Question block 1 Flashcards by Andreas Hein

What is a business model as defined in the lecture?

A method of of doing business by which a company can sustain itself, that is generation revenue.

The business model spells out how a company makes money by specifying where it is positioned in the value chain.

Example: company produces goods or services and sells it to customers.

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A1: a) What is a business model as defined in the lecture?

A method of of doing business by which a company can sustain itself, that is generation revenue.

The business model spells out how a company makes money by specifying where it is positioned in the value chain.

Example: company produces goods or services and sells it to customers.

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Name and briefly describe three basic categories of Business Models on the Web as presented in the lecture.

Merchant:
Virtual Merchant - only web(Amazon)
Bit Vendor - Only digital products (iTunes)
Catalog Merchant - mail order with web based catalog (Otto)
Click and Mortar:
retail establishment with web storefront (Barnes&Nobles)
Affiliate (Amazon):
pay for performance
-
pay per click or revenue sharing

Advertising:
Broadcaster (website) provides content and or services mixed with advertising
Effect of advertising can be analyzed immediately (Adsense - Analytics)
Banner ads may be the major sole source of revenue.
Works best when the volume of viewer traffic is large or highly specialized.
Image based ads decline get more target oriented (adwords - forum, platform)
Variations - Platforms (Yahoo) high traffic, specialized and niche platforms
Variations - query based (google) adwords
variations - content-target (adsense) identifies content (tea)
classifieds (craigslist) - list items for sale.

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Give an example for a website, which combines at least two of the presented business models, and name these business models.

Amazon - merchant and ads,

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Name and briefly describe three basic categories of Business Models on the Web as presented in the lecture.

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Briefly describe the Brokerage Model as presented in the lecture.

Auction Broker (eBay):
conducts auctions for sellers
listing fee and commission based on the value of the transaction
Auctions vary in terms of bidding rules and offering

Transaction Broker (Paypal):
provides third party payment mechanism

Demand collection system (priceline):
name your price model
buyer makes final bid - broker arranges fulfillment

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Which two kinds of variations of the formula for fees/commissions for transactions were presented in the lecture?

transaction fee: get money based on the value of the transaction
listing fee: list the item

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Briefly describe “Auction Broker” and “Transaction Broker” as two Variations of the Brokerage Model. Furthermore, give one example for each of those two variations.

Auction Broker: eBay
gets money for listing and transaction based on value
Transaction Broker: Paypal
provides third party payment and gets money based on value of transaction

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How would you avoid that the two parties circumvent the broker as soon as the contact between those is established?

Offer additional services like insurances.

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Briefly describe the Merchant Model.

Merchant:
creates an inventory, involved in distribution, fixed price
Virtual Merchant - only web(Amazon)
Bit Vendor - Only digital products (iTunes)
Catalog Merchant - mail order with web based catalog (Otto)
Click and Mortar:
retail establishment with web storefront (Barnes&Nobles)

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What is the difference to the Brokerage Model?

You have items on stock, because you are selling and not the seller. Fixed price.

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Briefly describe “Virtual Merchant” and “Bit Vendor” as two
Variations of the Merchant Model. Furthermore, give one
example for each of those two variations.

Virtual Merchant: like Amazon sells only over the web

Bit Vendor: Sells no physical products (iTunes)

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Briefly describe the so-called “Long Tail” in the context of the
Merchant Model.

Short Tail is famous music like Rhianna. Long tail is more specific and has a smaller target group like folk music from bavaria.

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Why it is easier for internet companies to exploit the Long

Tail theory than for traditional retailers?

Suggestions on the base of previous sales. More specific web sites tailored for this specific target group.

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Briefly describe the Advertising Model.

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Under which circumstances does the Advertising Model work

best?

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Large volumes of traffic or highly specialized customer segment is addressed.

Briefly describe “Portal” and “Query-based Paid Placement”
as two variations of the Advertising Model. Furthermore, give
one example for each of those two variations.

