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  • What is Strategy?
  • Business Models
  • Developing a Strategy
  • Strategic Planning
  • Competitive Advantage
  • Growth Strategy
  • Market Strategy
  • Customer Strategy
  • Geographic Strategy
  • Product Strategy
  • Service Strategy
  • Pricing Strategy
  • Distribution Strategy
  • Sales Strategy
  • Marketing Strategy
  • Digital Marketing Strategy
  • Organizational Strategy
  • HR Strategy – Organizational Design
  • HR Strategy – Employee Journey & Culture
  • Process Strategy
  • Procurement Strategy
  • Cost and Capital Strategy
  • Business Value
  • Market Analysis
  • Problem Solving Skills
  • Strategic Options
  • Business Analytics
  • Strategic Decision Making
  • Process Improvement
  • Project Planning
  • Team Leadership
  • Personal Development
  • Leadership Maturity Model
  • Leadership Team Strategy
  • The Leadership Team
  • Leadership Mindset
  • Communication & Collaboration
  • Problem Solving
  • Decision Making
  • People Leadership
  • Strategic Execution
  • OnDemand Coaching
  • Who’s Joe?

BUSINESS MODELS

Learn everything you need to know about business models. This guide on business models was created by an ex-McKinsey consultant and includes frameworks, case studies, examples, a step-by-step design guide, and an 18-page business model PowerPoint template.

THE BIG PICTURE ON BUSINESS MODELS

1. To Grow, Get All of the Elements Right

If you think through, analyze , and correctly solve each element of the business model, your company will grow.

2. Sequentially Solve the Business Model

Strategic planning should always start with the mission , then flow through the targets, value proposition , go to market, and finally the organization .

3. Understand the Role of Each Business Model Element

Once you understand each business model element, then it is much easier to solve for the right strategies to grow.

4. Strategic Alignment is the Key to Execution

Strategic alignment is when an organization is laser-focused on developing and delivering a killer value proposition and go-to-market that beats the competition .

A BUSINESS MODEL HAS 5 CORE ELEMENTS

There are five major components to any business model:

1. The Mission   2. Targets  3. Customer Value Proposition  4. Go-to-Market  5. The Organization

The way a business model works is: " The organization efficiently & effectively develops and delivers the customer value proposition and go-to-market to fulfill the needs of the target customers better than competitors , all for the purpose of achieving the mission ."

The horizontal graphic below translates the flow of elements in a business model.

How a business model works

THE WHO, WHAT, WHY, WHERE & HOW OF BUSINESS MODELS

We can take the horizontal business model graphic and make it vertical, which is the graphic we use throughout the site.

Business Model Questions

Let's go over the big picture of the business model.

We start at the top with the "true north" representing a business' mission , vision, and values , which ultimately gives purpose and provides the "why" the company exists. An inspiring and enduring mission, vision, and values serve as a guide to align strategies, and help all employees make the   right decisions , however big or small the decisions .

We next move down to the   targets.   These include the   markets   and   geographies   ("where") the company competes in, for the business of the target   customers  ("who"). Companies that clearly define and deeply understand their targets, develop focused and aligned business models.

Next is the  value proposition , which is the "what" and the core of any business model, composed of the  business's products ,  services ,  and  pricing . Then, there is the  go-to-market , comprised of the  business's distribution ,  sales ,  and  marketing . The purpose of go-to-market is to amplify the value proposition to drive customer acquisition and loyalty.

Finally, the  organization  is organized into  functions  (e.g., sales, ops, finance). Everything the organization does is a  process  (whether defined as one or not) executed by  team members ,  partners , and  infrastructure . The organization is the execution machine and the "how" things get done in a business model. And as stated before, the organization's purpose is to efficiently and effectively develop and deliver the value proposition and go-to-market to fulfill customers' needs better than competitors, all for the purpose of achieving the mission, vision, and values.

SOLVE A BUSINESS MODEL FROM THE TOP DOWN

Let's go over a few things about business models. First, look below to see all the  different types of strategy , which are just the tip of the iceberg. Second, most companies make the mistake of solving their strategy from the bottom up, starting with functional strategies. The conversation goes something like this, "We've got our board meeting coming up. Bob, I need your ops strategy. Jane, I need your marketing strategy . Helen, I need your sales plan and strategy. Nate, give me a readout on the HR strategy ."

I equate it to trying to design a car, with the chassis, brakes, engine, and electronics team independently designing their part. In the end, it won't work. Now, let's get into a simple case study to understand better how a business model works.

SOUTHWEST AIRLINES - ONE OF THE CLEANEST BUSINESS MODELS

Finding a better example of a well-tuned business model than Southwest Airlines is hard. Starting in 1967, Southwest Airlines has grown to be the largest domestic airline in the U.S., with $20 billion in annual sales and 50,000 employees. With a deep history of award-winning service, Southwest has amassed 43 straight years of  profitability . If you were lucky enough to buy $10,000 worth of Southwest stock in 1971, it would be worth over $20,000,000 today.

TRUE NORTH - "THE "WHY"

The true north of a company includes the organization's mission, vision, and values, which provide the foundation for aligning strategies, decisions, actions, and culture . A compelling mission gives the team and organization the inspiration and the focus they need to make mission-based decisions and align their strategies. A strong vision of strategic pillars and ambitious goals provides the next level of focus for aligning the organization's strategies. And values are the foundation of expected norms and behaviors that foster a company's culture. Without a compelling mission, vision, and values, management teams often struggle with strategic focus since they try to navigate without understanding the direction of true north.

Back in 1971, Southwest's mission was so simple and effective, “Charge the lowest possible fare. And provide the highest quality service.”

Over the past 45+ years, Southwest's strategic and day-to-day decisions reinforced how they could charge the lowest possible fare and provide the highest quality service. You'll see Southwest's mission throughout Southwest's business model.

Today, Southwest's true north is encapsulated below in its purpose, vision, mission, and values.

TARGETS - THE "WHO" & "WHERE"

A business model has three primary targets:  1. Markets , 2. Customers, 3. Geographies.  The targets define the "who" and "where" of a business model. A  market  establishes the solution space a business competes in for customers. If a  leadership team  truly understands its market dynamics, it can navigate its way to a leadership position. A defined  target customer  enables an organization to tailor their value proposition better to exceed the target customers' needs. While  target geographies  focus on the execution of a business and add to economies of scale.

Well-defined targets provide an organization clarity to make better decisions and execute at a higher level. Expanding into new markets, customer segments, and geographies can lead to explosive growth when a business already has a winning value proposition in existing markets, customer segments, and geographies. However, suppose a company expands into new target markets, customers, and geographies before the value proposition and organization are ready. In that case, it can fragment focus, create shoddy execution, and overextend the business into financial distress.

Let's better understand Southwest's target market, customer segments, and geographies.

Southwest's Target Market

The output of a market strategy is a differentiated positioning within the market. Southwest competes in the highly competitive commuter airline market, which, as an industry, lost $50 billion from 2001-2012.

The idea of Southwest was born on a napkin with lines connecting the three dots titled Dallas, San Antonio, and Houston. Back in 1967, the founders of Southwest saw a hole in the commuter airline market. While the big airlines were built around national and regional hub and spoke route models, Southwest focused on intrastate point-to-point routes (initially Dallas, Houston & San Antonio). Since then, Southwest has stuck to this point-to-point route market positioning, while most other airlines relied on their hub and spoke models.

Southwest's Target Customers

You start a business to fulfill a customer's need. Southwest started a regional point-to-point airline for customers who wanted an hour-long flight rather than waste 3.5 to 4.5 hours in a car to drive from Dallas to Houston or San Antonio. Instead of spending 7 to 9 hours behind the car windshield for a day round trip, customers could be pampered by  "the best service and the most beautiful girls in the sky."  Southwest had a unique perspective on how they defined the needs of their  target customers , as stated in their 1975 Annual Report,

"We believe that in short-haul markets of up to 500 miles, the private automobile is a worthy competitor for those consumers representing the great majority of us who cannot logically place a value on time commensurate with the airfares now charged in those markets. Except for the businessman and woman market, a fare that does not compete with the cost of personal automobile travel will not permit any air market to reach its potential.

By focusing on this unmet customer need to substitute a flight for a car drive, Southwest was one of the key influencers in driving astronomical growth in U.S. domestic air travel. They attracted business customers with low fares, convenience, and service, and leisure travelers with ultra-discounted weekend tickets to drive up their plane utilization. At the time, the ultra-discounted weekend fares opened up a whole new segment of travel customers who wanted to fly for pleasure, to visit family, recreation, and to explore new destinations.

Over the past 45+ years, Southwest has continued its focus on the business and leisure customer segments, tailoring its value proposition and go-to-market to these two segments.

Southwest's Target Geographies

While Southwest Airlines now serves over 100 destinations, its deliberate geographic expansion strategy was one of the keys to Southwest's growth. In keeping with its low-cost provider mission, Southwest has always pursued a geographic density strategy to drive cost and capital synergies and utilization.

Over the six years after their 1971 launch, Southwest expanded just in Texas with routes to the Rio Grande Valley, Austin, Corpus Christi, El Paso, Lubbock, and Midland/Odessa. In 1977, Southwest's fleet of 12 737s carried 2.4 million customers, which equals 200,000 passengers per plane, or 548 passengers per plane per day. Considering the population of Texas was only 13 million people in 1977, the word-of-mouth of the new, cool, and cheap Southwest Airlines was unavoidable. This geographic focus also enabled Southwest to leverage its fixed costs related to airports, personnel, maintenance facilities, and advertising .

Southwest has always taken a highly deliberate geographic expansion strategy, choosing routes that are natural extensions of the existing route network, leading to 40 years of steady, profitable growth. Southwest has continuously focused on driving the economies of scale that a dense geographic strategy provides. Furthermore, Southwest has been extremely opportunistic with their airport selection, often focusing on lower-cost second-tier airports in a region such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Oakland, San Jose, Burbank, Manchester, Providence, Ft-Lauderdale-Hollywood.

And, when Southwest expanded internationally, they made the strategic acquisition of AirTran, which had few overlapping routes but did have a robust business to the Caribbean, Mexico, and select Central American cities.

The Strategic Takeaway on Targets

Understanding, defining, and executing against target markets, customers, and geographies is core to building a killer business model. If you create a  differentiated market position,  you have a long-term vision of what you need to execute against. If you define the right target customers, you can tailor a differentiated value proposition to drive more customer value than competitors while also narrowing the scope of your go-to-market strategies. If you develop geographic density, then you reap economies of scale.

Keep your targets focused until your business and economic model are ready to scale into new markets, customer segments, and geographies. New markets, customer segments, and geographies can provide explosive growth, but only if your value proposition and economics are ready to beat the competitors in the new targets. The downfall of too many businesses is they overextend themselves by trying to expand into too many new targets, fragmenting the focus and execution of the organization.

THE VALUE PROPOSITION - THE CORE & "WHAT"

Southwest's value proposition.

Let's return to the original Southwest mission:  "Charge the lowest possible fare. And provide the highest quality service."  Frankly, it sounds like their value proposition, which is what you want in a mission statement .

Herb Kelleher, the co-founder and former CEO of Southwest, understood the customer value equation from the beginning, as he highlighted in an interview with  Strategy + Business, after being honored as a "Lifetime Strategist,"

One of the things that people, I think, didn't understand is that we started out saying we're going to give you more for less, not less for less. We're going to give you new airplanes, not old airplanes. We're going to give you the best on-time performance. We're going to give you the people who are most hospitable."

1970s Southwest Ad

Southwest's Service - Rational Benefits

In evaluating a value proposition, start with the rational benefits of the  products  and  services . Southwest's rational benefits are getting customers and their bags from point A to B through the air, which they do efficiently and competently.

They have the highest frequency of point-to-point routes, providing customers convenience and reduced travel time versus hub and spoke airlines. Southwest has the best historical on-time and baggage performance. They have a fast and convenient check-in process. In the event of a change, they have no change penalties and make it easy to book another flight. They also have the richest and easiest-to-redeem rewards program, averaging 9.5% of passenger miles flown on Rapid Rewards flights versus ~7% on other airlines.

By consistently and efficiently getting passengers and their bags from point A to B, Southwest consistently ranks as one of the top airlines in customer satisfaction.

Southwest's Service - Emotional Benefits

If you fly Southwest, you understand the difference in the emotional experience versus other airlines. It always starts with the people, and Southwest's employees have a fun, caring, and go-the-extra-mile attitude.

Then there is Southwest's physical experience of newer planes, with leather seats and extra legroom compared to other airlines in the same fare class.

Then there are the perks of free live TV, free snacks, drinks, and affordable $5 wifi and alcoholic beverages. If you're a frequent flier, they periodically send you free alcoholic beverage coupons.

There is also the emotional lift of not being taken advantage of with bag and change fees.

Southwest's service is so good, and their emotional connection with customers is so strong that they can pull off marketing campaigns centered around "Love." Imagine what a bad joke it would be if other airlines tried incorporating "love" into their  marketing .

Southwest Pricing

In 1993, the U.S. Department of Transportation coined the term the "Southwest Effect" for the rapid growth in total air travel in a city-to-city route once Southwest started to fly the route. The "Southwest Effect" is driven by their value equation, which equals benefits - price. While we've gone through the customer benefits of Southwest, let's flip to the other side of the coin:  pricing .

Historically, Southwest has been the price leader in the airline industry. With the growth of ultra-discount airlines (e.g., Frontier, Spirit), they may no longer be the ticket price leader. However, they are probably still the leader in the total cost of flying when you factor in the extra cost of bags, seat selection, change fees and the other charges of ultra-discount airlines.

Southwest utilizes its simple pricing in its #FeesDontFly  marketing campaign . While the competitive herd goes one way, Southwest goes the other way, which is the essence of  competitive differentiation .

The Strategic Takeaways on Value Propositions

A business's value proposition comprises its products, services, and pricing. The goal of a value proposition is to drive better customer value (benefits - price) than competitors. Over the past 45+ years, Southwest has consistently delivered superior customer value, leading them to grow into the largest U.S. domestic airline.

For struggling companies, the first thing to look at is the customer value proposition, which is most likely deficient versus the competition . Even for successful companies, the bottom line is to continuously focus on differentiating the value proposition to improve benefits while driving down costs, which can translate into enhanced profit or price improvement. The Customer Value Wedge is a nice visual to understand this concept better.

GO-TO-MARKET - AMPLIFYING THE VALUE PROPOSITION

The go-to-market strategy of a business model is how a company drives and fulfills the demand for products and services to customers. The three components of go-to-market include  distribution ,  sales , and  marketing . Powerful go-to-market strategies effectively and efficiently amplify the value proposition to the defined target customers.

The big strategic choice with distribution is whether to go direct, indirect, or a hybrid model of both direct and indirect channels. The big strategic goal with sales and marketing is to drive campaigns and activities to increase the size of the customer funnel and accelerate customers through the funnel.

Southwest Direct Distribution

With the rise of digital channels, distribution is currently a hotbed of disruption and innovation . Thousands of companies have cut out significant distribution costs from their value chain, by going directly to customers through digital channels .

