewards
for your users,
who earn these
rewards by
engaging more
with your app.

142. Pros
• Innovative app business model which can be adapted for
many verticals
• This advertising strategy will likely be better received by
app users because it is relevant and related to an app’s
purpose
• App developers and marketers earn revenue, advertisers
get more ad space, and users benefit from free promos
• This form of advertising can be aligned with your app’s
conversion funnels

143. Cons
• Mobile marketers need to be careful about what
actions they incentivize within their app (Apple has
been cracking down on incentivizing downloads and
social sharing)
• This app business model has not been as thoroughly
tried and tested as the other ones (results and
success may vary)

144. Apps Are Trending Towards Blended Models

145. • Last year, Developer Economics published a chart which
shows the popularity and revenues from five of the most
bankable app business models (excluding sponsorships
since it’s so new).
• Interestingly, it shows that advertising is the most popular
app monetization strategy, but subscriptions are the most
profitable.

146. As the app
landscape becomes
more sophisticated,
we should expect
to see a trend
towards more
blended models.
For instance, you
can start with a
“free, but with ads”
model and then
offer users a paid
upgrade to an ad-free
version, which
is a “freemium”
approach.
The end lesson here
is: don’t just do what
others have done
before, adapt and
iterate on each app
monetization
strategy to make it
work for your app.

147. What Key Resources do our Value Propositions
require?
Our Distribution Channels? Customer Relationships?
Revenue Streams?

148. Categories
• Physical
• Financial
• Intellectual
• Human

149. What Key Activities do our Value Propositions require?
Our Distribution Channels? Customer Relationships?
Revenue streams?

151. 7S of a Business Model / Management
Systems
Shared
Values
Structure
Strategy
Staffs
Style
Skills

152. Who are our Key Partners? Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?

155. Modes of Partnerships
1. Strategic alliances between non-competitors
2. Coopetition: strategic partnerships between
competitors
3. Joint ventures to develop new businesses
4. Buyer-supplier relationships to assure reliable
supplies

156. Motivations for Partnerships
• Optimization and economy of scale
– usually formed to reduce costs, and often involve outsourcing or sharing infrastructure..
• Reduction of risk and uncertainty
– Blu-ray, for example, is an optical disc format jointly developed by a group of the world’s leading
consumer electronics, personal computer, and media manufacturers. The group cooperated to
bring Blu-ray technology to market, yet individual members compete in selling their own Blu-ray
products.
• Acquisition of particular resources and activities
– Some extend their own capabilities by relying on other firms to furnish particular resources or
perform certain activities. Such partnerships can be motivated by needs to acquire knowledge,
licenses, or access to customers. A mobile phone manufacturer, for example, may license an
operating system for its handsets rather than developing one in-house. An insurer may choose
to rely on independent brokers to sell its policies rather than develop its own sales force.

158. • What are the most important costs inherent in our
business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?

159. Two Models
Naturally enough, costs should be minimized in every
business model. But low Cost Structures are more
important to some business models than to others.
Therefore it can be useful to distinguish between two
broad classes of business model Cost Structures: cost-driven
and value-driven (many business models fall in
between these two extremes)

160. Cost Driven Business Model
• Cost-driven business models focus on minimizing
costs wherever possible.
• This approach aims at creating and maintaining the
leanest possible Cost Structure, using low price Value
Propositions, maximum automation, and extensive
outsourcing.

161. Value Driven Business Model
• Some companies are less concerned with the cost
implications of a particular business model design,
and instead focus on value creation.
• Premium Value Propositions and a high degree of
personalized service usually characterize value-driven
business models.

162. Right Mix of 9 Building Blocks

168. www.canvaniser.com

170. DESIGN ASPECTS OF BUSINESS MODELS

171. 1. Customer Insight

172. Customer Insight
• Companies invest heavily in market research, yet often wind up
neglecting the customer perspective when designing products,
services—and business models.
• Good business model design avoids this error.
• It views the business model through customers‘ eyes, an approach
that can lead to the discovery of completely new opportunities.
• This does not mean that customer thinking is the only place from
which to start an innovation initiative, but it does mean that we
should include the customer perspective when evaluating a
business model.
• Successful innovation requires a deep understanding of customers,
including environment, daily routines, concerns, and aspirations.

