Definitions

Question 1

Freemium

Answer 1

The basic version of an offering is given away for free in the hope of eventually persuading the customers to pay for the premium version. The free offering is able to attract the highest volume of customers possible for the company. The generally smaller volume of paying ‘premium customers’ generate the revenue, which also cross-finances the free offering.

Question 2

Add-On

Answer 2

The core offering is priced competitively, but there are numerous extras that drive the final price up. In the end, the costumer pays more than he or she initially assumed. Customers benefit from a variable offer, which they can adapt to their specific needs.

Question 3

Affiliation

Answer 3

The focus lies in supporting others to successfully sell products and directly benefit from successful transactions. Affiliates usually profit from some kind of pay-per-sale or pay-per-display compensation. The company, on the other hand, is able to gain access to a more diverse potential customer base without additional active sales or marketing efforts.

Question 4

Cash Machine

Answer 4

The customer pays upfront for the products sold to the customer before the company is able to cover the associated expenses. This results in increased liquidity which can be used to amortise debt or to fund investments in other areas.

Question 5

Digitalization

Answer 5

Relies on the ability to turn existing products or services into digital variants, and thus offer advantages over tangible products, e.g., easier and faster distribution. Ideally, the digitization of a product or service is realized without harnessing the value proposition which is offered to the customer: efficiency and multiplication by means of digitization does not reduce the perceived customer value.

Question 6

Hidden Revenue

Answer 6

The logic that the user is responsible for the income of the business is abandoned. The main source of revenue comes from a third party, which cross-finances whatever free or low-priced offering attracts the users. A very common case of this model is financing through advertisement, where attracted customers are of value to the advertisers who fund the offering. This concept facilitates the idea of ‘separation between revenue and customer’.

Question 7

Peer-to-Peer

Answer 7

This model is based on a cooperation that specializes in mediating between individuals belonging to an homogeneous group. The company offers a meeting point, i.e., an online database and communication service that connects these individuals (these could include offering personal objects for rent, providing certain products or services, or the sharing of information and experiences).

Question 8

Electronic markets

Answer 8

Electronic markets are markets implemented using information and communication technologies, i.e., mechanisms of the market concerning the trading of goods or services that support a single or all transaction phases

Question 9

Network effects

Answer 9

The value of a market place increases with the number of its users

Question 10

Diffusion

Answer 10

Diffusion describes the process of spatial and temporal spread of an innovation in a social system. The Diffusion of an innovation occurs by the adoption (acceptance) of the innovation by individual

Question 11

five adopter categories

Answer 11

→ Innovators
→ Early adopters 
→ Early majority
→ Late majority 
→ Laggards