Given Southwest's mission of low fares, in the late 90s, as Expedia, Priceline, Orbitz, and other travel websites grew, Southwest decided not to partner with third-party websites and only utilize Southwest.com as their online distribution.  At the time it was a risky move as many airline analysts said Southwest was going to suffer. However, given the strength of Southwest's value proposition and loyalty, the direct distribution strategy paid off.

For Southwest, the estimated savings are ~$700 million a year by not using the travel sites. Southwest can split the $700 million between higher profits and lower fares for customers. It is an example of driving the customer value wedge.

Distribution strategy is a critical element of any go-to-market strategy, and getting it right can be the difference between winning and losing.

Southwest Sales & Marketing

Southwest's marketing, encapsulated in their "Tranfarency" and "Love" campaigns, reflects their low fares and high-quality service mission. "Transfarency" amplifies the rational benefits of Southwest's value proposition, while "Love" amplifies the emotional benefits.

One of the main outputs of any marketing strategy is a campaign, simply a combination of messages and media. There are three media meta-channels:  advocacy, owned, and paid . The beauty of Southwest is how consistent they are in driving its brand messages across all three of these media meta-channels.

With Southwest and most B2C companies, there isn't a "Sales" element to their business model, as in most B2B business models.

Too often, companies blame marketing for their growth woes instead of addressing the lack of value in their value proposition. Two of the most successful retailers, Costco and Trader Joe's, spend almost nothing on marketing but continue to grow through the strength of their value proposition and word-of-mouth advocacy. From 2010 to 2013, Southwest kept its advertising spending almost flat but increased revenues by 46%.

The Strategic Takeaways on Go-to-Market

Too often, executives blame distribution, marketing, and sales strategies for growth woes. They usually replace their sales and marketing leaders or spend more on advertising and salespeople when they need to improve their value proposition.

Go-to-market strategies amplify a value proposition. If the value proposition is inferior to the competition, improve the value proposition and then amplify the value proposition through bigger and better go-to-market strategies.

If your business has a strong value proposition, add growth fuel by heavily investing in distribution, sales, and marketing. And align the go-to-market strategies to the target customer and their typical purchasing journey. Lastly, get the brand messaging right to tap into the rational and emotional benefits of the value proposition.

THE ORGANIZATION - THE HEART & "HOW"

The purpose of an organization is to efficiently and effectively develop and deliver the customer value proposition and go-to-market. Reflect on this for a minute. Is your role and everyone in the company focused on developing and delivering the customer value proposition and go-to-market?

Organizations are simply a collection of processes executed by a combination of people, infrastructure, and partners . The  processes are organized into functions .

There are two types of functions: 1. value chain functions and 2. support functions. Value chain functions create the value proposition and deliver and service the value proposition (i.e., logistics, product development , manufacturing, sales, marketing, and service operations). Support functions support the efficiency and effectiveness of other functions (i.e., procurement , IT, finance, HR, legal).

Solve the Top Before Getting to the Bottom

From a strategic perspective, the better the management team defines the top part of the business model, the easier it is for them to define strong organizational and functional strategies. Strategically aligning the value proposition, go-to-market, and organizational strategies to the targets and "true north" is one of the easiest ways to drive the efficiency and effectiveness of the organization.

Another critical component of organizational strategy is  core competencies , which are those capabilities that a business needs to be world-class at to develop and deliver the competitive differentiation and advantage of the business model.

Now, let's dive into how Southwest reinforces its business model through its organizational strategies. Southwest's mission and value proposition of low cost, high service is accomplished through Southwest's strategies related to  Team Members, Infrastructure, Partners, & Processes .

Southwest's Enduring Focus on People

People are the heart and soul of any organization. Southwest's mantra is "employees first, customers second, shareholders third. As co-founder of Southwest, Herb Kelleher said,  "If the employees serve the customer well, the customer comes back, and that makes the shareholders happy. It's simple, it's not a conflict, it's a chain."

Southwest has one of the most passionate and loyal workforces. They were named  the best company for work-life balance . They've ranked as high as  #13 in the Forbes Best Employer list . They've never had a layoff or cut pay.  Voluntary turnover is less than 2%.  With over 50,000 employees, Southwest does an incredible job keeping its  team members  happy, productive, and passionate. So, the question is how?

There are three main elements to a holistic people strategy :  1. org design ,  2. employee journey, and 3. culture . Let's dig into Southwest's employee journey and culture to understand how they elevate and  realize the potential of their team .

Southwest's Culture

A company's culture starts with its  values , which are reinforced by norms and the environment. Benefits and compensation are also critical to a company's culture.

It is hard to beat Southwest's culture. What other companies  celebrate their culture in their recruiting materials ? And, what other companies have a Culture Services Department and Local and Companywide Culture Committees?

It all starts with Southwest's values, which are broken up into "Live the Southwest Way" (Warrior Spirit, Servant's Heart, Fun-LUVing Attitude) and "Work the Southwest Way" (Safety and Reliability, Friendly Customer Service, and Low Costs).

Southwest norms, which define how Southwest team members interact with each other, reinforce the values. Southwest's environment (offices, planes, gates, etc.) celebrates employees, travel, and Southwest. Southwest also reinforces its values and norms with spirit parties, chili cook-offs, and Luvlines (their employee magazine).

Though Southwest is a low-price airline, its compensation is some of the highest in the industry. And they align all team members to their mission and financial performance through a generous profit-sharing plan. In 2015, Southwest paid out $620 million in profit-sharing, which amounted to over $12,000 per employee. This plan reinforces the Work the Southwest Way values. Southwest's benefits are numerous and generous. There are too many to list, but you should glance at them on  Southwest's website .

While culture may seem squishy and nebulous, a solid and enduring culture can take root in any company if you get the values right and reinforce them with norms, the environment, benefits, and compensation.

Southwest's Employee Journey

Strong companies infuse their mission and values into their  employee journey , including recruiting, hiring, onboarding , development, evaluation, and advancement. Some companies do it better than others, but great companies like Southwest are deliberate and thoughtful in their employee journey strategy.

Southwest leadership knows that starting with the right people, who inherently embody Southwest's values, is paramount to realizing its mission and preserving its culture. Southwest hires less than 2% of applicants and 6% of interviewees. Their interview process is rigorous, with group interviews, fit interviews, and a profile guide.

New hires go through a 4-week training program that trains them on the ins and outs of the job and enculturates them in the Southwest values with fun activities such as egg balancing relays and scavenger hunts. Once a team member begins to work, they are assigned a team member sponsor and participate in new hire parties and luncheons to reinforce the Southwest norms and culture.

Evaluation and advancement are based not only on a team member's skills but also on their demonstration of living the Southwest values. Team member development is reinforced through SWA University's extensive leadership and management development programs, along with continuous feedback and coaching.

There is also a continuous celebration of Southwest team members. Customers see it in the Southwest magazine with monthly articles on team members who have gone above and beyond. Southwest advertisements use team members instead of actors. Team members can give each other SWAG (Southwest Airlines Gratitude) points, utilizing an online platform that allows team members to recognize other team members for their Warrior Spirit, Servant's Heart, or Fun-LUVing Attitude.  Team members can turn their points in for gift cards and merchandise . There are also numerous employee awards, such as the Spirit Award.

Southwest has thoughtfully optimized its employee journey to elevate and realize the potential of its 50,000+ person team.

Southwest's Infrastructure

Infrastructure includes the equipment, information technology, facilities, machinery, and other physical assets a business uses. Infrastructure strategy and decisions are challenging, given the typical significant investment, sometimes long and complex implementations, against the backdrop of a continuously changing future.

In Southwest's case, its infrastructure strategy reinforces its low-cost mission. In 1971, Southwest began service with four Boeing 737s, which were introduced into the market a mere four years earlier. While competitors used 15-25 seat commuter jets for the same type of routes, Southwest's 737s seated 112 passengers, ensuring Southwest a superior cost structure once the planes were fully utilized (which took a few years). Still to this day, Southwest's fleet of 700+ planes is all Boeing 737s, compared to United Airlines, which utilizes  over 20 types of aircraft .

As stated in  Southwest's 10-K ,  "The Company's low-cost structure has historically been facilitated by Southwest's use of a single aircraft type, the Boeing 737, an operationally efficient point-to-point route structure, and highly productive employees. Southwest's use of a single aircraft type has allowed for simplified scheduling, maintenance, flight operations, and training activities."

Southwest's no-seat assignments policy massively simplifies its systems and processes, with no need to track seats and seat assignments for every plane for every flight for an entire year out.

Then there is the decision, back in the early 2000s, not to install in-flight entertainment, which would have cost multiple millions of dollars per plane and led to installation downtime. The weight of each in-seat display unit can be upwards of 13 pounds. Every pound of extra weight adds ~$1,400 per year per plane in extra fuel. 13 pounds per seat adds ~$3 million in additional operating costs per year per aircraft. In-flight entertainment didn't align with their low-cost mission. Fast forward a decade, and now Southwest has arguably the best in-flight entertainment with free live TV with BYOD (bring your own device).

Southwest has always aligned its infrastructure strategy with its mission and value proposition, leading to its unit cost leadership of 4.4 cents per available seat mile versus 5.4 to 5.8 cents for other airlines.

Southwest's Partners

Partners are all those companies that support a business. To understand the breadth of partners in a company, simply look at the accounts payable list to see all the partners. Now, while many partners are transactional, in most businesses, a few strategic partners can support the success of a business model.

In the case of Southwest, Boeing is a strong and important strategic partner. Here is an excellent quote from a  nice history of the Boeing / Southwest partnership,

"Our relationship with Southwest is about more than just delivering great airplanes," said Carolyn Corvi, vice president and general manager of the Boeing 737/757 Programs. "It's about understanding their business, trusting each other, and working together to achieve solutions. We know that while they have a lot of fun and play hard, they also run a business model that the entire industry emulates and admires. We are delighted and honored to have such a wonderful partner."

And you can see the benefits of this partnership, with Southwest often being the launch partner on Boeing's new 737 and customizing them to meet the needs of Southwest's customers. Take a look at the  737-800 MAX as an example .

Southwest's Processes

Every action in a business is a process, whether acknowledged as one or not. The key to processes is that they are lean and efficient by reducing non-value-added actions and inventory, otherwise known as waste. For Southwest, the foundation of processes is great people, infrastructure, and partners, which enables them to have super lean & low-cost processes and high plane utilization.

Just think about Southwest's quick gate turnaround, which originated as a 10-minute turnaround challenge,  which you can read about here . They only use 737s, so their turnaround teams and training are optimized on one type of plane. They don't have food carts, and they have customers and stewards clean up during deplaning. Through the profit-sharing plan, their team members are incentivized to get planes out on time and turn them around quickly.

Or, think about their no-seat assignments, which help them lean out many processes. Customer service interactions about seat assignments are non-existent, which also lowers IT costs by eliminating the complexity of seat assignments. Furthermore, the first customers to check in are the first to get their boarding number, which drives earlier check-in and better over / under-booking  metrics , eliminating the need to kick paying customers off an overbooked flight.

Southwest's lean processes also make it the historical leader in on-time and baggage performance. The collective focus on lean processes helps Southwest's team members realize their mission of being a low-cost airline.

Strategic Takeaways on Organizations

Southwest's organization efficiently and effectively develops and delivers its value proposition and go-to-market. Southwest's alignment of its entire business model from the mission to the targets to the value proposition, go-to-market, and the organization is extremely rare. So is their phenomenal revenue growth and 45 years of profitability.

BUSINESS MODEL STRATEGY

If a company doesn't have a mission or has a weak mission, fix that first. If the target markets, customers, and geographies are too broad, then focus them on the most lucrative. If the value proposition doesn't drive better customer value than the competition, then solve that. If the value proposition is strong, then focus on scaling through an improved go-to-market strategy. The more focused the top part of the business model, the easier it is to develop great organizational and functional strategies. If the business model is robust and working, then, and only then, think about expanding into new markets, customer segments, or geographies.

Every company has the potential to grow for decades, but it all comes down to strategy and execution.

If you need to develop a business model strategy, I encourage you to read  developing a strategy  or  set up some time with me  to start figuring it out.

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The 9 Best Marketing Frameworks You Need to Know

Sheryl Green

Updated: April 15, 2022

Published: January 14, 2022

Marketing is a unique animal. With a combination of creativity, analytical thinking, taking data into consideration, and project management, a modern-day marketer must possess a great number of skills and have quite a few tools at their disposal.

marketing strategy frameworks

Sure, you can delegate some of the work, but it also means you’re responsible for getting multiple people on the same page…some of which work in different states.

Rather than allowing your frustration to build, you can utilize tools that will make your job easier. More specifically, marketing frameworks. In this piece, we’ll discuss what a marketing strategy framework is, the benefits of utilizing one, the best marketing models out there, and how to decide which is best for you.

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What is a marketing strategy framework?

A marketing strategy framework details how you’ll enact your marketing plan and deliver marketing content to your audiences in ways that will help you achieve your marketing goals. It’s often a template or visual representation of what you’re looking to accomplish.

You can think of it like this: you wouldn’t dream of approaching your marketing with a “throw spaghetti at the wall and see what sticks” attitude because it would be a disaster for your organization.

Instead, you'll likely spend days, weeks, and maybe even months identifying your target audience, where they spend time and determining the perfect way to reach them and communicate the benefits of your product or service in a marketing plan.

Your marketing strategy framework takes this all a step further and, as mentioned above, ensures your marketing plan is successful because you’ll share content with your audiences at the right time in the most relevant channels that are more likely to drive results.

The Benefits of a Marketing Framework

A Marketing Framework does more than just keep you focused on the task at hand. As your company grows and your team grows along with it, you must find a way to communicate with every member of the marketing department, no matter where they work or what tasks they are responsible for.

Creating a marketing framework is the best way to ensure that everyone knows what they need to do and how they need to do it. Additional benefits of utilizing a marketing framework include:

  • Creating a home for templates, guides, tools, and assets that all marketers in your organization will need to access.
  • Establishing and communicating approved verbiage for the organization.
  • Improving marketing which then improves the growth and bottom line of the company.
  • Allows the team to compare different strategies and determine the best route.
  • Clearly communicate who is responsible for what and make it easier to transfer people from one role to another.
  • Save time by limiting “redos” - areas that are often susceptible to errors and therefore must be reworked.

In addition, your framework will help you predict your customer’s behavior and the revenue you can expect to see. As a result, it will help your team function more efficiently and produce more effectively.

The Best Marketing Frameworks

Marketing has probably been around since prehistoric days when entrepreneurial cavemen designed state-of-the-art spears and tried to sell them to their less “handy” counterparts.

Okay, that might not be true, but marketing has been a necessary aspect of business for a long time, and, over that time, savvy marketers have designed models and frameworks to make their (and your) job easier. Let’s take a look at some traditional models as well as some newer frameworks.

Traditional Marketing Models

1. 7ps marketing mix.

This widely used model considers the stages of business strategy, beginning at conception and taking it to evaluation. The Ps stand for:

  • Product: What’s being sold?
  • Prince: How much does it cost?
  • Place: Where will the product be sold?
  • Promotion: How will you communicate with your audience?
  • People: Who is involved in the production, promotion, and distribution?
  • Process: How will you deliver it to the customer?
  • Physical Evidence: How will you prove to customers that your business exists?

