Free Business Models - Spotify Premium, the Long Tail Patterns - Essay Example

My Reflections By My Reflections Unbundled Patterns The following are the main reasons Companies unbundle their lines of business. First, Companies unbundle their lines of business to Find and to retaining customers, to develop new products and services; unbundling businesses may also help Companies counter more specialized companies which could provide similar offerings more efficiently. Secondly, Companies unbundle their lines of business if their providers underperforms; in an instance where a Company’s providers underperforms, the Company doesn’t have to remove a service but the Company can simply replace that one element instead of replacing the entire plan. The third main reason why Companies unbundle their lines of business is for business model innovation; unbundling lines of operation allows a Company to come up with new products and services. Unbundling helps a Company to focus on delivering the best results of plan, and keep costs down. In my opinion, in the case of paying for TV channels, It would be great if you could pay just for the channels you actually use, unbundling cable channels would not make consumers materially better off. The most likely result would be people paying about the same amount for fewer channels. The Long Tail Patterns In my reflections, I have always asked myself the following question: if long tail takes long time to succeed, why do some companies still follow this line of business? I really don’t understand the reason for long tail in some markets, like movies, music, video-games, Books; I don’t understand why these kind of businesses waste their time and money waiting for months to see the un expected result,; even if the results is negative, it doesn’t means that my business has to be shut down. In my Google research, however, I have found some perfect example s of Companies where long tail is quite useful. Long tail marketing generally involves more inventory management than product promotion; in long tail marketing, businesses hope to reach more customers and generate more total sales. One example of a business where long tail marketing has succeeded is in iTunes business. In long tail marketing, the following points are quite important. In value proposition , when producing niche goods for the tail end of the distribution, keep costs as low as possible. Your odds of success aren’t favourable here either, and they will probably become less so. Secondly, when trying to strengthen your presence in digital channels, focus on marketing your most popular products. An example of a Company that has used this long tail marketing strategy is Threadles App Store. Developing long tail marketing campaign does not mean replacing popular inventory with a variety of less popular products, but instead supplementing that inventory. This can be done to a greater extent as the costs of storing and distributing inventory fall. Free business models: Spotify &Premium In my reflections, I have realised that, nowadays, Spotify and Premium are based in using digital service; Spotify is really useful in online platforms, especially if one is a student, or one doesn’t have money to buy the service or product. All along, I have thought that Spotify its only for free services (free listening) , I have learned recently, however, that when we make the business canvas for online music, Spotify could be in Price, Features and Audio quality. Spotify Free is available to anyone at no cost. But premium requires some payments. For instance, if I want to subscribe to Premium then it will set me back £7.00 per month. If I one is not sure whether they want to sign up, they can try Spotify Premium on a one month free trial. I normally do this most of the time with Microsoft new applications and products. The main difference between Spotify free and Spotifys Premium is that, spotify premium gives one access to everything available on the website and doesnt force adverts. For example, in the example of Music tracks spotify, Premium users can play any song they want (on demand), as well as find and hear playlists, discover new music, create and edit playlists, share music and playlists. Open Business Model In my reflections on building innovation platform called innovation HUB, I have realised that, there is a roll of innovation HUB or open innovation. This role is Sharing Ideas; in sharing ideas, you have to focus in value proposition, by using license to use your Idea or solution. This could be either Inside-Outside or Outside-Inside. In Inside –Outside model, you come with solution from the same structure, for example the case of testing with Labs; in this example, the Company testing with the Lab does not produce product. With this situation, the Technology can be invented first and the result can be used to set up new company or new business. In Outside-Inside model, one has the ideas or solutions from out of the structure; it could be a key partner in HUB. Sometimes you can sell your solution to others or to the people who are in the same structure, or they can improve it or make it better Ideas. A good example of a Company that is using this model is Coca-Cola Company .Coca-Cola is participating in the hub by sharing two broad programs, including its on-going work with the WWF. The Natural Capital Business Hub differs from other multi-industry sustainability efforts, such as those of the WBSCD or the Beverage Industry Environmental Roundtable. Multisided Platforms In my reflections, I have come to understand multisided platforms as technologies, products or services that create value by enabling direct interactions between two or more customer or participant groups. Good examples of multisided platforms are eBay and Facebook; these two platforms create value by enabling interactions between two or more customer groups. But building and managing a winning platform isn’t easy. Although multisided platform marketing model is an innovative marketing model, I have, however, wondered how one can the multisided platform can be successful in marketing through the use of multisided platform model; also, I have wondered about what can one do to make this model more innovate. Also, I have asked myself the following questions: is this model focused in customer’s number or what are the important things in my strategy? How many sides will be part of the platform? What kind of design should the platform have? How should pricing be set up? Innovation Business Advisor Design Pattern Ideation: Ideas for business model innovation