Business Models 1-7

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Multi-Level Marketing

Freemium

Direct Sales

Affiliate Marketing

Nickel and Dime

Franchise

E-commerce

Retailor

Home Sharing

Vacation Rentals

Grocery

Discount Store

Supercenter

Warehouse Club

Customer Service

Fast Shipping

Subscription Service

Streaming Media

On-Demand Content

Type the type of business model used under each business.

Walmart

Air BNB

Zappos

Netflix

Types of Business Models

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Discussion Presentation 1-7

Lesson: Types of Business Models
Topic: Characteristics and Functions of Business
Course: Introduction to Business

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Business Model
vs.
Business Plan

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What is a Business Plan?

Business Plan: A roadmap of the business’s overall objectives, and the strategy and details of how those objectives will be achieved.

DEFINITION

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Often described by using a Pitch Deck.

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What is a Business Model?

Business Model: How a company sells its products to customers and its plan for making a profit.

DEFINITION

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The business model is one element of your Pitch Deck.

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Can business models
change over time?

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There are many types of business models

•Some blend together or are a combination of more than one.

•Some companies change their business models over time, in order to adapt to technology and changing consumer preferences.

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Bricks-and-Mortar

Online

Bricks-and-clicks

+

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Types of Business
Models

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Car Companies

Make cars out of steel,aluminum, plastic, glass, and other materials.

Ford & Tesla

Ford might sell the cars to a car dealership, while Tesla may sell directly to consumers.

U.S. Steel

Forms steel products that car manufacturers would purchase and use.

Manufacturer: Makes finished products from raw materials.

What is a Manufacturer?

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Ford and Tesla are both manufacturers but go about selling their cars differently. (Ford uses middlemen, i.e. car dealers, while Tesla sells directly to consumers/end users).

Direct to Consumer (D2C): Selling your product directly to your customers, the end user, without third-party retailers, wholesalers, or other middlemen.

What is a Direct to Consumer model?

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Distributor

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Buys products from manufacturers and resells them either to wholesalers, retailers, or the public.

Wholesaler

Buys large quantities of products from
manufacturers or distributors, warehouses or stores them, and then resells them to retailers.

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Online Retailers

Online stores and/or shopping experience. If they also have brick-and-mortar locations, they are called Bricks-and-Clicks.

Bricks-and-Mortar Retailer

Your local bank, grocery and hardware store. Any store with an actual storefront.

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Retailer: Buys products from a distributor or wholesaler or manufacturer and sells directly to the consuming public.

What is a Retailer?

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Bricks-and-Clicks

These companies provide a way for customers to buy products at their bricks-and-mortar stores, but also online. Or you could order products online and pick them up from the actual bricks-and-mortar stores.

BUS

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E-Commerce

Uses an electronic medium, like a website/store, to facilitate the buying and selling of products and services by businesses and consumers.
It can be broken down into three sub-categories:

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Business to Business (B2B)

02

Business to Consumer (B2C)

03

Consumer to Consumer (C2C)

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Franchise Model

Allows a person or small business, called the “Franchisee”, to start a business by legally using the Franchisor’s brand, expertise, practices, and established business and operational systems and processes.

BUS

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Nickel-and-Dime

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Business model that provides low price points for the cost-sensitive consumer, also often called Low-Cost Providers.

Subscription

Charges a regularly scheduled fee, usually monthly or annually, for their products or services.

Freemium

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Dropbox, Spotify, Kahoot, Canva etc. (many apps)

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Classic internet model and used by all sorts of companies to attract new customers. A company will offer some basic services for free, and then charge money for certain additional features.

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Aggregator

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Collects (aggregates) information on goods and/or services from competing sources and collects a fee or commission per transaction for selling the aggregated products through its own platform.

Online Marketplace

Collects a fee or commission per transaction for enabling suppliers to compete against each other for customers on one platform.

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Advertisement Model

Model used by companies that provide their services for free and sell advertisement space to fund their businesses.

Examples Include:

o YouTube

o Google

o Facebook

o Instagram

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Data Licensing / Data Selling

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Data is everywhere due to the explosion of the internet. These companies sell or license the data they collect as a form of revenue.

Twitter makes money from selling advertising, but they also make money from selling their data.

BUS

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Agency

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Model that handles certain business activities for
other companies for a fee.

These include advertising and digital marketing, and various other services.

Multilevel Marketing (MLM)

Individuals make commissions selling goods and
services directly and make commissions from sales made by their network of recruited distributors.

BUS

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Direct Sales

Selling products directly to the consumer in a non-retail environment. Think about the people who have been selling items from books to vacuum cleaner's door to door.

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Affiliate Marketing

An e-commerce relationship where an online merchant agrees to pay an affiliate (a promoter) in exchange for providing an advertisement and link to the merchant’s site.

Examples:

oPay-Per-Click (PPC)

oPay-Per-Lead (PPL)

oPay-Per-Sale (PPS)

13 Best Affiliate Marketing Website Examples of 2024

BUS

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Additional Business Models
Include:

• Auctions – eBay is a form of an auction

• Crowdsourcing – Wikipedia and more

• Crowdfunding – Kickstarter and GoFundMe

• SaaS models – Salesforce and Adobe Creative Cloud.
  SaaS stands for selling Software as a Service.

• Dropshipping

• Peer 2 Peer - Craigslist

• Blockchain – unchangeable, decentralized, digital ledger

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Business Model Slide
Example

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BUS

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Crowdfunding Model: Collects small amounts of capital from a large number of individuals to finance a new business venture or various other needs or projects.

DEFINITION

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Additional Glossary Terms

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Crowdsourcing Model: The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, especially from the online community.

DEFINITION

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Additional Glossary Terms

28

Dropshipping Model: A business model where the merchant sells products from its web store but doesn’t keep an inventory or handle the fulfillment and shipping of the product; rather, it purchases the product from a third party as soon as the customer makes a purchase and requires the third party to ship to the customer directly.

DEFINITION

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Additional Glossary Terms

Categorize

Options (4)

Multi-level Marketing

Franchise

Advertisement

Subscription

Type the type of business model used under each business.

Pampered Chef

Subway

Google Ads

Netflix

Categorize

Options (5)

Manufacturer

Direct to Consumer

Crowdfunding

Online Retailer

Auction

Type the type of business model used under each business.

Tesla

Go Fund Me

Zappos

Ebay

Categorize

Options (10)

Retailer

E-commerce

Supercenter

Grocery Store

Discount Retailer

Distributor

Aggregator

Short-term Rental

Affiliate Marketin

Aggregato

Type the type of business model used under each business.

WalMart

Air BnB

Dog Food Advisor

WW Grangier