When you utilize the 7P model, you’ll have the opportunity to analyze and optimize every aspect of your company and your strategy to improve your business.

marketing strategy framework: The-7Ps-Marketing-Mix

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2. STP Marketing Model

The SPT mode l is a top-down approach that focuses on how a company addresses customers and helps deliver personalized (and relevant) messages to audiences.

STP stands for segmentation (dividing your audience into different sections), targeting (who will be the most receptive to your product), and positioning (how do you make your product the most appealing to that audience), and has helped many companies shift to utilizing social media to deliver content.

marketing strategy framework: stp approach

3. Porter’s Five Forces

While most marketing frameworks focus on the product itself and the audience, Porter’s Five Forces looks at the outside influences that can affect profitability. These include:

  • Supplier Power, how many other suppliers exist, what makes them different, and how much their product costs.
  • Buyer Power, which is the customer’s ability to influence decisions made by the company.
  • Threat of Substitution, which is how your product compares to others on the market.
  • Threat of New Entry, which is any barriers you might experience when entering the market.
  • Competitive Rivalry, which is any other outside forces that affect how your product compares to the competition.

This model will help determine just how competitive your business environment is.

marketing strategy framework: porters five forces

Now, let’s look at some of the newer models to hit the marketing scene. While they may not have been around as long as the more traditional models, they take into account the current marketing climate and often focus on start-ups.

Modern Marketing Models

4. pirate metrics or “aarrr”.

No, you don’t have to don an eye patch or adopt a parrot to use this framework. Developed by serial Startup Founder Dave McClure, Pirate Metrics allows you to see how a customer may travel on their buying journey and what areas you need to improve. AARRR stands for:

  • Acquisition:  Where are prospects finding you? Facebook ads, blog content, a paid search, etc.
  • Activation: What step did a prospect take once they arrived at your website? Depending on the business, this could include signing up for an account, downloading a free giveaway in exchange for their email, filling out a profile, etc.
  • Retention: Once they’ve left your site, do prospects or customers come back? How often?
  • Revenue:  How do you earn money from your customers? Consider reviewing metrics such as conversion rates, shopping cart size, and the LTV or customer lifetime value.
  • Referral: When customers are happy, they tell other people, and you end up with more customers. This lowers your CAC or customer acquisition cost because your loyal customers will attract new prospects for you.

marketing strategy framework: aarrr framework

5. Lean Analytics Stages

Developed by Alistair Croll and Ben Yoskovitz, the Lean Analytics Stage framework combines aspects of many different models and is ideal for improving startup growth. There are five pillars to this model:

During the product development stage, you’ll spend most of your time listening to customers, empathizing with their challenges, and taking in as much feedback as they are willing to provide. Once you have identified a problem you can solve to create your minimum viable product (MVP), you can then move on to the next stage.

2. Stickiness

Focus on engagement and retention as you work to create something that yields return customers. When you’ve got an engaged base and a low attrition rate, you can continue to stage three.

3. Virality

Before you try to attract customers through heavy advertising spending, focus on your existing customers. As your organic growth rates improve, you can move to stage four.

Without money, you’ll be out of business quickly. Pay attention to your customer acquisition cost metrics to make sure your customers spend more money than they cost to acquire. Once you’ve reached your revenue goals, you can move to the final stage.

You’ve got explicit knowledge of your product and your market. Now, it’s time to increase the revenue from your current market and potentially enter into new markets.

marketing strategy framework: lean analytics model

6. The Hook Model

No, it has nothing to do with the Pirate Metrics we discussed earlier, but it does compliment the stickiness and virality we discussed during Lean Analytics.

The Hook Model was developed by Nir Eyal, author of Hooked: How to Build Habit-Forming Products . He believes that our most purchased and utilized products achieve that status because they become a part of habitual behaviors. As marketers, we can tap into that by understanding the cycle:

  • Trigger: The beginning of the cycle is often an external trigger like a push notification. However, as the cycle continues, negative internal emotions become triggers as we attempt to lessen these negative emotions with an action.
  • Action: The easier you make things to do, the more likely a person will do it. Habit-forming products make taking action painless and straightforward.
  • Variable Reward: The anticipation of reward is a strong motivator. Variability increases anticipation, making prospects and customers more likely to take an action that warrants a reward.
  • Investment: Creating an investment or “buy-in” for your customers makes it more difficult for them to step away from your product or service.

marketing strategy framework: the hook model

7. The ICE Score

Sean Ellis, the Father of Growth Marketing, teaches the ICE score, a simple and quick way to evaluate potential channels for growth.

Rather than implementing a complex system, Ellis suggests asking three questions:

Asking yourself and your team these questions is one of the fastest ways to evaluate an idea and determine if you should move forward.

Developed by Jonah Burger, the author of Contagious: Why Things Catch On , STEPPS is a formula to create contagious content that has people talking and sharing.

  • Social Currency: Invite your customers to feel more like insiders. Humans are programmed to care what others think of them. This taps into that need to be seen positively by others and encourages conversation around your product.
  • Triggers: Frequently remind people of your product utilizing triggers and they’ll talk about it more.
  • Emotion: Highly emotional content is more likely to go viral. Taking that one step further, high arousal emotions like anger will be shared more often than low arousal emotions like sadness.
  • Public: When you make something public, you encourage people to talk about it and share it.
  • Practical Value: Provide value in the form of useful content, and people will be more likely to share it.
  • Stories: We are biologically wired to see the world through narrative. Creative stories that are easy to relate to and easy to remember, and they’ll also be easy to share.

marketing strategy framework: stepps model

9. They Ask, You Answer

Marcus Sheridan developed They Ask, You Answer after he saved his pool company from failure during the Great Recession.

The strategy was simple: If a customer asked a question, he would answer it on the company website. He never let himself off the hook, even if the questions touched a nerve. So because customers asked about price (which they did a lot) or asked about his competition (which they also did a lot), Marcus provided a thorough, transparent, unbiased answer to each question.

At the core of They Ask, You Answer are what Marcus called The Big 5 : Five topics that every company needs to cover thoroughly and honestly on their website:

  • Price: Explain the cost of everything you sell, including the factors that make that number go up and down.
  • ‘Best of’ lists: Give your buyers lists of the top options they should consider when making a purchase.
  • Reviews: Provide expert reviews of everything related to what you sell — even if you don’t directly sell it yourself.
  • Problems: Openly address the drawbacks of your products or services. Explain who is (and is not) a good fit to buy from you.
  • Comparisons: Offer head-to-head comparisons to help buyers make an informed decision.

Together, these topics form the foundation of a content marketing framework that can build a strong connection with your intended audience.

Selecting the Best Marketing Framework for Your Business

While there are a variety of models available to you, they are not all created equal. There are a number of factors that will influence which framework is best for you and your organization.

In order to determine which framework to choose, you’ll want to examine the following aspects of your business:

  • What are the top priorities of the business?
  • What is the role of marketing within the organization?
  • How is success defined and measured within the marketing?
  • What is the marketing department capable of, and what improvements would you like to make?
  • Where would you like to see the most impact due to marketing efforts and what’s the easiest way to ensure that impact?

Over To You

Marketing is a difficult role no matter your product or service. You are in essence responsible for telling the world that your company has the cure to what ails them. Without you, the most amazing product or service ever created will never reach the hands of the people who need it.

As challenging as it is, there are tools you can utilize to take some of the difficulty out of your responsibilities. A marketing framework will help you stay the course, keep your team in the know and on the right path, and will ultimately help you better achieve your desired goals. Create a marketing framework today and make tomorrow easier.

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A marketing perspective on business models

  • Published: 05 January 2018
  • Volume 7 , pages 85–89, ( 2017 )

Cite this article

  • Hubert Gatignon 1 ,
  • Xavier Lecocq 2 ,
  • Koen Pauwels 3 &
  • Alina Sorescu   ORCID: orcid.org/0000-0002-3625-0656 4  

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The Internet and the digital economy have prompted the creation of new business models (McKinsey and Company 2017 ). Technologies that can enable new business platforms and increased digital access to potential customers have significantly changed in the manner in which firms conduct business, from the creation of value (see, for instance, the literature on co-creation, e.g., Hoyer et al. 2010 , or that on open innovation, e.g., Chesbrough et al. 2006 ), to the appropriation of value (see, for instance, research on freemium pricing, e.g., Pauwels and Weiss 2008 , or on pay-per-use, e.g., Prasad et al. 2003 ). Competitive advantage from product innovation has become difficult to maintain for extended periods of time; as a result, incumbents are increasingly looking for ways to update and innovate their existing business models (Neus et al. 2017 ). For instance, Accenture reports that 80% of firms plan to grow via new business models over the next 5 years (Accenture 2014 ).

Changes in business practice have also led to a heightened focus on business models in the academic literature. Several recent reviews highlight the scope of this literature, which ranges from attempts to define and provide structure for the concept of business model, to examinations of specific types of business models (Coombes and Nicholson 2013 ; Foss and Saebi 2017 ; Massa et al. 2017 ; Zott et al. 2011 ). The majority of these articles, however, can be found in management journals. Attempts to study business models in marketing are scant, and typically focus on specific sectors of the economy (e.g., Wieland et al. 2017 on services, and Sorescu et al. 2011 on retailing) or on specific types of business models (e.g., Kind et al. 2009 ; Pauwels and Weiss 2008 ). Moreover, while value creation and appropriation have separately received attention in marketing, they have been rarely studied in combination, which is a prerequisite to understanding business models. This is a surprising gap, given that marketers are responsible for the design and implementation of several aspects of the value creation and value appropriation components of a business model. This special issue is a first step in stimulating more research on this topic in the marketing literature. Building on what we have learned from the management literature but bringing insights from the marketing literature’s expertise on building a viable value proposition, we can further enhance our understanding of how business models can be effectively designed in order to lead to sustainable firm performance.

Value creation, value appropriation and the value proposition

From the early 2000’s, researchers in management, strategy and entrepreneurship have endeavored to conceptualize the notion of business model. Several tools to describe the components of a business model have been developed, such as the Canvas (Osterwalder and Pigneur 2013 ) or the RCOV framework (Demil and Lecocq 2010 ). Moreover, the notion of business model has been contrasted with the traditional concept of strategy, with Casadesus-Masanell and Ricart ( 2010 ) calling the business model a reflection of a firm’s realized strategy. Business models have also been credited with prompting a renewed view of strategic thinking (Lecocq et al. 2010 ).

The marketing discipline is underrepresented in the strong stream of over a thousand scholarly articles focused on business models (Coombes and Nicholson 2013 ; Zott et al. 2011 ). However, a closer look at this research stream reveals that many authors emphasize that the purpose of the business model is to articulate a firm’s value proposition and to propose a “viable structure of revenues and costs for the enterprise delivering that value” (Teece 2010 , p.178). The value proposition—which explains how the products and services offered by the firm match the needs of the targeted market segment—is a core marketing concept (Frow and Payne 2011 ; Skålén et al. 2015 ). Thus, marketing academics should be favorably positioned to contribute to this important literature.

Why has marketing literature yet to contribute substantively to the development of knowledge on business models? We believe a key reason is the separate attention given in marketing to either value creation (mostly in the form of product innovation) or value appropriation (mostly in the form of pricing and ‘marketing mix’ instruments). Understanding business models requires studying both processes simultaneously, as well as their interactions; as this is a complex endeavor, most attempts to integrate them remain at the conceptual level (e.g. Brandenburger and Stuart 1996 ; Bowman and Ambrosini 2000 ). A notable exception is Sorescu et al. ( 2011 ), who propose concrete practices in retail industry associated with value creation and value capture.

The development of research on business models in marketing could help the field better understand how to design more effective value creation and value appropriation processes for different types of firms. Indeed, the strategic management literature, which used to be largely focused on value appropriation (Demil et al. 2015 ), has benefited from the development of the business model concept. Bringing this concept into extant literature has led to a better integration of value creation for the customer within the value creation frameworks for the firm and its shareholders (Priem et al. 2012 ; Tantalo and Priem 2016 ).

Insights from the special issue

The papers included in the special issue can be classified into two broad categories. First, several authors bring a marketing perspective to conceptualizing the notion of business model at a general level. Second, several papers focus on how to best address a specific segment with a business model tailored to that segment’s needs.

Within the first category, Robertson ( 2017 ) proposes an ecosystem of business model innovation (BMI) combining external elements, particularly customer segments and value chains (very much in the domain of marketing), with internal elements, particularly organizational processes (much more in the domains of strategic management and especially organizational behavior). Robertson develops a conceptual model with the objective of answering the question of how a BMI value proposition is derived. The article identifies the factors that are critical in how BMI emerges and how consumers’ responses to BMI differ from their reactions to pure product or service innovations. In order to help advance marketing research on BMI, the author proposes a set of research hypotheses related to these factors. In the same vein, Nystrom and Mustonen ( 2017 ) go beyond a static perspective to further develop the flexible and adaptive nature of business models based on an industrial network approach. Nystrom and Mustonen ( 2017 ) argue that the business model cannot be conceptualized in isolation; rather it is embedded in business contexts and business networks, and as a result it evolves with changes in the business environment. Leischnig et al. ( 2017 ) also highlight the flexible nature of successful business models. These authors conceptualize business models as a configuration of interdependent components influencing how the firm can achieve its strategic objectives. The authors draw on configuration theory to discuss how marketing may benefit from such a view and how the discipline may contribute to configurational thinking.

Finally, a unique perspective on how incumbents can update their business models as they compete with more flexible startups is provided by Seggie et al. ( 2017 ). They provide an integrated process for corporate innovation learning through combining the lean startup methodology with big data. By themselves, the volume, variety and velocity of big data may trigger confirmation bias, communication problems and illusions of control. However, if firms also adapt elements from the lean startup methodology, then they can innovate their business models to build competitive advantage in a similar manner to how startups achieve this advantage. Specifically, incumbents could update their business models through fast verification of managerial hypotheses, innovation accounting and the build-measure-learn-loop cycle. Such advice is especially valid for environments with high levels of technological and demand uncertainty.

The second category of articles included in the special issue is a reflection of the fact that conceptualizing business models is a useful theoretical exercise but may present challenges to academics and practitioners interested in specific types of business models that can be designed to help capture a particular customer segment that has unique needs. Several papers in the special issue address this topic. For instance, Prabhu et al. ( 2017 ) focus on poor consumers in emerging markets. Marketing to this segment presents multiple challenges: such consumers may not be aware of the product or service, may not be able to gain access to it or to afford it. Drawing on institutional theory, the authors present a model of exchange in emerging markets where the seller takes an entrepreneurial role and spearheads a process of institutional change that eventually mitigates these challenges and makes the exchange possible. While the process of institutional change is presented in general terms, specific business model applications are presented in the paper. The various types of business models discussed in this article illustrate the complexity of the ecosystem of value creation in emerging markets, which includes sellers having to go beyond the boundaries of their firms and having to change the environment in order to enable their business model to fulfill its role.