173. Adopting the customer perspective is a guiding
principle for the entire business model
design process.
Customer perspectives should inform our choices
regarding Value Propositions,
Distribution Channels, Customer Relationships, and
Revenue Streams.

174. Henry Ford once said,
“If I had asked my customers what they
wanted, they would have told me ‘a faster
horse.”

175. …..
• Business model innovators should avoid focusing
exclusively on existing Customer Segments and set
their sights on new or unreached segments.
• A number of business model innovations have
succeeded precisely because they satisfied the unmet
needs of new customers

176. Customer Insight in Business Model Design
Organization-Centric Business Model Design
• What can we sell customers ?
• How can we reach customers
most efficiently ?
• What relationships do we need
to establish with customer ?
• How can we make money from
our customers ?
Customer-Centric Business Model Design
• What job(s) do(es) our customer need to
get done and how can we help ?
• What are our customer’s aspirations and
how can we help him live upto them ?
• How do our customers prefer to be
addressed?
• How do we as an enterprise best fit into
their routines?
• What relationship do our customers
expect us to establish with them?
• For what value(s) are customers truly
willing to pay?

177. The Empathy Map

178. What does she see?
• Describe what the customer
sees in her environment
– What does it look like?
– Who surrounds her?
– Who are her friends?
– What types of offers is she exposed
to daily (as opposed to all market
offers)?
– What problems does she
encounter?
What does she hear?
• Describe how the environment
influences the customer
• What do her friends say?
• Her spouse?
• Who really influences her, and
how?
• Which media Channels are
influential?

179. What does she really think and feel?
• Try to sketch out what goes on
in your customer’s mind
– What is really important to her
(which she might not say publicly)?
– Imagine her emotions. What moves
her?
– What might keep her worried ?
– Try describing her dreams and
aspirations.
What does she say and do?
• Imagine what the customer
might say, or how she might
behave in public
– What is her attitude?
– What could she be telling others?
– Pay particular attention to potential
conflicts between what a customer
might say and what she may truly
think or feel.

180. What is the customer’s pain?
• What are her biggest
frustrations?
• What obstacles stand between
her and what she wants or
needs to achieve?
• Which risks might she fear
taking?
What does the customer gain?
• What does she truly want or
need to achieve?
• How does she measure success?
• Think of some strategies she
might use to achieve her goals.

181. The Empathy Map

182. Buyer Behaviour - Social Factors
• A customer’s buying behaviour is also influenced by social factors, such as the groups to
which the customer belongs and social status.
• In a group, several individuals may interact to influence the purchase decision.
• The typical roles in such a group decision can be summarised as follows:
• The person who first suggests or thinks of the idea of buying Initiator a particular product or service
Influencer • A person whose view or advice influences the buying decision
• The individual with the power and/or financial authority to make the ultimate choice regarding
which product to buy Decider
Buyer • The person who concludes the transaction
User • The person (or persons) who actually uses the product or service Sohan B. Khatri

183. Buyer Decision-making Process
Problem Recognition [Awareness of Need]
Desired State Actual State
Information Search
Internal Search External Search
Evaluation of Alternatives
Criteria for Evaluation Rank Alternatives or Resume Search
Purchase Decision
Choosing Alternative Product Features
Actual Purchase
Time , Access and Reference
Post Purchase Evaluation
Satisfaction vs Dissatisfaction
Sohan B. Khatri

184. What Marketers need to do ?
Problem Recognition [Awareness of Need]
Communicate Need Sell solution
Information Search
Impress consumers intensely Be present in all sources of information
Evaluation of Alternatives
Help consumers with information Influence by framing alternatives
Purchase Decision
Communicate Product Features Design easy process
Actual Purchase
Design moment of truth
Post Purchase Evaluation
After sales communication After Sohan sales B. Khatri
service Customer lifetime value

185. 2. Ideation

186. Generating New Business Model
• Mapping an existing business model is one thing;
designing a new and innovative business model is
another.
• What’s needed is a creative process for generating a large
number of business model ideas and successfully isolating
the best ones.
• This process is called ideation.
• Mastering the art of ideation is crucial when it comes to
designing viable new business models.

