Types of Business Models (old)

Summary

This video explains the concept of a business model, distinguishing it from a business plan. A business model outlines how a venture generates revenue and delivers value to customers, while a business plan serves as a roadmap for achieving business goals. Through examples like Hilton Hotels and Airbnb, the video illustrates how different companies can address the same customer needs using various business models. It covers common types such as manufacturer, distributor, aggregator, and subscription models, highlighting the importance of adapting business models over time to meet market demands and enhance profitability.

Takeaways

• 😀 A business model defines how a venture plans to generate revenue and profit by delivering value to customers.
• 😀 It is distinct from a business plan, which is a detailed roadmap for achieving business goals.
• 😀 Two businesses can solve the same problem but operate under entirely different business models, exemplified by Airbnb and Hilton Hotels.
• 😀 Common business model types include manufacturer, distributor, retailer, aggregator, franchisee, brick-and-click, premium subscription, SaaS, and marketplace.
• 😀 The manufacturer business model involves creating finished products from raw materials and selling them to distributors.
• 😀 In the distribution model, a company buys finished goods from manufacturers and sells them to retailers.
• 😀 Aggregator models bring multiple service providers under one brand, earning commissions from their offerings.
• 😀 The franchise business model allows franchisees to use the parent company's product and business model while paying royalties.
• 😀 Brick-and-click businesses operate both physical stores and online platforms to reach customers.
• 😀 The freemium model offers basic services for free while charging for premium features, common among digital products.

Q & A

What is a business model?

A business model is how a venture plans to generate revenues and profits by delivering value to its customers through products or services and monetizing that value.

How does a business model differ from a business plan?

A business model conceptualizes the business and defines how it will solve problems and monetize value, while a business plan is a detailed roadmap outlining specific goals and the steps to achieve them.

Can you give an example of two companies with different business models but similar offerings?

Airbnb and Hilton Hotels both provide accommodation but have different business models; Hilton owns and operates hotels, while Airbnb aggregates various homeowners' properties and earns money through commissions.

What are some common types of business models?

Some common business models include manufacturer, distributor, retailer, aggregator, franchise, bricks-and-clicks, subscription, freemium, software as a service (SaaS), and marketplace.

What does a manufacturer business model entail?

In a manufacturer business model, a company produces finished products from raw materials and sells them to distributors, who then sell these products to consumers.

What is the role of a distributor in a business model?

A distributor purchases finished goods from manufacturers and sells them to retailers, who sell directly to customers.

How do aggregator business models work?

Aggregator business models involve a company bringing together multiple service providers under one brand and offering their services to customers, earning money through commissions.

What defines a franchise business model?

In a franchise business model, a franchisee uses the business model and products of a parent company and pays royalties for the right to use the brand.

What is a freemium business model?

A freemium business model offers basic services for free while charging for premium features or additional services, commonly seen in digital products.

Why do businesses change their models over time?

Businesses often change their models to innovate new products, adapt to competition, or respond to changing market demands.