can come from anywhere, and each of nine business model can be starting point. So, when I begin to design the model, I have to be very clear what I am designing and how I want to approach the market. That would determine my starting points. There are four epicentres of business model innovation: The first epicentre is Resource- Driven: innovates originate from Existing infrastructure. Offer-Driven: innovates originate and create new value proposition. A good example of offer driven epicentre is Zappos online service company. Zappos Company deliver WOW Through Service, Free Shipping and Fast Shipping- Returns policy- No limit for amount of call times ,and Insights delivers WOW through service to other companies; also, Zappos give the costumer the information about other companies, and gives Ideas about similar items they want that’s all to satisfy their buyer. All these services makes zappos one of the best online service. The second epicentre is Customer- Driven: innovates are based on customers’ needs. An example of customer-driven epicentre is health care in U.S.A. Health care in USA has painful procedure. Customer-driven bring in the plan sponsor. Most sponsors are as interested in finding less costly ways to access good care as their employees. It demandS transparency on treatment costs and giving employees economic incentives to choose better value. The third epicentre of business model innovation is Finance- Driven. A good example of finance-driven epicentre is Internet Service Providers (ISPs), which have earned sales revenue from providing fast Internet connections for individuals. Customer Insight In my reflections on customer insight, the first question that pop up to my mind is, how can one discover whats missing from peoples lives? And what do they want? These kinds of questions help me to explore the functional, emotional and social, base needs motivators that drive customers. Functional motivators: its benefit delivered by brand that provide value. Sometimes the context can affect the functional. Example: If 2 people man & woman want to have a trip from Leeuwarden to Paris by a car. What kind of car can fit them? The following factors would influence the man and the woman on a trip in making decision about the kind of car to use in the trip. Functional: every car can gets the job don take them from A to B. Context: If he is rich in 50 with his young beautiful girlfriend and he wants to show off (Mercedes car). If they are a family with children they will stop frequently (Family car).Social: looking good, Gain status, Gain power. Example 2: Buy a new iPhone 6 makes you feel good and confidant. The following factors would influence the decision to buy iPhone 6. Aesthetic, feel good, and security. Example 3: some drivers prefer to arrive a safely reach their distance with speed, so emotionally they would like to feel secure at the result they will prefer to choose Volvo cars. For business model the innovation we dont just interview consumers in focus groups. We go shopping with them. We visit their homes and watch them closely. Our understanding of habits and desires make innovations easier for consumers to do something they were already trying to accomplish. Protyping A business model is a system that explains how somebody creates and delivers value. A business model canvas is a tool that allows you to describe, design, challenge, invent, and pivot your business model. Prototyping technique is about discovering a new and better business model. And outline new ideas by adding or removing elements of each prototype For innovation and new ideas, you need somebody who is more analytical, rational with some experience in finance, if possible; also, somebody who is good at synthesising, and seeing the big picture of everything. Story Telling Telling story is the newest visual tools in marketing, it seems like its less about whats new technology-wise and more about whats become easier for everyone to do. For innovation in storytelling, one can use Photography, animation, editing and manipulation –The stories are what everyone remembers. One may already know how customers have used your products or services and received benefits. So, one should make customer story-telling part of your company’s culture. The power of story: it is a combine form of communication, possessing the ability to tap into the experiences of your listener. One can connect new information to your listener’s existing knowledge. Reflection on Building Blocks and Relations between Building Blocks What happens if I eliminate or change any of the building blocks? It means you eliminate or change one or more of the nine most important elements you need to decide on when designing your business model. Changing or eliminating a block will still give you a partial view of your model, but you might not consider all critical elements to the success of your business model. For example, if you replace the key resources, key activities or partnerships blocks, you stop describing the infrastructure decisions required to make your business model work. Let me illustrate this with three examples where a particular key resources or key activity was a foundational pillar for the success of the business model (risk management for Kiva, patents for Nespresso, large audience for Google). When KIVA started their social lending platform they didnt have risk management as a key activity and it almost brought them down. Googles business model only works because they have a large audience (from free search) that is a key resource that they can "sell" to advertisers. Nespresso, the Nestlé owned coffee company, couldnt have built a competitive advantage without patents as a key resource that protected their pods from being copied for decades (review example on Harvard Business Review). What are the foundational pillars of your business model? If you change one or more of the nine building blocks of the Canvas you eliminate one ore more of the questions that help you figure out the pillars of your business model. The nine building blocks are all related and integrated. There is no such thing as a revenue stream without a customer paying for a value proposition. There is no value proposition that can be offered to customers without performing activities and drawing on key resources. Why isnt there a building block for competition, problems or measurements? Because great tools dont do everything, great tools do some things extremely well and work together with other great tools to get the work done. 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