187. Business Model Innovation
• ignoring the status quo and suspending concerns over
operational issues
• is not about looking back, because the past indicates little
about what is possible in terms of future business models
• not about looking to competitors, since business model
innovation is not about copying or benchmarking, but about
creating new mechanisms to create value and derive
revenues.
• is about challenging orthodoxies to design original models
that meet unsatisfied, new, or hidden customer needs.

188. Ideas for business model innovation can
come from anywhere, and each of the nine
business model building
blocks can be a starting point.
Transformative business
model innovations affect multiple building
blocks.

189. Epicenters of Business Model Innovation
1. Resource-driven
– Resource-driven innovations originate from an
organization’s existing infrastructure or partnerships to
expand or transform the business model.
• Example: Amazon Web Services was built on top of
Amazon.com’s retail infrastructure to offer server
capacity and data storage space to other companies.

190. Epicenters of Business Model Innovation
2. Offer-driven
– Offer-driven innovations create new value propositions that
affect other business model building blocks.
• Example: When Cemex, a Mexican cement maker, promised to
deliver poured cement to job sites within four hours rather
than the 48 hour industry standard, it had to transform its
business model. This innovation helped change Cemex from a
regional Mexican player into the world’s second largest cement
producer.

191. Epicenters of Business Model Innovation
3. Customer-driven
– Customer-driven innovations are based on customer needs, facilitated
access, or increased convenience. Like all innovations emerging from a
single epicenter, they affect other business model building blocks.
• Example: 23andMe brought personalized DNA testing to
individual clients—an offer previously available exclusively to
health professionals and researchers. This had substantial
implications for both the Value Proposition and the delivery of
test results, which 23andMe accomplishes through mass-customized
Web profiles.

192. Epicenters of Business Model Innovation
4. Finance-driven
– Innovations driven by new revenue streams, pricing mechanisms, or
reduced Cost structures that affect other business model building
blocks.
• Example: When Xerox invented the Xerox 914 in 1958— one of
the first plain paper copiers—it was priced too high for the
market. So Xerox developed a new business model. It leased the
machines at $95 per month, including 2,000 free copies, plus
five cents per additional copy. Clients acquired the new
machines and started making thousands of copies each month.

193. Epicenters of Business Model Innovation
5. Multiple-epicenter driven
– Innovations driven by multiple epicenters can have significant impact on
several other building blocks.
• Example: Hilti, the global manufacturer of professional
construction tools, moved away from selling tools outright and
toward renting sets of tools to customers. This has a substantial
change in Hitli’s Value Proposition, but also in its Revenue
Streams, which shifted from onetime product revenues to
recurring service revenues.

194. Show your full creative colors…..
Sohan Khatri 194

195. "An innovative business is one which lives and breathes 'outside the
box'. It is not just good ideas, it is a combination of good ideas,
motivated team members and an instinctive understanding of what
your customer wants."
Richard Branson - DTI Innovation lecture, 1998
Sohan Khatri 195

196. Techniques
• “What IF”… and Scenario Analysis
• 5Why Techniques
• Brainstorming
• Reverse Brainstorming
• Focus Group Discussion

197. Ideation
• Which elements must we study before generating
business model ideas?
• What innovations can we imagine for each business
model building block?
• What are the most important criteria for prioritizing our
business model ideas?

198. DESIGN ASPECTS OF BUSINESS MODELS
1.Customer Insights
2.Ideation
3.Visual Thinking
4.Prototyping
5.Storytelling
6.Scenarios

199. STRATEGY

200. Strategy Landscape - Business Environment:
context, design drivers, and constraints

206. Each of these contextual aspects offers
feeders for strategy formulation for
business model design and implementation

207. How should your
business model evolve
in light of a changing
environment?

209. EVALUATING BUSINESS MODELS

213. Perform Detail SWOT analysis of each
building block of Business Model

214. Strength-Weakness Analysis

218. Analyzing Threats

220. Assessing Opportunities

224. Using SWOT
assessment
analysis results to
design new
business model
options

225. Value Innovation

227. Changing elements on the right-hand
side has implications for the left-hand
side. For example, if we add to or
eliminate parts of the Value
Proposition, Channels, or Customer
Relationship Building Blocks, this will
have immediate implications for
Resources, Activities, Partnerships, and
Costs.
Identifying which elements of the
Value Proposition can be eliminated,
reduced, raised, or newly created.
The first goal is to lower costs by
reducing or eliminating less valuable
features or services. The second goal
is to enhance or create high-value
features or services that do not
significantly increase the cost base.
You can ask the Four Actions
Framework questions (eliminate,
create, reduce, raise) about each
business model Building Block and
immediately recognize implications
for the other parts of the
business model, (e.g. what are the
implications for the cost side when
we make changes on the value side?
and vice versa).