A different perspective on how to use the business model to strengthen the value proposition is provided by Tower and Noble ( 2017 ), who focus on collective open business models. This type of business model draws from the notion of interdependent consumer collectives, which are groups of consumers who benefit from resource complementarities in the pursuit of achieving a superior consumption experience, such as communities who play videogames online. Tower and Noble ( 2017 ) propose a set of propositions that link actions taken inside interdependent consumer collectives to notions of collective value creation, delivery and capture. In doing so, they delineate the characteristics of the collective open business model and help firms who serve consumer collectives better understand and leverage the characteristics of their segments. Finally, Fedorenko and Berthon ( 2017 ) recognize that consumers are not only static recipients at the end of the value creation chain, but rather potential participants in the process of co-creation. Moreover, the authors go beyond traditional wisdom, and show that in crowdsourcing business models contributors are usually a special kind of non-consumer multi-role stakeholder. They discuss how these contributors are creating value and what types of rewards they are seeking.

Altogether, the articles of this special issue are demonstrating the potential of marketing to contribute to knowledge about business models through a better integration of value creation and value appropriation processes and through linking the behavior of various firm stakeholders to the components of the business model.

This is just the start: An agenda for future marketing research on business models

Despite the richness of business model literature in strategic management, much remains to be studied in this domain, particularly from a marketing perspective (Massa et al. 2017 ; Wirtz et al. 2016 ). The special issue starts the scholarly conversation on how marketing knowledge can refine the general conceptualization of business models and help design effective business models for specific segments. However, many research questions are still unanswered. We list a few below, in hopes that the marketing field will continue to focus on this important topic.

First, more attention should be dedicated to the antecedents of BMI. Prior research acknowledges that a primary role of the business model is to define new ways to operate within a sector, going beyond business as usual (Arend 2013 ). Robertson ( 2017 ) tackles this central issue. However, we still lack a clear understanding of how firms can innovate their existing business models. Innovation in business models can be studied from two perspectives. First, BMI can arise as a result to changes in the business environment, such as the availability of new technologies, the increased digitization of business processes, the availability of big data and the advent of artificial intelligence. Seggie et al. ( 2017 ) and Sorescu ( 2017 ) provide examples of how big data can be leveraged to innovate business models; however, to our knowledge, no research has yet explored how artificial intelligence will change the way in which firms conduct business, despite its significant potential to change the value creation and appropriation processes that firms currently use. Second, BMI can arise in response to serving a specific segment. In this special issue, Prabhu et al. ( 2017 ) focus on poor consumers in emerging markets and Tower and Noble ( 2017 ) examine interdependent consumer collectives. Many other segments are in need of business models that require significant adaptations from the general conceptualization. Third, BMI may become necessary for incumbents faced with tectonic shifts in their industries, such as the private transportation and hotel industries facing new business models brought about by the gig economy (e.g., Uber and Airbnb). Seggie et al. ( 2017 ) provide one avenue that incumbents can use to innovate their business models but this stream remains one that is in significant need of further research.

A second important issue that marketers can address is the role of customers in helping design business models. Literature on crowdsourcing and open innovation is growing and one of the papers included in the special issue, Fedorenko and Berthon ( 2017 ), provide novel insights in the dynamics of crowdsourced business models. Additional questions that still require an answer involve the extent to which crowdsourcing should be incorporated in a business model so that firms would retain sufficient control over their message and the equity of their brands. Should firms involve both customers and non-customers in the value creation aspect of the business model? Does crowdsourcing result in products that have a competitive advantage or is it likely to encourage incremental innovation? Does crowdsourcing have an effect on customer acquisition and retention? And how can it be streamlined so that effective ideas from outside stakeholders can be more easily identified and more quickly incorporated into various elements of the business model? These are just a few of the questions that future research could address.

Third, marketing has a long tradition of studying competition and its impact on value creation and appropriation processes. Promising questions in this domain include: How does the diffusion of business models through an industry differ from the diffusion of products? Are there network effects in business model diffusion? What is the consequence of business model diffusion on competition? Can BMI provide a longer lasting competitive advantage than product innovation? Nystrom and Mustonen ( 2017 ) provide a starting point by arguing that competitive advantage can be created not only from unique business model features, but also from firms’ ability to continuously update their business models in response to changes in their environment. Future research should propose specific ways in which business models can be designed so that changes can be made quickly and with low operational and human resource costs.

We hope that the papers included in this special issue provide an impetus for other authors to work on the important topics of business models, business model innovation, and the impact of business models on customer outcomes, firm performance and industry dynamics.

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Gatignon, H., Lecocq, X., Pauwels, K. et al. A marketing perspective on business models. AMS Rev 7 , 85–89 (2017). https://doi.org/10.1007/s13162-017-0108-5

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What Is a Business Model?

Understanding business models, evaluating successful business models, how to create a business model.

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The Bottom Line

Learn to understand a company's profit-making plan

marketing strategy and business model

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

marketing strategy and business model

Investopedia / Laura Porter

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

  • A business model is a company's core strategy for profitably doing business.
  • Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
  • There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
  • The two levers of a business model are pricing and costs.
  • When evaluating a business model as an investor, consider whether the product being offer matches a true need in the market.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

  • Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
  • Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
  • Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
  • Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
  • Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
  • Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
  • Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

  • Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
  • Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
  • More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2021 ."

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Marketing Strategy Models: A Comprehensive Guide

Marketing Strategy Models: A Comprehensive Guide

Marketing strategy models are an essential tool for businesses to achieve their goals and objectives. These models provide a structured approach to developing and implementing marketing strategies that can help businesses grow, increase revenue, and improve customer engagement. In this comprehensive guide, we will explore the most popular marketing strategy models and how to use them effectively. Whether you are a business owner, marketer or student, this guide will provide you with valuable insights into the world of marketing strategy models. So let’s dive in and explore the importance of these models in more detail.

What Is a Marketing Model?

A marketing model is a framework that helps businesses plan and execute their marketing strategies. It is a visual representation of the customer journey and the various touchpoints where a business can interact with its target audience. Marketing models provide a structured approach to marketing, allowing businesses to identify their goals, target audience, and the best channels to reach them.

A marketing model should not be confused with a marketing strategy. While a strategy outlines what a business wants to achieve through its marketing efforts, a model provides the roadmap for how to achieve those goals. A strategy might involve increasing brand awareness or generating more leads, while a model would specify which channels to use and how much budget to allocate towards each one.

Marketing models have been around for decades, but they gained prominence in the 1960s when academics began studying consumer behavior. The first widely recognized marketing model was the Four Ps of Marketing: Product, Price, Promotion, and Place. This model was developed by Jerome McCarthy in 1960 and has since become an essential tool for marketers worldwide.

Over time, more sophisticated marketing models have emerged that take into account changes in technology and consumer behavior. These newer models are designed to help businesses stay ahead of the curve and adapt quickly to changing market conditions.

One of the benefits of using a marketing model is that it provides structure and clarity around your marketing efforts. With so many different channels available today—from social media to email campaigns—it can be challenging for businesses to know where to focus their resources. A good marketing model will help you identify which channels are most effective for reaching your target audience and which ones are not worth investing in.

Another benefit of using a marketing model is that it allows you to measure your results more accurately. By tracking metrics like conversion rates and customer acquisition costs across different channels, you can determine which ones are delivering the best ROI (return on investment) for your business.

In addition to helping you plan your marketing activities more effectively, using a marketing model also makes it easier to communicate your strategy with other stakeholders in your organization. Whether you’re presenting your plan to investors or discussing it with your team members, having a clear framework in place will make it easier for everyone involved to understand what needs to be done and why.

The Benefits of a Marketing Strategy Model

The Benefits of a Marketing Strategy Model

A marketing strategy model is a framework that helps businesses plan and implement their marketing strategies. It is a systematic approach to developing and executing marketing plans that align with the business’s goals and objectives. There are several benefits of using a marketing strategy model, which we will discuss in this section.

How a Marketing Strategy Model Can Help a Business

Firstly, using a marketing strategy model can help businesses identify their target audience and understand their needs and preferences. By doing so, businesses can tailor their marketing efforts to meet the specific needs of their customers, resulting in higher customer satisfaction rates.

Secondly, a marketing strategy model can help businesses allocate their resources effectively. With limited resources, it is essential for businesses to prioritize their spending on the most effective channels. A marketing strategy model can provide insights into which channels are most likely to generate leads or sales, allowing businesses to allocate their resources accordingly.

Thirdly, a marketing strategy model can help businesses measure the success of their marketing campaigns. By setting clear goals and metrics, businesses can track the effectiveness of their campaigns and make data-driven decisions about future investments.

The Advantages of Using a Marketing Strategy Model

Using a marketing strategy model has several advantages over ad-hoc or improvised approaches to marketing planning. Firstly, it provides structure and discipline to the process of developing and executing a marketing plan. This ensures that all relevant factors are considered and addressed systematically.

Secondly, using a marketing strategy model can reduce the risk of failure by providing guidance on best practices and proven strategies. By following established models that have been tested in various contexts, businesses can avoid costly mistakes and increase their chances of success.

Thirdly, using a marketing strategy model promotes collaboration across different departments within an organization. By involving stakeholders from different areas such as sales, product development, or customer service in the planning process, organizations can ensure that everyone is aligned around common goals and objectives.

The Disadvantages of Not Using a Marketing Strategy Model

The Disadvantages of Not Using a Marketing Strategy Model

On the other hand, not using a marketing strategy model can have several disadvantages for businesses. Firstly, it increases the risk of wasted resources by investing in ineffective channels or campaigns that do not resonate with customers.

Secondly, not having a clear plan or framework for executing your marketing activities can lead to inconsistent messaging or branding across different channels. This can confuse customers or dilute your brand identity over time.

Finally, not using a marketing strategy model makes it difficult to measure the success of your efforts accurately. Without clear goals or metrics in place beforehand, it is challenging to determine whether your campaigns are generating ROI or delivering value for your business.

Popular Marketing Strategy Models

Marketing strategy models are frameworks that businesses use to develop and execute their marketing strategies. These models help businesses identify their target audience, understand their competition, and create a plan to achieve their goals. In this section, we will discuss some of the most popular marketing strategy models used by businesses today.

SWOT Analysis

SWOT analysis is a strategic planning tool that stands for strengths, weaknesses, opportunities, and threats. It helps businesses identify internal and external factors that can affect their success. By analyzing these factors, businesses can develop a plan to leverage their strengths, address their weaknesses, take advantage of opportunities, and mitigate threats.

To conduct a SWOT analysis, businesses need to identify their strengths and weaknesses by looking at internal factors such as resources, capabilities, and processes. They also need to identify opportunities and threats by looking at external factors such as market trends, competition, and regulatory changes.

Examples of successful SWOT analyses include Apple’s ability to leverage its strong brand image and innovative products while addressing its weakness in supply chain management. Another example is Coca-Cola’s ability to expand its product portfolio into new markets while mitigating threats from health concerns related to sugary drinks.

Porter’s Five Forces

Porter’s Five Forces is a framework developed by Michael Porter that helps businesses analyze the competitive forces in an industry. The five forces include the threat of new entrants, bargaining power of buyers and suppliers, threat of substitute products or services, and rivalry among existing competitors.

By analyzing these forces, businesses can assess the attractiveness of an industry and develop a strategy to compete effectively. For example, Amazon has been able to dominate the online retail industry by leveraging its scale economies while keeping prices low for customers.

Ansoff Matrix

The Ansoff Matrix is a strategic planning tool that helps businesses decide on product and market growth strategies. The matrix includes four options: market penetration (existing products in existing markets), product development (new products in existing markets), market development (existing products in new markets), and diversification (new products in new markets).

By using the Ansoff Matrix, businesses can determine which growth strategy aligns with their goals based on risk tolerance and available resources. For example, Netflix has been able to grow rapidly by expanding into new international markets while continuing to develop original content for its existing subscribers.

STP Marketing Model

The STP Marketing Model stands for segmentation, targeting, positioning. It helps businesses identify specific segments within a larger market based on characteristics such as demographics or psychographics. After identifying these segments, businesses can target them with tailored marketing messages that resonate with their needs or preferences.

Finally, positioning involves creating a unique value proposition that differentiates your business from competitors within your targeted segment. For example, Nike has been able to position itself as a premium athletic brand through targeted advertising campaigns aimed at athletes who value performance over price.

How to Use Marketing Strategy Models?

How to Use Marketing Strategy Models?

Marketing strategy models are an essential tool for any business looking to succeed in today’s competitive market. However, simply choosing a model is not enough. To get the most out of your marketing strategy model, you need to know how to use it effectively.

The steps to using a marketing strategy model

The first step in using a marketing strategy model is to understand its components and how they relate to each other. This involves analyzing the different elements of the model and identifying how they fit together to create a cohesive strategy. Once you have a clear understanding of the model, you can begin to develop your own plan based on its principles.

The next step is to implement your plan by taking action on each element of the model. This requires careful planning and execution, as well as ongoing monitoring and analysis to ensure that your strategy is working effectively.

Tips for effective implementation

To ensure that your marketing strategy model is being used effectively, there are several tips that you should keep in mind:

  • Start with a clear goal: Before implementing your plan, make sure that you have a clear goal in mind. This will help you stay focused and ensure that all elements of your plan are aligned with this objective.
  • Use data-driven insights: Data is key when it comes to developing an effective marketing strategy. Use analytics tools to gather insights about your target audience, competitors, and industry trends.
  • Be flexible: While it’s important to have a solid plan in place, it’s also important to be flexible and adaptable as circumstances change. Keep an eye on market trends and adjust your plan accordingly.
  • Communicate effectively: Communication is key when it comes to implementing a marketing strategy model. Make sure that everyone involved understands their role and responsibilities, and keep lines of communication open throughout the process.

The importance of flexibility and adaptation

One of the most important aspects of using a marketing strategy model is being able to adapt as circumstances change. In today’s fast-paced business environment, things can change quickly, so it’s essential that businesses remain agile and flexible.

By regularly reviewing and updating their marketing strategies based on changing market conditions or customer needs, businesses can stay ahead of the competition and continue growing over time.

How to Choose the Best Marketing Model for Your Business?

Choosing the right marketing strategy model is crucial for the success of your business. With so many models available, it can be overwhelming to decide which one to use. In this section, we will discuss the factors you should consider when choosing a marketing strategy model, the importance of aligning the model with your business goals, and the benefits of customizing a marketing strategy model.

Factors to Consider When Choosing a Marketing Strategy Model

When choosing a marketing strategy model, it’s important to consider several factors. First and foremost, you need to understand your target audience and what they are looking for in your product or service. This will help you choose a model that resonates with them and encourages them to take action.

Another factor to consider is your budget. Some marketing strategy models require more resources than others, so it’s important to choose one that fits within your budget. You also need to consider the size of your business and its growth potential. A model that works well for a small business may not be suitable for a larger enterprise.

Aligning Your Marketing Model with Your Business Goals

Once you have identified the factors that are important for your business, it’s time to align your marketing strategy model with your business goals. Your marketing goals should align with your overall business objectives, such as increasing sales or improving customer retention.

