New business models

A Data Observer and Opinionway study entitled “Which Business Models in the Acceleration Race?” », Brings out the most common business models in our companies. If the Swiss University of Saint Gall had identified 20 possible, 9 would be much more used than the others. Some companies use more than one. Focus on the main types of business model.

The different types of business models

Subscription (10%)

This business model has already proven itself in the sales of magazines or newspapers because it offers many options: customer loyalty, liquidity reserve, simple inventory management, easy-to-implement forecasts and low risk of non-payment. However, This business model requires having a strategy that encourages consumers to subscribe without frustrating them too much. Among other things, we can give them access to 1 or 2 articles before they block access, as the media do (les échos, le parisien, liberation, etc.), show only part of an attractive content, offer articles that are only available to subscribers, or even subscribers promise pages that appear without advertisements … Every day we see the different media, for example offer us subscriptions using different strategies.

The platform or marketplace (8%), a win-win business model

The marketplace’s business model occupies an increasingly prominent place. We are thinking in particular of Ebay, Rakuten or Le Bon Coin. The marketplace offers an exhaustive product catalog on its website as it sells products other than its own. If you go through a marketplace for your products / services, your offer will therefore be mixed with others and the difficulty lies in your ability to differentiate yourself in order to stand out from the crowd. You can achieve a qualitative goal without having to spend a budget on marketing and communication as it naturally falls on the market. In return, you have to pay commission when you sell and you have no control over the development.

Rental (8%)

Rental has become an increasingly frequent consumption habit. If until recently it was a social recognition to own, it is no longer the same today: The two most striking examples are carpooling and coworking. This business model challenges the traditional “buy-sell” model, which is beneficial to consumers and businesses. According to a survey conducted by IFOP for Zuora – a cloud solution dedicated to consumption via subscription – more than every other Frenchman feels out of touch with traditional consumption patterns and says they are ready to rent their products rather than buy them.

Sale of licenses (8%)

Sales of licenses is a business model that allows a company to either expand its brand to other areas, or for an industrialist to develop other products that bear the image of an already well-known brand.

In the case of the sale of the sale to an industrialist, the recipient makes his brand available and the industrialist his skills. This association may give rise to a derivative product. Compensation is usually provided by the industrialist who pays royalties to the right holder. The principle is to exploit the notoriety of a famous character or a movie like Star Wars. The film can thus provide derivative products in, for example, toy stores.

In normal cases, it allows to make extra margin, for example, in an area that the brand does not want to exploit. The sale may be single or even subject to additional commission depending on the revenue achieved. Finally, there may be the possibility of using a product.

Sales of consumables (7%)

Printers, razors, coffee machines, etc. are sold at attractive prices, which means that the accessories can be sold in large quantities at much less attractive prices. This business model is based on a fairly simple method: you get to sell a product at a very attractive price compared to the competition (this is the bait product). So, to use it, buy extra accessories on which the company makes margins that sometimes exceed the imagination (this is the hook). These accessories are generally disposable and have a relatively short lifespan, forcing you to replace them. It should be noted that products and accessories are covered by patents, which prevents competitors from manufacturing cheaper accessories.

Freemium (5%)

The business model is a mix between the “free” model and the “premium” model. The “free” offers a free service and the “premium” a paid and advanced service. The strategy is to get as many customers as possible to subscribe to its free service to lead them to the paid service. We are then talking about the premium conversion rate. The so-called “premium” subscription is often a paid subscription, in return the company offers products or services that are better than the free basic version. Skype offers an Internet telecommunications service. Skype’s offer is shared between a free service, which makes it possible to communicate from one computer to another computer, and a payment service which makes it possible to make calls to landlines or mobiles, anywhere in the world. It is through this service that Skype generates revenue while the premium conversion rate is less than 10%. The Gameloft company offers many games that are free but linked to payment features. These functionalities make it possible, for example, to buy items in the game, which makes it possible to pass the levels faster. Thus, a patient player can play his salary, while a player who is busy passing the levels will tend to pay to speed up his progress.

Low price with sales of additional products (4%)

Many sectors such as air transport, rail transport or mobile telephony have so-called “low-cost” players.

The low-cost model offers very attractive prices to attract more customers by reducing the product offered or the service offered as much as possible. The “low cost” has the special feature of focusing on the needs of the consumer. The first service or product is therefore without options, which must be paid if you want to obtain them. Ryanair, an airline that has become one of the market leaders with more than 70 million passengers, generates profits of 100 million euros. They offer a place, but if you want to eat, drink a cup of coffee or take a large suitcase with you, then you have to pay extra. Ouigo is SNCF’s “low cost” service, which allows you to take a TGV from € 10 for a Paris-Marseille. Any other service such as the outlet or extra luggage will be charged to you. Finally, the distribution system mainly uses the Internet which significantly reduces costs (no agencies at the station, fewer employees, etc.).

Deductible (4%)

The number of franchisees has increased significantly because the benefits are many: The network in which a franchisee wants to establish itself already benefits from its fame and visibility. He should therefore not have a marketing and communications budget for his brand. In addition, the franchisor possess real market and customer experience and can support the franchisee. He will therefore have no strategic decision to make., the franchisor makes sure to make all the important decisions that can help the development of the brand. The entry fee, the possible royalties as well as the ability to quickly develop a brand attracts many entrepreneurs to use this business model to evolve.

The white label (3%)

White label is an excellent practice for developing its revenue without investing colossal sums in communication or marketing. The brand is not known by the general public but the company benefits from the reputation of the supplier or customer while the product is personalized in its image (graphic charter, design, color, etc.).

For companies, this business model provides the opportunity to develop both a white label business by, for example, being a supplier of Toyota cars and at the same time having a visible presence outside and thus developing their business with many customers. . Customers, for example, believe that all accessories for a car are made by the brand when it is made by a company under the auspices of the white label.

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