Business models and examples are essential for startup owners to consider when establishing their businesses. From Apple to Amazon, some of the world’s most successful companies have built their businesses on innovative business models. In this article, we will take a look at the
7 most popular business models, and provide examples of how the world’s greatest giants are making money.
What Is The Business Model?
A business model is a plan for generating revenue. It describes how an organization creates, delivers, and captures value, in economic, social, cultural, or other contexts. Types of business models include retail, manufacturing, subscriptions, and more. It identifies the target market, the market’s need, and how the organization will meet the need and make a profit. It can be described through 9 building blocks: customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure.
9 Building Blocks For Any Business Model
The 9 Building Blocks for any Business Model are as follows:
1. Customer Segments – These are the different groups or organizations an enterprise aims to reach and serve.
2. Value Propositions – This creates a unique value for customers through a mix of elements that could be qualitative or quantitative.
3. Channels – This is how a company communicates with each customer segment, delivering them the value proposition.
4. Customer Relationships – This is how a company builds personalization into its brand and company.
5. Revenue Streams – This measures the earnings a company generates from each customer segment.
6. Key Resources – These are the important assets that are available to a company and are required to make the business plan a success.
7. Key Activities – This describes the important processes that a business must take part in for a business model to work.
8. Key Partnerships – This revolves around the network a business builds with other companies. 9. Cost Structure – This is the cost of the resources, activities, and partnerships a business needs to run its business model.
Building A Business Model On The Foundation Of A Story
Business models that succeed are created to address a specific need or issue in society. The stories behind the brands of companies often reveal the creativity and vision of their founders. For example, Facebook was established to facilitate connections among Harvard students, while Amazon was founded by Jeff Bezos as he recognized the potential of the internet and the limitations of physical bookstores.
With a story and an idea in place, and the components of your business identified on a business canvas, let’s examine the 7 most popular business models, and provide examples to determine which one your business aligns with.
Product Business Model
The first popular business model is the product business model. This is the traditional model, in which a company produces a physical or digital product and sells it directly to customers. Apple, for example, sells iPhones, iPads, and Macs directly to customers. Another product-based business model is the subscription model, which is popular for services such as streaming and software. Netflix, for example, sells subscriptions to its streaming service.
Platform Business Model
The second business model is the platform business model. This is a digital business model in which a company creates a platform or marketplace that brings together buyers and sellers. Amazon, for example, is a platform business model that connects sellers with buyers. Similarly, Uber connects drivers with passengers and Airbnb connects hosts with guests.
The third business model is the advertising model, in which a company makes money by selling ad space on its platform. Google, for example, is an advertising-based business model. It makes money by selling ads on its search engine and its YouTube platform.
The fourth business model is the affiliate model, in which a company earns a commission for referring customers to other products or services. Amazon, for example, has an affiliate program in which it pays affiliates for referring customers to its products.
The fifth business model is the freemium model, in which a company offers a basic version of its product for free and charges for access to advanced features. Dropbox, for example, offers a free version of its cloud storage service and charges for access to additional features.
On-Demand Business Model
The sixth business model is the On-demand business model, in which a company provides products or services to customers on an as-needed basis. Examples of companies that use this model include Instacart, Postmates, and TaskRabbit.
Sharing Economy Business Model
The seventh business model is Sharing economy business model, in which a sharing economy business model is one in which a company facilitates the sharing of resources, such as cars, homes, and equipment, between individuals. Examples of companies that use this model include Uber, Airbnb, and Zipcar.
In conclusion, there are many different business models that companies can use to create value and generate revenue. The 7 most popular business models we discussed in this article include the platform business model, subscription business model, freemium business model, sharing economy business model, on-demand business model, franchise business model, and licensing business model. Each of these models has its own set of advantages and challenges and the best model for a given company will depend on factors such as the industry, target market, and competitive landscape. However, by understanding and utilizing these popular business models, companies can create new and innovative ways to generate revenue and create value for their customers. The examples of the world’s greatest companies such as Amazon, Uber, Netflix, LinkedIn, and McDonald’s, clearly demonstrate how these models can be effectively used to build successful and profitable businesses.