Your chosen marketing strategy model should also reflect the unique characteristics of your business. For example, if you run an e-commerce store, you may want to focus on digital marketing channels such as social media advertising or email campaigns.

Customizing Your Marketing Strategy Model

While there are many popular marketing strategy models available, it’s important to remember that no two businesses are exactly alike. To get the most out of your chosen model, it’s often necessary to customize it based on your specific needs and circumstances.

Customization can involve tweaking certain aspects of the model or combining different elements from multiple models into something entirely new. By customizing a marketing strategy model, you can create something that is uniquely tailored to your business needs and goals.

Marketing Strategy Model Examples

Marketing strategy models are essential for businesses to achieve their goals and objectives. In this section, we will discuss some real-life examples of successful marketing strategies using models, their features and benefits, and how to apply them to your business.

The Ansoff Matrix

The Ansoff Matrix is a popular marketing model that helps businesses identify opportunities for growth. It consists of four strategies – market penetration, market development, product development, and diversification. One example of a company that successfully used the Ansoff Matrix is Apple. The company initially focused on its existing products (market penetration) by improving its iPhone’s features and expanding into new markets (market development) such as China and India. Later on, Apple introduced new products (product development) such as Apple Watch and AirPods. Finally, the company diversified its product line (diversification) by introducing services such as Apple Music and Apple TV+. By using the Ansoff Matrix, Apple was able to grow its business in a sustainable way.

The 4 Ps of Marketing

The 4 Ps of Marketing model is one of the most widely used marketing models. It consists of four elements – product, price, promotion, and place. One example of a company that successfully used the 4 Ps model is Coca-Cola. The company has been able to maintain its position as the world’s leading soft drink manufacturer by focusing on each element of the 4 Ps model. Coca-Cola has a wide range of products (product), which it sells at different prices (price) depending on the market segment it targets. The company uses various promotional activities (promotion) such as advertising campaigns and sponsorships to create brand awareness among consumers. Finally, Coca-Cola distributes its products through various channels (place) such as supermarkets, vending machines, and restaurants.

The Blue Ocean Strategy

The Blue Ocean Strategy is a marketing model that helps businesses create uncontested market space by making competition irrelevant. One example of a company that successfully used this strategy is Cirque du Soleil. The circus industry was highly competitive when Cirque du Soleil entered it in the 1980s. However, instead of competing with traditional circuses like Ringling Bros., Cirque du Soleil created a new type of performance art that combined circus acts with theater arts like music and dance. This allowed Cirque du Soleil to attract a new audience that was not interested in traditional circuses while also charging higher ticket prices than its competitors.

Customer Relationship Management

Customer Relationship Management (CRM) is a marketing model that focuses on building long-term relationships with customers by providing them with personalized experiences based on their preferences and behavior patterns. One example of a company that successfully used CRM is Amazon.com. Amazon uses customer data to provide personalized recommendations for products based on customers’ purchase history and browsing behavior patterns when they visit their website or mobile app.

After exploring the various marketing strategy models and their benefits, it’s clear that having a solid strategy in place is crucial for any business looking to succeed in today’s competitive market. However, it’s important to remember that marketing strategy models are not one-size-fits-all solutions. Each business is unique, and what works for one may not work for another. That’s why it’s essential to take the time to choose the right model for your specific needs.

In addition, while these models provide a great framework for planning and executing marketing strategies, they should not be seen as static or unchanging. The future of marketing is constantly evolving, and businesses must be willing to adapt and modify their strategies accordingly. This means continually monitoring results, analyzing data, and making adjustments as needed.

Ultimately, the success of any marketing strategy model depends on how well it is executed. It requires dedication, hard work, and a willingness to take risks. But with the right approach and a solid understanding of these popular models, businesses can create effective campaigns that build brand awareness, increase sales, and drive growth.

In conclusion, choosing the right marketing strategy model can be challenging but is critical for achieving success in today’s market. By understanding the benefits of each model and how to use them effectively, businesses can create targeted campaigns that resonate with their audience and drive results. And by staying up-to-date with industry trends and embracing change when necessary, companies can ensure they remain competitive in an ever-evolving landscape. So whether you’re a seasoned marketer or just starting out in business ownership, remember that a strong marketing strategy is key to achieving long-term success.

Related posts:

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  • How to Create Digital Marketing Strategy (Complete Guide)
  • 10 Key Differences Between Brand Strategy and Marketing Strategy
  • Marketing Plan vs Marketing Strategy [with Examples]

marketing strategy and business model

 FourWeekMBA

The Leading Source of Insights On Business Model Strategy & Tech Business Models

marketing-strategy

The Ultimate Marketing Strategy Guide And Examples

A marketing strategy is the “what” and “how” to build a sustainable value chain framed for a target customer. A powerful marketing strategy needs to be able to manufacture desire, amplify the underlying value proposition , and build a brand that feels unique in the mind of its customers.

Table of Contents

The death of marketing as we knew it

MOUNTAIN VIEW, Calif. – October 23, 2000 – Google Inc., developer of the award-winning Google search engine, today announced the immediate availability of AdWords(TM), a new program that enables any advertiser to purchase individualized and affordable keyword advertising that appears instantly on the google.com search results page. The AdWords program is an extension of Google’s premium sponsorship program announced in August. The expanded service is available on Google’s homepage or at the AdWords link at adwords.google.com, where users will find all the necessary design and reporting tools to get an online advertising campaign started.

This is how in 2000, Google announced the launch of its advertising machine, Google AdWords (it would become Google Ads by 2018).

While this was just the beginning of what would become the most potent advertising machine, it was also the beginning of the end of marketing. 

In a few years, Google AdWords would completely replace Google Premium Sponsorships (a CPM-based program that placed sponsored links on Google’s search results). 

Example of how Google placed sponsored links as part of the Google Premium Sponsorship Program on top of search results ( Source and image credit : searchenginewatch.com ).

Not only Google AdWords mainly removed the salesperson from the loop (at least on smaller accounts), but it also changed the whole revenue model from CPM (cost per mille, or number of impressions) to CPC (cost per click).

As Larry Page pointed out at the time “Google has carefully built and scaled the AdWords program to address the needs of any business by providing a one-stop resource that is affordable and easy to use,”

And he continued, “AdWords offers the most technologically advanced features available, enabling any advertiser to quickly design a flexible program that best fits its online marketing goals and budget.”

By 2003, as Google AdWords was fully rolled out the advertising revenues (coming from the self-serving advertising platform) snowballed, and went from over $66 million in 2001 to over $770 million in 2003 ( FourWeekMBA research and analysis ). 

It was the beginning of last-mile advertising, with a new manifesto that we can summarize in a few core beliefs. 

The core beliefs of markeneers

As Google advertising platform proved to be the most powerful machine ever created, where millions first, and then billions of people each day turned their eyeballs – drawn to the Moutain View’s white page.

Those eyeballs got directed toward blue links and ad results, which turned into clicks.

It was the beginning of last-mile advertising as the only form of acceptable marketing. 

Ad platforms didn’t need any more salespeople or marketers but engineers. This is what I call marketeers (engineers turned marketers).

For marketeers, a few core beliefs drove this new world, some of them are: 

  • There is no marketing if there isn’t tracking. 
  • Every dollar spent should be a dollar accounted for. 
  • From the top of my mind to tap of fingers. 

Marketers have convinced the world that marketing is an engineering endeavor. And yet here we want to reassess those beliefs. 

How has marketing changed in the digital era?

Marketing has changed over the years, and it has undergone a profound change in the last two decades due to forces that have changed the business world.

Some of those forces can be summarized as follows:

  • Digitalization.
  • Globalization.
  • Technological Innovation.
  • Moore’s Law.
  • Business Model Innovation.

As we’ll see those forces have changed the way we do marketing.

However, the underlying psychological forces that shape our minds are still the foundation of a powerful and effective marketing strategy .

And we’ll see how they affect and need to be taken into account, especially in today’s marketing, where engineering trying to rationalize it might make it ineffective.

The impact of digitalization on marketing strategy

digital-business-models

Digital businesses have become critical players in the marketplace, which has also, in part, changed the logic of business itself.

Where in the past, a good marketing strategy might have meant developing a good product or service. Nowadays, with the rise of customer-centric platforms, having must-have products is really the baseline.

In the era of mass-media marketing (driven by TV and Radio), it was possible to manufacture desire by creating cultural stereotypes to generate demand for products.

While a few companies like Nike have successfully transitioned through the digital age by using strategies like influencer marketing to stimulate the demand for its products and by leveraging cultural memes.

influencer-marketing

Digital platforms, with a customer-centric approach, have changed the way we conceive marketing.

Thus, a platform to be successful has to push as much as possible on customer experience through engineering and product development.

Thus, the common mantra today is that if you can build a product sticky enough, people will get back.

However, digital platforms have changed how we interact with potential customers.

Better customer experience is indeed the domain of manufacturing design and aligning those designs with your brand.

In short, a brand that drives growth by the sheer force of engineering might gain traction in the short term, but it might not be strong enough to survive in the long-run

In consumers industries, while offering lower prices, comparisons, and options are how digital platforms are mostly breaking down the traditional trade-off between value (you charge more by offering more) and cost advantage (you charge less by offering a standardized service), what can be defined as a blue ocean strategy .

blue-ocean-strategy

Today, digital platforms can also offer more at a lower cost. That’s because digital platforms usually don’t own the assets they sell (a classic example is how Airbnb doesn’t own the homes it rents).

In this era, marketing is increasingly integrated into product development and engineering processes (disciplines like Growth Hacking look at breaking down the silos in traditional department structures so that engineers and marketers can work together as a growth team).

But it’s important to highlight that marketers are also required to be able to understand the customers they want to talk to deeply.

And as new tools for audience segmentation become available, those same marketers can deliver the message to specific intents and smaller and smaller segments.

But those messages must be framed to be understood by the target audience. 

In other words, marketers have powerful weapons which, if used sparingly, can have a significant impact on a company’s long-term value.

Globalization’s impact on marketing strategy

Globalization might have accelerated in the last two decades as well. A marketing strategy that doesn’t take into account globalization might be short-sighted.

A media business that publishes an article, that in an instant has the potential to reach hundreds of countries across the world, has also to be able to deliver that message to each of those locations.

At the same time, the potential access to a global community might give the impression that distribution has become an easy game in the digital era. That is just that, an impression.

Building a proper distribution strategy is just as hard as it has always been.

A message can get easily lost in the Facebook algorithm.

A piece of content properly written can get easily lost in Google’s ranking algorithms.

And a product distributed across an existing platform can become easily commoditized (think of how users can easily compare products on Amazon ).

In short, Globalization works as a double-edged sword; where on the one hand requires a deeper (not provincial) understanding of your potential audience.

While on the other hand, it requires a powerful distribution strategy to get your message across and ensure that in the billions of users available on the web, you reach those few hundreds to which your message can resonate.

In this era, it is also important to frame a message to fit the platform desired format.

For instance, in an era where platforms like Google , Instagram , TikTok , and others compete for snippets of our attention, understanding what formats work best for each platform is critical to give the maximum message amplification. 

Technological innovation and consumer behavior

If you haven’t realized it yet, technologies affect our behaviors, or more precisely, certain behaviors can be amplified through technologies.

As a thought experiment, what’s the first thing you do in the morning as soon as you open your eyes?

Chances are you’ll probably pick up your smartphone, to either go on social media or engage with someone digitally.

That might sound trivial. Yet just a couple of decades ago, that was unthinkable.

One of the effects of those technologies is to change our habits and the way we do things.

If we used to consume most content on a TV screen, now younger generations might feel normal to consume content on devices that are a few inches wide.

That makes the experience different and also its perception.

Armed with that, the marketer needs to know how to deliver a message in a format that fits the medium and, thus, its audience.

That is why among the most effective marketing strategies, creating several formats to spread a message might work.

For instance, if you wrote an article for the blog if that article has proved successful, why not make an audio version for that or a video that might get more easily shared on social media?

By repurposing the same content on several formats, you can also fit it into several media and make sure you give people options to consume content as they like.

For instance, I personally love reading.

But I also realize not anyone does reading or finds reading efficient.

Therefore, I also launched my own podcast and an online business school that can help people consume content at their own pace and in the formats they like the most.

Again if you’re a marketer, you might want to create options for your audience.

The foundation is great content.

And if that content can be delivered in several formats and delivered across different channels without it losing its intrinsic quality, you’re also creating more options for your audience.

In short, technological innovation changes the way people behave and consume content, thus, the way we might need to communicate.

But it also creates more opportunities for us to reach our desired audience.

But once again, you need to make sure not to forget that as a marketer, you need to make the message compelling and unique so that the story told by your brand resonates.

Moore’s Law impact on marketing strategy

Gordon Moore, co-founder of Intel, in a paper, back in 1965, foresaw how in the coming decade, the numbers of components would double every year.

Just to confirm this prediction, a decade later, the doubling rate would be every two years.

This heuristic would prove quite powerful.

And this is also one of the reasons why computers keep becoming more and more powerful in the digital age.

And that also affected the rise of certain business models.

For instance, before Netflix could roll out the on-demand content consumption model its founder had in mind, the company had to wait a decade before technology would pick up to that.

But once it did, Netflix became a streaming content company in a blink of an eye and outside its optimistic forecasts.

When new technologies become mature enough, they also enable marketers to find new ways to communicate, which makes more and more options available. That availability of options might make markets lose focus and dilute their strategy .

However, a focused marketer can use those new media to spread the message effectively.

Business model innovation impact on marketing strategy

business-model-innovation

The web-enabled new ways of doing business. Business modeling was once a sleepy beast, it woke up suddenly when the web became commercially viable.

Companies like Google and Amazon proved that by building tech empires.

The most important takeaway for business model innovation is how it demands a new business playbook.

The web wasn’t just a new distribution or marketing channel. It required a new mindset.

While using the same marketing strategy and bringing it on several channels might amplify the message.

Its impact on your business might be limited in the long run.

As with a new business playbook, you would also need a fresh perspective on marketing strategy .

For instance, consider a platform business model.

platform-business-models

Which relies on network effects to grow.

network-effects

A marketer, to enable a successful strategy , should execute that on top of the platform developed by the company’s engineering team.

While marketers need to know how to work with engineers to build growth tools that make the brand go viral, those same marketers also need to preserve their discipline by keeping creativity at the center. 

Creativity is about loosely held assumptions, tested quickly, and sometimes with what might seem to engineers as “clumsiness” and as counterintuitive, yet for that reason, effective. 

Marketing strategy vs. marketing plan

strategy-vs-tactics

From a marketing strategy , a marketing plan can be derived.

However, where the marketing strategy might be defined as the “what” of an organization, a marketing plan is the “how-to” to get that marketing strategy into action.

Thus, a marketing plan takes the form of a document laying out the activities to undertake in the short, and medium term to implement and execute a marketing strategy .

Therefore, a marketing strategy will have a broader understanding and a long-term view compared to a marketing plan.

The marketing strategy allows the creation of a value proposition and all the elements that characterize a brand, which by nature have a longer life span.

value-proposition

Indeed, while a company might change its essential elements and value proposition to adapt to market changes, those market changes depending on the industry, might happen every few years to a decade.

