Marketing Strategy – Collaborative Business Model – Flashcards

- Tech innovation - Values shift - Economic realities - Environmental pressures

- Belief there is a financial gain to be made in increasing asset value over time - Security and convenience of not being displaced at end of rental period - Social convention/values

- Belief that non-ownership models offer marginal benefit (e.g., leasing) - Belief in increasing asset value (classic, rare cars) - Security and convenience of possessing the asset (older generation) even though it is depreciating

- Resellers purchase the product/service to sell on to end customers under specifically defined criteria & conditions - Reseller may be permitted to customise products and services - They usually provide additional products and services as a "one-stop shop"

- Different to contract manufacturing such as HTC's build of the Google Nexus 9 where the association is clear to customer - Enables each partner to bring its core strengths to the initiative - Google can move to a new manufacturer if it does not do well

- Pharmaceutical companies spin out drug development to a new company in which it owns a stake - Other R&D firms take equity stakes and share the risk - Provides originator with finance and resources

A way an established company can bring other people, smaller innovative companies to a partnership type of contract.

- New ideas - Customer engagement (they are the judges) - Potential investments - Networking - Brand image

Collaboration marketing refers to an approach in marketing that relies on integrating customers' creativity, experience, and insights by engaging them in your marketing process. And providing them something in return such as economic incentives.

- Customers have a lot of creativity. And there are more of them than you. - Customers want to reach out and engage. - Customers will embrace what they co-create. They have a sense of ownership and a greater sense of engagement.

- Idea generation. Starbucks created mystarbucksidea.com where people can give recommendations on operations, etc. - Collaborative design. Nokia has Concept Lounge where people can give designs of a new phone. - Collaborative distribution. Southwest and Bing make it possible for you to be a travel agent.

- They were trying to make it viral. These people are feeling involved. - This is co-creating the experience, but not the product. They use co-marketing with the consumers.

Traditional business do not collaborate with their suppliers and customers in the same way platforms do Sellers sell item on your platform. Buyer pays your platform for the item, and the seller must give 10% of the selling price to your platform. Seller then has to send the item to the participant. The value of reputation is big in the collaborative economy. The eBay platform is a good example of how trust is critical.

- Ease of access - Interaction - Facilitation - Defined exchanges of value - Foundation of trust - Low marginal cost to serve

- Being first to market? It is important to make it right so the fast follower don't displace you - Ability to achieve scale? You will need funding. - Cash flow vs. delivering promises - Getting the subsidy right

The platform incurs cost in serving both groups and can collect from each, although one side is often subsidized. When successful, these platforms catalyse a virtuous cycle. More demand from one user group spurs more from the other. - The more video games developers create for Xbox platform, the more players buy the new Xbox - The more players who use Xbox, the more developers willing to pay Microsoft a licensing fee to produce new games.

1. Get pricing right. Subsidize one user group while charging the other a premium for access to the subsidized group. Adobe charges producers $299 and users nothing. 2. Winner-Takes-All Dynamic. Multi homing costs are high for at least one user side. Homing costs includes adoption, operation, and the opportunity cost of time in order to establish and maintain platform affiliation. I only use Mac, don't want to learn Windows. 3. The threat of envelopment. It is easy for one platform provider to swallow the network of another. e.g., Gojek

- A small number of customers within the overall user group funding the platform (e.g., LinkedIn) - Distinction of being a paying customer is to receive premium content/features - Advertising revenue streams can be used (often users can pay to remove the advertising) (e.g., Soundcloud Go)

- Free entry for children with paying adults to places like tourists venues - Discounts on bundles - (e.g., holiday package add-on like car rental) - Commissions for independent financial advisors on life insurance, pension choices, making it free for consumers

- Asset owner providing temporary use of the asset to customer (e.g., ZipCar, AirBnb) - Agreed price - Many sharing economy companies

Includes: - Low value products or services or few providers - Higher priced alternatives not perceived to add sufficient additional value. e.g., fiver Examples: - Domestic cleaning - Food delivery - Moving home

Includes: - People with time on their hands, but want to stay at home - Seasonal businesses - Ability to add labour at low marginal cost - People with expertise/hobbies e.g., Lynda.com Examples: - Day care - Virtual assistants - Getting tasks done

- Multi-sided platforms (MSPs) often offer free services to build up the user base and then charge for access to their data to others (freemium) can be same-side or cross-side - The scale effect often leads to a "winner-takes-all" situation where the largest platform is the only one that consumers want in their lives to serve a particular need (e.g., LinkedIn) - Examples of successful MSPs include Amex, Ebay, FB, LinkedIn, Spotify

- We are entrusting complete strangers with our most valuable possessions, our personal experiences - and our very lives. In the process, we are entering a new era of internet-enabled intimacy

Customer Needs: - People need to get from A to B regularly - People are happy to take rides from others - People have few choices on (supplier) Supplier Beliefs: - People are looking at flexible ways to supplement their income - People are willing to take on the risk of having strangers in their car Economics: - The cost must be below that of a licensed taxi

1. Model the value destruction - Loss of market share & profit - Impact on share price - Threat of "winner takes all" 2. Highlight the opportunity - Access new customers - Higher returns on current assets - Not starting from scratch 3. Determine whether the new model can be built into the core business structure or whether it should be a new venture

- Quicar - Share a Volkswagen - Work [Space] On Demand by Marriott

- Partnership used to be a type of firm, now refers to business relationships through contracts and/or equity - Open innovation enables companies to scale their R beyond internal limitations (and changes the nature of the firm) - Customer co-creation is a powerful marketing strategy, but there are limitations - Platform businesses have changed the nature of competitive economics - winner-takes-all dynamics make scale critical - The Sharing Economy is built on changing social norms, including attitudes to asset ownership vs. on-demand usage