Sources of Revenues and Market Targets

1. 4 Sources of Revenuesand Market Targets

2. Sources of Revenues (1 of 3) • Taxonomy of Revenue Sources and Revenue Models • Direct Product Sales • After-Sales Service • Indirect Content Sales • Product Financing • Collect-Early, Pay-Late • Royalties on Intellectual Property • Combinations

3. Sources of Revenues (2 of 3) Table 4.1 Sources of Revenues and Associated Revenue Models Revenue Model Sources of Fee-for- Revenues Advertising Commission Service Markup Production Subscription Direct product or service sales  After-sales service  Indirect content sales  Product financing  Collect-early, pay-later financing  Royalties on intellectual property 

4. Sources of Revenues (3 of 3) • Profitability of a Source of Revenues • Industry Factors: Attractiveness of a Revenue Source • Firm-Specific Factors

5. Evaluating Revenue Sources and Revenue Models (1 of 3) • Growth-Share Matrix (Boston Consulting Group – BCG) • Stars, Question Marks, Cash Cows, and Dogs • Strengths and Weaknesses of the Framework Figure 4.1 The Growth-Share Matrix

6. Evaluating Revenue Sources and Revenue Models (2 of 3) • GE/McKinsey Matrix Figure 4.2 The GE/McKinsey Matrix

7. Evaluating Revenue Sources and Revenue Models (3 of 3) • Relationship between Business Model and Revenue Model • Business Model: framework for making a profit • Revenue Model: framework for generating revenue

8. Targeting Customers (1 of 9) • Two important choices • A firm usually must decide which customers to target: • All, assuming no difference in needs or preferences • Individual, identifying unique needs or preferences • Segments, identifying groups of customers within the total market that share common needs or preferences • A firm must usually decide how much of the needs of its target market it wants to satisfy.

9. Table 4.2 Targeting Different Customers (2 of 9) Customer Target Activities of Firm Mass Market Market Segment Individuals Needs and One-to-all One-to-segment One-to-one preferences marketing marketing marketing identification Value creation Mass production Mass production Customization and delivery Mass customization Mass approach customization

10. Targeting Customers (3 of 9) • Mass Market • Mass production: standardized products • Mass marketing: one-to-all marketing • Supply push or technology push: combination of mass production and mass marketing

11. Targeting Customers (4 of 9) • Individual Customers • One-to-one marketing: identifying each customer’s needs and preferences • Customization: non-standardized products • Mass customization: non-standardized products created and delivered cost-effectively • Demand-pull: as opposed to supply-push

12. Targeting Customers (5 of 9) • Market Segments • One-to-segment marketing: dividing the market into groups based on some homogeneous characteristic • Consumer Segments • Demographics • Psychographics • Behavior • Geography • Multidimensional segmentation • Business Segments • Benefits • Timing of needs • Industry • Customer size • Geography

13. Targeting Customers(6 of 9)Figure 4.3Multidimensional Segmentation

14. Targeting Customers (7 of 9) • Mapping Value into Targeted Markets • Firm must decide how much of the targeted market’s needs to meet • Variety-based positioning: selectively meeting all of the market’s needs for a specific product or service • Needs-based positioning: supplying all of the needs of a segment of the market

15. Targeting Customers (8 of 9) • Evolution of Targets – customer preferences change: • Customers often need to learn how to use a product when it is first introduced. • As a product evolves, the features that customers need may change. • Technological change may raise customer expectations.

16. Targeting Customers (9 of 9) • Selecting Customer Targets • Market size • Affordability • Attractiveness of target • Firm-specific factors

17. Sources of Revenues and Market Targets ? Questions