Therefore, the primary difference between the marketing strategy and the marketing plan can be generalized to the broader difference between a strategy and a plan. The strategy informs the “what” and investigates the “why.” A plan is all about the “how-to” to get there.

From the “what” and “how,” the implementation and execution phase takes traction. Indeed, if you had the proper strategy and derived from it an adequate plan, this should make it way easier to take action.

Key forces behind an effective marketing strategy

communication-strategies

A marketing strategy and a marketing plan might dissolve to the same primary functions. In my opinion, a marketing strategy is driven by a few key forces.

Focused but authentic

In many cases, the failure of a strategy might be due to a lack of focus. A marketing strategy informs a marketing plan that narrows down its focus to a target that can be hit with the maximum precision.

Rather than boil the ocean, a good marketing strategy will allow you to identify the small pond where you can be a big fish.

Once you’ve dominated that small pond, you can move to a bigger one.

This approach works for startups and companies with a minimum marketing budget.

Once you scale and have a substantial marketing budget, it becomes critical to manufacturing desire.

Being focused doesn’t mean you don’t have to work on your brand story—quite the opposite.

As a small player, you won’t need to spend huge marketing budgets for your story to be appreciated by your potential audience.

Large companies and tech giants need to spend billions on distribution and to make millions or billions of people “believe” their brand story.

Companies like Google and Amazon, seemingly engineering-driven, spent respectively $16.3 billion in sales and marketing and $13.8 billion in marketing alone in 2018.

As a niche player, you can be authentic, as your values, your organization’s values, and your customers’ values are aligned.

Specific but flexible

A marketing plan derived from a focused marketing strategy should have specific goals and actions.

That is also why marketing plans often include situation analyses (like SWOT ).

Also, you want to be very specific in identifying a target market . And you want to make sure to set up clear objectives.

However, flexibility is essential, as the actions identified might not work out in the real world; you want to allow tests, experiments, and actions that have a broad spectrum, as you might be surprised to find out something completely counter-intuitive works. 

Measurable but not metric-enslaved

Metrics help assess whether a strategy is working or not.

However, it’s essential not to fall into measuring vanity metrics (metrics that don’t impact the business) or misleading metrics.

Indeed, each time you use a new metric, you must ensure it impacts the business.

Two or three key metrics might do the job, rather than having dozens of useless metrics.

At the same time, even a simpler approach where you measure impact (a 10X approach on results for tests and experiments you perform) might solve any doubt on whether or not a strategy is working. 

What other threats might you want to be aware of?

Beware of the “data scientist mindset” (do not try to make marketing too “SMART”)

In a digital world, where, so far, engineering and programming are the protagonists, marketing becomes relegated to being S.M.A.R.T. (specific, measurable, attainable, relevant, and timely) as marketers try to become data scientists.

Those approaches and methodologies try to reduce marketing to a linear process to follow.

Yet human behavior, the pillar of any marketing activity, is not linear. It follows a logic that goes beyond logic itself.

In an interview for MarketingWeek , the sports brand’s global media director, Simon Peel, explained how Adidas overinvested in digital advertising channels, as those were easy to track in terms of performance.

In short, Adidas, like many other companies, assumed that digital channels, as trackable, would enable it to drive most of its sales.

Yet by looking at the data with a more holistic approach, Adidas found out that, in reality was the brand activities that drove Adidas sales across wholesale, retail, and e-commerce. As Simon Peel highlighted for MarketingWeek:

The reason for that is short-termism because we are trying to grow sales very quickly,

And he also added:

We had a problem that we were focusing on the wrong metrics, the short-term, because we have fiduciary responsibility to shareholders.

Adidas had used an attribution model borrowed from digital platforms (like Google Ads or Facebook Ads), which primarily tracked the last mile the consumer went through, as this is the easiest to track, which led to short-termism.

That doesn’t mean digital channels can’t be used to build a brand.

Still, when you focus on the wrong metrics (most of the metrics which are readily available for measurement) that is how your marketing becomes ineffective and irrelevant, and your brand gets diluted.

As such, the great marketer will need to treasure creativity as the most critical asset. Where most marketers in the digital world convert in data scientists, those that keep an artistic profile will make a difference in the business world. 

Marketers are persuaders

It might sound like an exaggeration, and after all, some digital marketing channels (take a technical marketing activity, like SEO ) might not seem suited to generate dreams and drive action.

However, you don’t need to lose focus on what marketing is.

On that, Seth Godin can help us:

If you need to persuade someone to take action, you’re doing marketing.

Distribution is the volume of your message

For a message to be heard, it needs to be amplified. Distribution is the volume. While in many cases, you don’t need a higher volume to make your message resonate (sometimes whispered messages might work more effectively).

In a crowded space, you can increase the volume or change the frequency. If you don’t have a choice, you might want to increase the volume. If you do have a choice, it’s essential to find the distribution channel that can vehicle your message effectively. 

The Context is the message

A marketing message to work has to be in fit with the context. A message that makes sense in one context might not be in another. Understanding the context in which your audience is when experiencing the message is critical.

That is why today’s technology is powerful. It enables marketers to feel the context of the audience. Mass media requires marketers to frame messages that could be compelling for all but for such reasons, ineffective. Today’s marketers can frame a message to make it resonate. 

Perspective and frame of mind

In life, perspective is all we got.

The same event happening to different people, interpreted – thus framed differently- can bring wholly different outcomes. There might be a few objectively bad things.

For all the rest, perspective and framing help us go through anything. As a marketer, you have the power of framing in your hands. If you know how to use it, you can help your customers frame their life for the better; that is how you become a source of inspiration for them. Framing is a powerful weapon, and as a marketer, you must use it ethically!

Types of marketing strategies and channels

There are as many types of marketing strategies as businesses out there. However, we’ll focus here on a primary marketing strategy : digital marketing.

Digital marketing involves taking action and crafting a value proposition delivered via digital devices (smartphones, computers, and any other digital device).

There are many other marketing channels to experiment with in digital marketing.

For instance, in the Bullseye framework  and the book Traction, Gabriel Weinberg highlights 19 primary channels for creating a distribution , delivering your message, and executing your marketing strategy .

In the book,   these are the identified 19 channels for growth :

  • Targeting Blogs
  • Unconventional PR
  • Search Engine Marketing
  • Social and Display Ads
  • Offline Ads
  • Search Engine Optimization

Content Marketing

  • Email Marketing
  • Viral Marketing
  • Engineering as Marketing
  • Business Development
  • Affiliate Programs
  • Existing Platforms
  • Trade Shows
  • Offline Events
  • Speaking Engagements
  • Community Building

Those are just some of the types of existing channels, and I’m sure that we can find several classification methods and lists.

Byt the key point here is about making sure to communicate properly your value proposition and in a way that gets through to your desired audience.

Each of these types of marketing requires a specific strategy and execution. However, it is essential not to get bogged down in details and focus on the types of marketing that can connect your business to its customers.

Marketing strategies examples

We’ll look at several cases where a marketing strategy is built into a business model . 

TOMS: when the one-for-one becomes an effective marketing strategy

toms-business-model-explained

The TOMS one-for-one business model is also a marketing strategy .

As its value proposition is delivered through its business model.

In short, the one-for-one works as a powerful trademark for the brand, which not only helps TOMS deliver its value proposition more powerfully. It also helps it save on marketing expenses, as the brand is pushed forward by its one-for-one model.

Brunello Cucinelli: when humanism becomes a powerful trademark

brunello-cucinelli-business-model

Also , Brunello Cucinelli Humanistic Enterprise isn’t only a business model but within that, there is built a powerful marketing strategy .

That shouldn’t surprise you, as among the critical elements of a business model there is its value proposition and how it gets delivered.

Amazon: how a financial model translates into a growth/marketing strategy

cash-conversion-cycle-amazon

Also, Amazon’s business model made it possible for the company to offer a wide variety of goods at a lower price while still generating cash to sustain and quickly grow its operations.

This came through its cash conversion cycle strategy .

While this is a financial strategy integrated into its business model, it became mighty over the years.

In this case, Amazon better marketed itself by unlocking liquidity to grow the operational efficiency of the business. 

Apple: when stores become the cathedrals of the brand

apple-distribution-strategy

Over the years, Apple has built its stores worldwide in central locations. Many of those stores are now iconic monuments.

And yet, most of the sales Apple make is through indirect distribution channels (third-party stores, carriers, and cellular networks).

So why does Apple build its stores?

While this is quite an expensive branding strategy, yet very effective, another reason for having those stores is the ability of Apple to develop its line of services on top of its products and, in part, to control the overall experience of customers across the world.

Key takeaway

  • Marketing is changing, and it is getting shaped by forces such as digitalization, globalization, and business model innovation .
  • That also implies understanding the current landscape to anticipate how the business world might be changing.
  • For that matter, a proper marketing strategy must inform a marketing plan that helps a company focus on a target market and conquer it quickly.
  • However, marketing is primarily about understanding hidden psychological levers, manufacturing desires, and building a solid brand that is unique for your tribe.
  • Marketers that lose sight of that are leaving immense opportunities to build a valuable brand that drives change for their tribe.

Business pro tips

In a world where former startups turned into incumbents, controlling vast portions of the digital landscape, it becomes important to understand the logic behind those giants and build a valuable business on top of them!

Gain traction in the gatekeepers era

gatekeepers-model

Master distribution

distribution-channels

Leverage on digital distribution

digital-marketing-channels

Surf the giants

amazon-seo

Build your brand

brand-building

Key Highlights

  • Marketing strategy involves creating a sustainable value chain for a target customer.
  • A powerful strategy must manufacture desire, amplify the value proposition, and build a unique brand.
  • In 2000, Google launched AdWords, allowing advertisers to buy keyword advertising on its search results page.
  • Google AdWords evolved into Google Ads, changing the revenue model from CPM to CPC.
  • Google AdWords marked a shift towards last-mile advertising.
  • Engineering-focused marketing (markeneers) emerged, emphasizing tracking and accountability.
  • Digitalization, globalization, technological innovation, Moore’s Law, and business model innovation have transformed marketing.
  • Digital business models leverage technology to enhance customer acquisition and value proposition.
  • Customer-centric platforms emphasize creating must-have products and experiences.
  • Globalization requires understanding diverse audiences and effective distribution strategies.
  • Effective messaging fits platform formats and resonates with targeted audiences.
  • Technologies change habits and content consumption behaviors.
  • Adapting content formats to platforms can enhance message delivery.
  • Technological advancements enable new business models and marketing opportunities.
  • New technologies drive innovation, create options, and influence communication.
  • Focused and authentic strategies resonate with specific audiences.
  • Flexibility allows for experimentation and adaptation to real-world results.
  • Metrics must impact business and avoid vanity metrics.
  • Creativity remains essential in an engineering-driven marketing landscape.

Marketing Strategy vs. Marketing Plan:

  • A marketing strategy defines “what” and “why,” while a marketing plan outlines “how.”
  • A marketing strategy aligns brand elements and has a longer life span.

Forces Behind an Effective Marketing Strategy:

  • Proper framing and perspective enhance brand impact.
  • Distribution amplifies messages, while context shapes messaging effectiveness.
  • Marketers are persuaders and storytellers, creating resonance.

Types of Marketing Strategies and Channels:

  • Digital marketing employs various channels for message delivery and execution.
  • Identifying effective distribution channels is crucial for connecting with audiences.

Marketing Strategy Examples:

  • TOMS’ one-for-one model serves as a powerful marketing strategy.
  • Brunello Cucinelli’s Humanistic Enterprise model integrates marketing and business strategy .
  • Amazon’s cash conversion cycle strategy contributes to growth and branding.
  • Apple’s retail stores enhance customer experience and service integration.

What is a marketing strategy?

A marketing strategy is the “what” and “how” to build a sustainable value chain framed for a target customer. A powerful marketing strategy needs to be able to manufacture desire, amplify the underlying value proposition, and build a brand that feels unique in the mind of its customers.

What are examples of marketing strategies?

Nike shoes and how they are branded it’s a great example of marketing strategy and how the company differentiates its product through its communication. For instance, Nike has an entire budget dedicated to demand generation, which is a key branding element helping the company be a recognized brand across the globe.

What is the most effective marketing strategy?

There isn’t a size-fits-all marketing strategy. And it will highly vary on the context in which it gets applied. A successful example is how Apple managed to differentiate its products in the marketplace by creating a whole line (iPhone) that opened up a new market, with no competition.

Visual Marketing Glossary

Account-Based Marketing

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AARRR Funnel

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Affinity Marketing

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Ambush Marketing

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Affiliate Marketing

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Bullseye Framework

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  • Brand Building

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Brand Dilution

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Brand Essence Wheel

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  • Brand Equity

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Brand Positioning

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Business Storytelling

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Customer Lifetime Value

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  • Customer Segmentation

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Developer Marketing

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Digital Marketing Channels

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Field Marketing

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Funnel Marketing

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Go-To-Market Strategy

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Greenwashing

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Grassroots Marketing

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Growth Marketing

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Guerrilla Marketing

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Hunger Marketing

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Integrated Communication

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Inbound Marketing

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Integrated Marketing

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Marketing Mix

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Marketing Myopia

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Marketing Personas

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Meme Marketing

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Microtargeting

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Multi-Channel Marketing

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Multi-Level Marketing

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Net Promoter Score

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Neuromarketing

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Newsjacking

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Niche Marketing

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Push vs. Pull Marketing

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Real-Time Marketing

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Relationship Marketing

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Reverse Marketing

reverse-marketing

Remarketing

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Business Model vs. Strategy: What’s the Difference?

How is a business model different from a strategy.

Military strategy is thousands of years old but the field of business strategy has only been around for about fifty years . Because this field is so new, there’s still a lot of disagreement about how business strategy and business models should be defined—and often among those who write about these topics the most!

Given these challenges, is it even possible to answer the question, “What is the difference between a business model and business strategy?” We believe the answer is “yes,” and we have chosen to stand by definitions of those terms that are similar to the position of professors at Harvard Business School.

This discussion will help you understand the difference between business models and strategies and how founders choose strategies that become the models for their business. Use these ideas to think about how you can approach your own role in the business more strategically.

What Is a Business Strategy?

A foundational business strategy is a carefully chosen response to a business environment. It takes the form of a set of decisions about the direction the business should go.

Think of strategy as the plan you make before you go on a drive. In this analogy, the business environment would be the weather conditions and your strategy would be the decision you need to make between having a night out in the city, going off-roading in the mountains, or going on another type of trip.

Strategy includes all the choices you make about where you’re going, what you’ll do when you get there, what you need to take with you, how you’ll prepare for the conditions you’ll meet along the way, and which vehicle you will take. The choices you make are designed to accomplish certain goals.

Similarly, before a company is started, founders carefully assess the current business environment (the markets, customers, competition, and so on) and try to forecast the future. They choose a mission and goals. Then, they create a plan for how the company will work toward those goals and fulfill that mission.