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Variations - Platforms (Yahoo) high traffic, specialized and niche platforms
Variations - query based (google) adwords

Why does the advertising model work better for Google than

for Facebook?

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User intent on Facebook is social collaboration. On google they are looking for specific products or information.

Briefly describe the Subscription Model.

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periodic fee for service (daily, monthly, annual …)
subscription fees are incurred irrespective of actual usage rates
subscription and advertising models are frequently combined
variaton: Conten services (Netflix):
provide content for paid access / customer relationship
variation: person2person network (Xing, classmates):
search for former classmates and pay
variation: internet services provider (american online):
offer network connectivity for fee
variation: trust services (TRUSTe):
best practices / online privacy seal

Name and briefly describe three basic categories of Business Models on the Web as presented in the lecture.

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Affiliate (Amazon):
pay for performance
-
pay per click or revenue sharing

Briefly describe the Subscription Model.

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Briefly describe “Content Services” and “Person-to-Person Networking Services” as two variations of the Subscription
Model. Furthermore, give one example for each of those two
variations.

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variaton: Conten services (Netflix):
provide content for paid access / customer relationship
variation: person2person network (Xing, classmates):
search for former classmates and pay

Briefly explain the Freemium Model. What is the motivation

for using the Freemium model?

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It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content, this is called freemium. e.g. xing

get user base and offer additional features. people get used to ist and want those features afterwards.

Which business model is frequently combined with the
Subscription model (and in particular with the Freemium model), and how?

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And advertising model: like person2person: large user volume. Like netflix: promotion

Briefly describe the Manufacturer (Direct) Model.

reach buyer directly and compress therefore the distribution channel (BMW Online buy). based on efficiency, improved customer service, and a better understanding of customer preferences

Name the three advantages of the Manufacturer (Direct) Model compared to indirect distribution channels as presented in the lecture.

direct purchase: saves extra costs and reduces value chain. you know your customer - more reliable data and suggests reduce dependency.

riefly describe “Purchase” and “Lease” as two variations of | the Manufacturer Model. Furthermore, give one example for each of those two variations.

Purchase (Dell): ownership is transferred. Lease (E-Sixt): for rental fee the buyer can use the product under certain terms and conditions. product is returned to seller after agreed date expired. Could be a right for purchase after the period ends.

Briefly describe the Community Model

based on user loyalty. High investment in time and emotion. Rev: Donations, sale of ancillary products or services,

How does the Community Model can generate revenue in | general?

Rev: Donations, sale of ancillary products or services. | or in combination with other models (advert.)

Briefly describe “Open Source” and “Social Networking Services” as two variations of the Community Model. Furthermore, give one example for each of those two variations and briefly describe how those concrete examples generate revenue.

Open Source (e.g. Red Hat, SUSE) - Software developed voluntarily by a global community of programmers who share code openly. - Instead of licensing code for a fee, open source relies on revenue generated from related services like systems integration, product support, tutorials and user documentation. Social Networking Services (e.g. Facebook, Flickr) - Sites that provide individuals with the ability to connect to other individuals along a defined common interest (professional, hobby, romance). - Social networking services can provide opportunities for contextual advertising and subscriptions for premium services.

Briefly describe the Affiliate Model.

affiliate model, provides purchase opportunities wherever people may be surfing. offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. affiliates provide purchase-point click-through to the merchant pay-for-performance model if affiliate generates no sales - no costs for the merchant

Name and briefly describe the two variations of the Affiliate Model.

pay-per-click: Site that pays affiliates for a user click-through (amazon). Revenue Sharing: offers a percent-of-sale commission based on a user click- through in which the user subsequently purchases a product (amazon)

Briefly describe the Utility Model.

based on metering usage, or a "pay as you go" approach. Unlike subscriber services, metered services are based on actual usage rates. essential services (e.g., electricity water, long-distance telephone services).

Briefly describe the Infomediary Model.

aggregated data carefully analyzed and used to target marketing campaigns. collecting and selling information to other businesses. Audience Measuring Services, Advertising networks ...

Question block 1 Flashcards

(34 cards)