228. Questioning your canvas with the
four actions framework

229. Customer Segment Perspective
Ask yourself the Four Actions Framework questions
about each business model Building Block on the
customer side of the Canvas: Channels, Relationships,
and Revenue Streams. Analyze what happens to the
cost side if you eliminate, reduce, raise, or create value
side elements.
• Which new Customer Segments could you focus on, and
which segments could you possibly reduce or eliminate?
• What jobs do new Customer Segments really want to have
done?
• How do these customers prefer to be reached and what
kind of relationship do they expect?
• What are the cost implications of serving new Customer
Segments?

230. Value Proposition Perspective
Begin the process of transforming your Value Proposition
by asking the Four Actions Framework questions.
Simultaneously, consider the impact on the cost side
and evaluate what elements you need to (or could)
change on the value side, such as Channels, Relationships,
Revenue Streams, and Customer Segments.
• What less-valued features or services could be eliminated
or reduced?
• What features or services could be enhanced or newly
created to produce a valuable new customer experience?
• What are the cost implications of your changes to the Value
Proposition?
• How will changes to the Value Proposition affect the
customer side of the model?

231. Cost Perspective
Identify the highest cost infrastructure elements and
evaluate what happens if you eliminate or reduce them.
What value elements disappear, and what would you
have to create to compensate for their absence? Then,
identify infrastructure investments you may want to
make and analyze how much value they create.
• Which activities, resources, and partnerships have the
highest costs?
• What happens if you reduce or eliminate some of these
cost factors?
• How could you replace, using less costly elements, the
value lost by reducing or eliminating expensive resources,
activities, or partnerships?
• What value would be created by planned new investments?

232. FIND POINTS OF SYNERGIES WITH OTHER
BUSINESS MODELS
Strategic alliance
Partnerships
Joint Ventures
Diversification (horizontal / vertical)

233. Design – Innovation
Satisfy Market
Bring to
Market
Improve
Market
Create
Market
Be Reactive Be Adaptive
Be Expansive
Be Pro-active/
Explorative

234. Note the followings carefully
• Critical Success Factors
• Key Performance Indicators
• Metrics and Measurements to be used
• Feedback Loop
• Incremental Improvements
• Total Quality Management

235. APP MARKETING STRATEGIES

236. 7Ps of Marketing

237. In a market that is estimated to be worth $ 25
billion by 2015, discoverability is the key and this is
reliant on a clear app marketing strategy and
timely execution.

238. Study Consumer Behavior Patterns

243. Some prescriptions
• Identify Your Target Persona First
• Consider Pricing Carefully
• Cast a Wide Net With Your Elevator Pitch
• Continuously Promote Retention
• Don’t Overlook the International Market
• USER ENGAGEMENT IS THE KEY

244. ………
• Make your press kit pop.
• Build an enticing microsite.
• Create a teaser or giveaway campaign.
• Keep content fresh.
• Build hype.
• Ask customers for feedback.

245. ……..a high-resolution logo, sample design screens, an app icon,
a press release, a microsite and a teaser video. Make sure you
have a fantastic name and icon for your app that's catchy and
connects with the audience instantly. The first paragraph of the
app description should be your selling pitch and app store
screenshots should be customized to attract your customer.
One of the most under-rated, but highly effective strategies is
app store marketing. Because a lot of people browse with
keyword searches, select your keywords wisely by researching
successful competitors.

246. ………
• Create a Buzz around your App
– a. Extensive market & competitive analysis
– b. SEO and ASO
– c. Press Releases
• Integrate social media
• Mobile display advertising
• Burst Marketing
• Incentivized downloads

247. An estimated 60% of downloads come
directly from users who discover your app
from organic search within the app store, so
your app store description is crucial.

248. ALL THE BEST