This process creates the overarching strategy at the core of a company, which defines why the company exists. A business strategy might include the following:

  • A focus on customers who are eager for a solution
  • A value proposition for those customers
  • An inventory of the resources and capabilities needed to deliver that value
  • An effective business model that will consistently deliver that value

Another powerful part of an effective business strategy is contingency planning. Contingency plans are “if, then” scenarios and might sound like, “If this competitor does this, we will do that,” “If the market shifts in this direction, we will pursue such and such activity,” and “If our customers don’t respond to this offer, we will focus on that offer instead.”

Contingency plans are important because the founding strategy is much like a hypothesis; the start of the business is a series of experiments, and adjustments must be made as the business learns more and matures over time.

What Is a Business Model?

Let’s go back to the analogy of planning a trip. The strategy includes assessing the weather, choosing and perhaps even modifying a car, and making other preparations.

In that analogy, the business model would be represented by choosing the correct car for the conditions and goals of the trip. It could be a rugged jeep with off-roading options or a luxury sedan with leather seats and a state-of-the-art sound system.

A business model is a system that consists of cycles of activity which fulfill the mission and goals of the company. It is the expression of a high-level strategy. It can be expressed very simply by a term such as

  • Subscription
  • Pay as you go
  • Standardization
  • Crowdsourcing
  • Product to service

A list of 19 models is available from Harvard Business Review . However, a complete business model might include details such as a company’s

  • Strengths and weaknesses
  • Customers and customer segments
  • Customer relationships
  • Competitors
  • Supply chain
  • Important resources and activities in its value chain
  • Revenue streams
  • Cost structures
  • Cost-control methods
  • Employee-payment policies
  • Marketing campaigns
  • Governance framework
  • Vertical-integration practices

Not every car would be appropriate for every type of trip. Similarly, certain business models do a better job of expressing a particular business strategy than others.

Business Model vs Strategy

You may still wonder what the true difference is between a business model and a strategy , and you may also be wondering why we need to define the differences at all. The simple answer is that in a perfect world, we wouldn’t need to. The business model would be a perfect expression of the ideal strategy and the model would continuously make the founders a great profit.

However, in the real world, technology, changing demands, and other factors can make a business model obsolete or ineffective. Founders and managers may need to tweak the business model in order to continue to progress toward their goals. They might even scrap their current model completely and adopt an entirely new one.

Strategic thinking includes choosing between different business models and sometimes switching to a new model to achieve the mission and goals of the strategy, just like a driver might change to snow tires in a storm or even buy a new car when an old one no longer serves the driver’s needs.

Founders must decide which model would most effectively serve their customers based on the products, services, and value they are offering and the resources that are available in the current business environment.

How Do Founders Choose a Strategy?

Thinking about how a high-level strategy is chosen can be useful even if your job is to plan and/or execute annual strategies rather than create core business strategies.

If you understand the core strategy of your company, you can think about how to contribute to it more directly. That might mean focusing more on innovation, competition, or another key concept.

Four ways founders come up with their high-level strategies can be found below. See if one of these approaches seems to describe your company and think about how you might apply the concepts to your own role.

1. Seeking a Blue Ocean

The best-selling book Blue Ocean Strategy uses the analogy of a red ocean to represent a market environment in which companies fiercely compete. In contrast, a “blue ocean” describes a situation in which a company creates a new category of product or service that can be sold without competition.

Cirque du Soleil, for example , stripped away many of the classic elements of a circus and offered a new type of show at a higher price to theater-going audiences instead of offering this style of entertainment at a low price to audiences sitting outdoors in tents.

Blue ocean strategy requires innovation, leadership, and the imagination to sometimes serve customers who don’t yet understand why they need what you are offering.

2. Choosing Between Cost and Differentiation

A lecture at the University at Albany stated that founders can choose between cost and differentiation to arrive at five different types of strategies:

  • Cost leadership: Using efficient, low-cost business practices to offer the lowest, most-attractive prices to a mass customer base
  • Differentiation: Using great customer service, special features, innovation, and more to offer high-value products or services to a mass market without competing on price
  • Focused low cost: Focusing on cost leadership and marketing only to a relatively small group of customers
  • Focused differentiation: Competing through differentiation and marketing only to a relatively small customer base
  • Integrated low-cost and differentiation: Marketing to a mass audience using both differentiated features and low prices

3. The Chess Master

Some founders approach strategy like a game of chess. They carefully assess the current market situation, all the pieces they have available, and where the competition has placed their pieces on the board. They choose a goal they’re passionate about and then plan many moves ahead, seeking to outmaneuver the competition and anticipate every adverse circumstance.

If founders and managers are able to create plans that are detailed enough and anticipate their business moves well enough, they may have the satisfaction of seeing their ideas work as expected and their company reaching its goals despite competition and difficult circumstances.

4. Strategizing about Strategy

Your Strategy Needs a Strategy advocates using a system to choose between categories of strategies. The first step is to assess the strategic situation by rating the unpredictability of the markets, the changeability of the situation, and the difficulty or ease of current problems.

Then, a founder uses what he or she learns from this assessment to choose between five strategy types :

  • Classical: simply analyzing, planning, and executing in a stable environment
  • Adaptive: in an unpredictable environment, running a series of experiments and codifying and extending those that perform best
  • Visionary: creating new markets and innovations in a predictable yet changeable environment
  • Shaping: setting up a platform for other businesses to connect in a changeable, unpredictable environment
  • Renewal: revamping a business model because of the imminent failure of a corporation

Continue Learning How to Think Strategically

We hope this discussion helps answer the question, “What is the difference between a business model and a strategy?” and gives you a deeper way of thinking about strategy that can help you in your role.

The more you practice strategic thinking, the more valuable you will be to your company. Good strategy can guide a company through difficult situations and may even contribute to changing a business model for the good of the entire company. To learn more about thinking and leading strategically in your organization, contact CMOE .

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8 Types of Business Models & the Value They Deliver

Stacks of coins in a garden

  • 26 May 2016

You want to start a company but aren’t sure about a viable business model. How might you create something that people are willing to pay for and could earn you a profit?

Before diving into potential strategies, it’s important to understand what a business is and does. At its heart, a business generates value for its customers. A business model is a specific method used to create and deliver this value.

What Is Value in Business?

A successful business creates something of value . The world is filled with opportunities to fulfill people’s wants and needs, and your job as an entrepreneur is to find a way to capitalize on these opportunities.

A viable business model is one that allows a business to charge a price for the value it’s creating, such that the business brings in enough money to make it worthwhile and continue operating over time. Whatever the business is offering must also satisfy the customer’s needs and quality expectations.

It’s important to note that value is subjective. What’s valuable to one person may not be to another. Moreover, the concept of value excludes any moral judgments about the intrinsic worth of an offering. For example, while most would agree that human life is more valuable than sports, some professional athletes make far more money than the average brain surgeon.

Nonetheless, the concept of value provides a useful bedrock on which to begin building your business model. In particular, consider what forms of value people are willing to pay for. Here are eight potential business models and the forms of value they deliver—as well as the pros and cons of each—to help you get started.

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8 Types of Business Models to Explore

A product is a tangible item of value. To run a successful product-focused business, try to produce the item for as low a cost as possible while maintaining a reasonable level of quality. Once the item is produced, your objective should be to sell as many units as you can for as high a price as people are willing to pay to maximize profit.

Products are all around us. From laptops to books to HBS Online courses (products don’t have to be physical), products are a classic form of value with high upside if you can get them right.

  • Pros: Many products can be easily duplicated. Thus, firms can achieve economies of scale after bearing some upfront costs of production.
  • Cons: Physical products need to be stored as inventory, which can increase costs. They can also be damaged or lost more easily than, say, a service.

Related: How to Create an Effective Value Proposition

A service involves offering assistance to someone else for a fee. To make money from your service, provide a skill to others that they either can’t or don’t want to do themselves. If possible, repeatedly provide this benefit to them at a high quality.

Like products, services are in abundance, especially in the knowledge economy. From hairdressers to construction workers to consultants to teachers, people with lucrative skills can earn good money for their time.

  • Pros: If you have a skill in high demand or a skill that very few others have, you can charge a fair price for your time and stand out in your field.
  • Cons: If you don’t charge enough for your services, or many people have your skill, your business may not be as lucrative.

3. Shared Assets

A shared asset is a resource that many people can use. Such resources allow the owner to create or purchase the item once and then charge customers for its use. To run a profitable business around shared assets, you need to balance the tradeoff of serving as many customers as you can without affecting the overall quality of the experience.

For instance, think of a fitness center. A gym typically buys treadmills, ellipticals, free weights, bikes, and other equipment and charges customers monthly membership fees for access to these shared assets. The key is to charge customers enough to maintain and, if needed, replace their assets over time. Finding the right range of customers is the key to making a shared asset model work.

  • Pros: This model provides people access to a lot of assets they wouldn’t otherwise have access to. In addition, many people are willing to pay a lot for access to trendy social spaces.
  • Cons: Because they don’t own the assets, customers have little incentive to treat your resources well. Make sure you have enough in your budget for quick fixes, if necessary.

4. Subscription

A subscription is a type of program in which a user pays a recurring fee for access to certain specified benefits. These benefits often include the recurring provision of products or services. Unlike a shared asset, however, your experience with the product or service isn’t affected by others.

To have a successful subscription-based offering, build a subscriber base by providing reliable value over time while attracting new customers.

The number of subscription services has exploded in recent years. From magazines to streaming services to grocery and wine delivery subscriptions, businesses are turning to the subscription-based model, often with great success.

  • Pros: This model provides certainty in the form of predictable revenue streams, making financial forecasting a bit easier. It also benefits from a loyal customer base and customer inertia (for instance, customers may forget to cancel their subscription).
  • Cons: To run this model, your business operations must be strong. If you can’t deliver value consistently over time, you may want to consider a different business model.

5. Lease/Rental

A lease involves obtaining an asset and renting it out for an agreed-upon amount of time in exchange for a fee. You can lease virtually anything, but it’s in your best interest to rent assets that are durable enough to be returned in good condition. This ensures you can lease the good multiple times and, perhaps, eventually sell it.

To profit from leases, the key is to ensure that the revenue you get from leasing the asset before it loses value is greater than the purchase price. This requires you to price the rental of the item strategically and potentially not lease to those who may not return it in good condition. This is why many rentals of high-value items require references, credit checks, or other background information that can predict how someone may return the leased item.

  • Pros: You don’t have to have a novel idea to make money using a lease business model. You can purchase assets and rent them to others who wouldn’t buy them for full value and earn a premium.
  • Cons: You need to protect yourself from unexpected damage to your assets. One way to do so is through insurance.

6. Insurance

Insurance entails the transfer of risk from a customer to a seller of an insurance policy. In exchange for the insurance company (the seller of the policy) taking on the risk of a specified event occurring, they receive periodic payments ("premiums" in insurance lingo) from the policyholder. If the specified event doesn’t happen, the insurance company keeps the money, but if it does, the company has to pay the policyholder.

In a sense, insurance is the sale of safety—it provides value by protecting people from unlikely, but catastrophic, risks. Policyholders can take insurance out on almost anything: life, health, house, car, boat, and more. To run a successful insurance company, you have to accurately estimate the likelihood of bad events occurring and charge higher premiums than the claims you pay out to your customers.

  • Pros: If you calculate risk accurately, you’re guaranteed to make money using the insurance business model.
  • Cons: It can be difficult to accurately calculate the likelihood of specific events occurring. Insurance only works because it spreads risk over large numbers of policyholders. Insurance companies can fail if a large portion of policyholders is impacted by a widespread, negative event they didn’t see coming (for example, the Global financial crisis in 2007 and 2008).

Related: 5 Steps to Validate Your Business Idea

7. Reselling

Reselling is the purchasing of an asset from one seller and the subsequent sale of that asset to an end buyer at a premium price. Reselling is the process through which most major retailers purchase the products they then sell to buyers. For example, think of farmers supplying fruits and vegetables to a grocery store or manufacturers selling goods to a hardware store.

Companies make money through resale by purchasing large quantities of items (usually at a bulk discount) from wholesalers and selling single items for a higher price to individuals. This price raise is called a markup.

  • Pros: Markups can often be high for retail sales, enabling you to earn a profit on the items you resell. For example, a bottle of water might cost 10 cents to produce, whereas a customer may be willing to pay $1.50 or more for the same bottle.
  • Cons: You need to be able to gain access to quality products at low costs for the reselling business model to work. You’ll also need the physical space to store inventory to manage sales cycles.

8. Agency/Promotion

Agents create value by marketing an asset, which they don’t own, to an interested buyer. They then earn a fee or a commission for bringing the buyer and seller together. Thus, instead of using their own assets to create value, they team up with others to help promote them to the world.

Running a successful agency requires good connections, excellent negotiation skills , and a willingness to work with a diverse set of individuals. One example is a sports agent who promotes players to teams and negotiates on their behalf to get the best deal. In return, they typically receive compensation equal to a certain percentage of the contract.

  • Pros: You can highly profit from expertise and connections in your industry, be it publishing, acting, advertising, or something else.
  • Cons: You only get paid if you seal the deal, so you have to be able to live with some uncertainty.

So You Want to Be an Entrepreneur: How to Get Started | Access Your Free E-Book | Download Now

Setting Your Business Up for Success

These eight types of business models each have pros and cons and deliver value in their own ways. If you’re looking to start a business and need a place to start, one of these could be the best fit for your venture and entrepreneurial skill set .

Interested in honing your entrepreneurial skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn the language of the business world.

This post was updated on February 19, 2021, and is a compilation of two posts, previously published on May 26, 2016, and June 2, 2016.

marketing strategy and business model

About the Author

Using the Business Model Canvas for your marketing strategy

  • Written by Daniel Lee
  • February 11, 2023

It can be a challenge to align your marketing with the broader business. Marketing can become even more of a challenge with a large organisation where the business model can become rather complex

Luckily, there is a great tool available that can help you to layout your business model on a single page. That tool is called the Business Model Canvas . Read on to find out what the Business Model Navigator is and how it can help your marketing.

What is the Business Model Canvas?

The Business Model Canvas (BMC) is a strategic management tool created by Alexander Osterwalder in 2005. You can use this tool to develop and document new and existing business models. The Business Model Canvas often takes the form of a one-page template featuring nine boxes.

Why use the Business Model Canvas?

The Business Model Canvas allows you to plan out a business model on a single page quickly. Since you plan out the business model on one page, it is easy to get a clear, top-level overview of the organisation. You can then use the insights you gain from the BMC in other areas of the business.

How can the Business Model Canvas be used for marketing?

When planning your marketing strategy, it is crucial to understand the business plan. The Business Model Canvas allows you to communicate the core elements of the business model to the team responsible for creating the marketing strategy.

The Business Model Canvas is useful for businesses or in-house teams. However, the BMC is also helpful for marketing consultants and agencies to better understand their clients’ business models.

How to use the Business Model Canvas

To use the BMC, all you need to do is complete the nine boxes in the template with information about your business model.

The nine elements of the Business Model Canvas

The nine boxes used in the Business Model Canvas template correspond to nine elements of a business model. These nine elements are grouped into one of four categories: infrastructure, offering, customers, and finances.

Infrastructure

Key partners.

Key partners refer to all organisations or individuals with whom you have a business alliance. Examples of key partners include suppliers, distributors, sub-contractors, importers, service providers, and complementary businesses with whom you partner.

To use this for your marketing, think about how you currently communicate with each of your partners. Can you improve your comms with partners? Possible marketing ideas for partners include collaboration on content, or you could contribute content to your partners’ websites. You could even do something as simple as mutual ‘shout outs’ on social media platforms.

Key activities

Key activities are the business activities critical to delivering on your value proposition. For example, a supermarket needs to ensure they have a cost-effective and efficient supply chain to keep costs down and maintain fully stocked shelves. If necessary delve into the actions required to complete the key activities successfully.

The key activities you identify may be suitable for content marketing. One example would be ‘behind the scenes’ content. Often, your target would appreciate an inside look at how your organisation operates. If we take Tesla as an example, many of their fans and customers will find the production of their electric vehicles and the development of their technology interesting.

Key resources

Key resources are the assets required to be able to achieve your key business activities. Resources can take many forms, including physical, financial, human and intellectual.

Your key resources can be used for marketing. Of course, financial resources can be used to fund marketing activities. However, physical, human and intellectual resources can also be used for marketing. People can be a great resource. If you have experts in a particular field, they can produce insightful thought leadership content for your website and social media. Physical and intellectual resources can also be used for content marketing.

Value proposition

Your value proposition is the value that you are providing to your customers. Which problems are you solving for your customers, and which of their needs are you satisfying. The characteristics of your value proposition can include:

  • Usability and convenience
  • Customisation/Personalisation
  • Performance
  • Brand or status
  • ‘Getting the job done’ or effectiveness
  • Cost reduction
  • Risk reduction
  • Accessibility

Remember that your value propositions can be quantitative and qualitative.

Identifying your value proposition is vital for your marketing and communications. When building your campaigns, think about how you can incorporate your value proposition into your comms. You want to clearly communicate to your audience what makes your organisation different to its competitors, and the value that your offering provides.

Customer relationships

The customer relationship section refers to the types of relationships your organisation has with its customers. Think about how you will get more customers, how you will keep your customers, and how you can grow revenue from your existing customers. Some of the types of relationships you can develop with your customers include:

  • Personal assistance in the form of direct employee-customer interaction
  • Dedicated personal assistance is more hands-on for a small subset of customer than just ’personal assistance’
  • Self-service is a relationship where the organisation is hands-off and provides the tools for the client to provide the service to themselves
  • Automated personalisation of services
  • Communities allow groups of customers to interact and provide value to each other, as well as the organisation providing value by facilitating the community platform
  • Co-creation is where the customer directly has input into the service they receive

Understanding customer relationships is important for your marketing. For example, if you provide ‘dedicated personal assistance’ to your customers, you could use this as a benefit, communicating this service throughout your content, website and advertising.

Which channels are you using to provide value to your customers? How are you using the various marketing channels to communicate with your customers? Channels to consider include:

  • Physical stores
  • Search engines
  • Social media
  • Printed publications
  • Direct mail

The channels that you use to provide value to your customers are vital for your marketing. For example, your website is an important marketing channel if you use it to provide valuable information to your customers. In this situation, you will also want to look at the channels link to your website for more opportunities, such as search engines, social media and affiliates.

Customer segments

To complete the customer segments box, you need to identify the different types of customers you have. Once you have listed the different types of customers, you need to determine which of these groups are the most important. You can use this information to plan your marketing approach, e.g., mass marketing or niche markets.

Customer segment insights can be used to build personas of your target audience. This information can then be used to refine which channels you use to market, optimise your website and your improve your content based on your specific audience’s wants and needs.

Cost structure

When it comes to costs, identify the expenses necessary to deliver your key business activities. Identify which of your resources and activities are the most expensive.

You should think about whether the business model is costs-driven or value-driven. Costs-driven generally means focused on lower costs at the expense of quality (budget). Value-driven often means focused on high quality (premium) but typically comes with higher costs.

The costs structure box is also where you should identify any economies of scale and economies of scope.

Cost structure can also be used to improve your marketing. For example, depending on whether the business model is costs-driven or value-driven will impact whether you are market your offering as a budget-friendly option or whether is a high-end premium solution.

Revenue streams

Revenue streams refer to the most important ways your business model will generate income. Take a look at what customers are currently paying and what they would be willing to pay. How do your customers pay and how would they prefer to pay? Work out the relative difference between your revenue streams. Which sources of income contribute the most? Note down whether you will be using fixed pricing or dynamic pricing.

Some examples of revenue streams include:

  • Asset sales
  • Subscription fees
  • Advertising

Understanding how your organisation actually monetises is vital to a successful marketing campaign. Identifying where revenue could be increased and where you should focus your marketing efforts is the difference between a positive or negative ROI.

After you have completed your Business Model Canvas, it is time to take a step back and look at your business model holistically. Can you see any marketing opportunities now that you could not see before? You can also use the completed BMC template to double-check any marketing initiatives against to ensure you align your marketing with the wider business’ priorities.

Download our Business Model Canvas template

So, you want to get started using the Business Model Canvas for your organisation or idea? Instead of making one yourself, we have a prepared a hand Business Model Canvas template for you to use. Click on the links below to download either the Word/.doc version or a PDF version.

Download Word/.doc template for the Business Model Canvas

Download the PDF template for the Business Model Canvas

Wrapping up

To sum up, the Business Model Canvas is a tremendous strategic management tool. The BMC provides an overview of your business model, which you can use to inform your marketing strategy.

If you would like any help with your digital marketing strategy, you contact us about our digital marketing services by emailing [email protected] .

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The Strategy Story

Dell Business Model: Supply chain & Marketing Strategy

Dell Technologies helps organizations build their digital futures and individuals transform how they work, live, and play. Dell provides customers with one of the industry’s broadest and most innovative solutions portfolios for the data era, including traditional infrastructure and extending to multi-cloud environments. 

Dell is helping customers accelerate their digital transformations to improve and strengthen business and workforce productivity by offering secured, integrated solutions that extend from the edge to the core to the cloud.

Dell is expanding its IT-as-a-Service and cloud offerings to give customers greater flexibility to scale IT to meet their evolving business needs and budgets. As strategy enthusiasts, we decided to analyze the business model, supply chain strategy, and marketing strategy of Dell.

Marketing Strategy of Dell

Dell’s customers include large global and national enterprises, public institutions, governmental agencies, educational institutions, healthcare organizations, law enforcement agencies, small and medium-sized businesses, and consumers. Hence Dell has a unified global sales and marketing strategy that is customer-focused, collaborative, and innovative.

Go-to-market strategy  — Dell sells products and services directly to customers and through other sales channels, which include value-added resellers, system integrators, distributors, and retailers. Dell continues to pursue a direct business strategy, which emphasizes direct communication with customers, thereby allowing it to refine Dell’s products and marketing programs and strategy for specific customer groups. 

In addition to Dell’s direct business model, Dell uses its network of channel partners to sell Dell’s products and services, enabling it to serve a more significant number of customers efficiently. Dell has a partner program for the development of channel sales, which provides appropriate incentives to encourage sales generation. During Fiscal 2022, Dell’s other sales channels contributed over 50% of Dell’s net revenue. 

Dell’s go-to-market engine includes a 32,000-person sales force and a global network of over 200,000 channel partners. Dell Financial Services and its affiliates (“DFS”) offer customers payment flexibility and enable synergies across the business.

Large enterprises and public institutions  — Dell maintain a field sales force for large enterprises and public institutions. Dedicated account teams, which include technical sales specialists, form long-term relationships to provide Dell’s most prominent customers with a single source of assistance, develop tailored solutions for these customers, position the capabilities of Dell Technologies, and provide it with customer feedback. 

For these customers, Dell offers several programs to provide single points of contact and accountability with dedicated account managers, special pricing, and consistent service and support programs. Dell also maintains specific sales and marketing programs targeting federal, state, and local governmental agencies and healthcare and educational customers. 

Small and medium-sized businesses and consumers  — As part of its marketing strategy, Dell markets its products and services to small and medium-sized enterprises and consumers through various advertising media. To react quickly to Dell’s customers’ needs, Dell tracks its Net Promoter Score, a customer loyalty metric widely used across multiple industries. Dell also engages with customers through Dell’s social media communities on Dell’s website and in external social media channels. 

Supply Chain Strategy of Dell

Dell owns manufacturing facilities in the United States, Malaysia, China, Brazil, India, Poland, and Ireland. Dell also utilizes contract manufacturers worldwide to manufacture or assemble Dell’s products under the Dell Technologies brand as part of Dell’s strategy to enhance Dell’s variable cost structure and to achieve Dell’s goals of generating cost efficiencies, delivering products faster, and enhancing Dell’s supply chain strategy. 

Dell’s manufacturing process consists of assembly, software installation, functional testing, and quality control. Dell conducts operations utilizing a formal, documented quality management system to ensure that Dell’s products and services satisfy customer needs and expectations. 

Testing and quality control are also applied to components, parts, sub-assemblies, and systems obtained from third-party suppliers. Dell’s quality management system is maintained by testing components, sub-assemblies, software, and systems at various stages in the manufacturing process. 

How Dell pioneered the Just in Time to gain market share?

Dell has implemented programs and methodologies to ensure that the quality of Dell’s designs, manufacturing, test processes, and supplier relationships are continually improved. Dell maintains a Supplier Code of Conduct, actively manages recycling processes for Dell’s returned products and is certified by the Environmental Protection Agency as a Smartway Transport Partner. 

As part of its supply chain strategy, Dell purchases materials, supplies, product components, and products from many qualified suppliers. The strategy of contracting multiple vendors for procurement needs is called Multi-vendor sourcing. 

Dell maintains more than 2,400 vendor-managed service centers. Dell’s supply chain strategy drives long-term growth and operating efficiencies, with approximately $75 billion in annual procurement expenditures and over 750 parts distribution centers. Together, these elements provide a critical foundation for Dell’s success. 

How does Dell make money: Business Model

Before we understand how Dell makes money and its business model, let’s understand the structure of offerings from Dell. Dell designs, develops, manufactures, markets, sells, and supports comprehensive and integrated solutions, products, and services. Dell is organized into two business units, Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).

Infrastructure Solutions Group (“ISG”)  — ISG enables customers’ digital transformation through trusted multi-cloud and big data solutions built upon modern data center infrastructure. ISG helps customers simplify, streamline, and automate cloud operations in hybrid cloud deployment. ISG solutions are built for multi-cloud environments and optimized to run cloud-native workloads in public and private clouds and traditional on-premise workloads. 

Client Solutions Group (“CSG”)  — CSG includes branded hardware (such as desktops, workstations, and notebooks) and branded peripherals (such as displays and projectors), as well as third-party software and peripherals. For customers seeking to simplify client lifecycle management, Dell’s PC-as-a-Service offering combines hardware, software, lifecycle services, and financing into one all-encompassing solution that provides predictable pricing per seat per month. CSG also offers attached software, peripherals, and services, including support and deployment, configuration, and extended warranty services. 

marketing strategy and business model

Dell made $102 Billion in 2021 , a 17% growth from 2020. Dell makes money primarily from two revenue streams: products and services. Product revenue includes the sale of hardware products and software licenses. Service revenue includes service offerings and support services related to hardware products and software licenses. Products and Services contribute 70% and 21% to Dell’s revenue, respectively. 

In 2021, product revenue increased by 18%, primarily due to an increase in product net revenue for CSG and, to a lesser extent, ISG product net revenue. CSG product revenue increased primarily due to increases in units sold of both commercial and consumer product offerings as a result of continued strength in the demand environment and, to a lesser extent, an increase in average selling price principally related to our commercial offerings. ISG product net revenue increased primarily due to increased sales volumes of server offerings.

At the same time, services revenue increased by 13%, driven primarily by growth in CSG services revenue and, to a lesser extent, growth in both ISG and other businesses’ services revenue. Growth in CSG services revenue was primarily due to increases in services net revenue attributable to both CSG hardware support and maintenance and CSG third-party software support and maintenance. ISG services revenue increased primarily due to growth within hardware support services, while other business services’ net revenue increased due to software support and maintenance growth within VMware Resale.

marketing strategy and business model

A passionate writer and a business enthusiast having 6 years of industry experience in a variety of industries and functions. I just love telling stories and share my learning. Connect with me on LinkedIn. Let's chat...

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Business News Daily

6 Tips for Creating a Great Business Marketing Plan

E very successful company needs a well-thought-out business plan to outline its course of action. A marketing strategy is one key part of that plan: It spells out critical information, including how a business will distinguish itself from competitors and what the team will aim to achieve.

While marketing plans don't always produce immediate results, they are still a crucial aspect of a business plan and should be given a considerate amount of attention. A complete and effective marketing strategy can reveal opportunities through new audience segments, changes in pricing strategy or by differentiating the brand from the competition.

Here's how to create an effective marketing plan for your business. 

How to develop a business marketing plan

A focused marketing plan sets two goals. The first is to maintain engagement and customer loyalty , and the second is to capture market share within a specific audience segment of your target audience.

Your marketing plan outlines the strategies you'll use to achieve both goals and the specific actions your marketing team will employ, such as the specific outreach campaigns, over which channels they will occur, the required marketing budget and data-driven projections of their success.

Marketing is a science-driven commitment that typically requires months of data to refine campaigns, and an interconnected marketing plan keeps your business committed to its long-term goals. 

All marketing guidelines will circle back to the four P's: product, price, place and promotion. The following tips are starting points that will ingrain the habit of continually returning to these four P's.

1. Create an executive summary.

Marketing campaigns should not be considered individual functions. Marketing is the story of your brand as told to customers; like any narrative, its tone and characters should remain consistent. An executive summary details your marketing goals for the next year and helps tie each campaign together. 

When establishing your marketing goals, they should be specific, measurable, attainable, relevant and time-bound – or SMART. These goals should work together to achieve both internal and external harmony, telling a consistent story that informs customers of your exact message while building on its previous chapters. 

For example, you may set a SMART goal to increase your company's social media traffic by 15% in a 90-day time frame, and plan to achieve this by creating four relevant, informative and high-quality posts per week on each platform, using your company's brand kit. 

2. Identify your target market.

Before you write a marketing plan, you need to find and understand your niche. Ask yourself who the specific demographic is that you're targeting. For example, if your business sells 30-minute meals, then those who work traditional 9-to-5 jobs are likely in your market. Study that group of individuals to understand their struggles and learn how your business can solve the problem.

FYI: Targeting your audience can drastically improve the effectiveness of your marketing efforts and help you avoid wasting resources on fruitless campaigns.

3. Differentiate your brand with inbound marketing.

Inbound marketing utilizes internal tools – such as content marketing, social media activity and search engine optimization (SEO) – to attract a customer's attention primarily through online communication. Content marketing can include informative blog posts, interviews, podcasts with relevant industry figures or supplementary guides on how to best use your product. For example, if you sell cooking supplies, consider posting several fun recipes around the holidays that your tools can help prepare.

Each of these strategies empowers the others in a loop to achieve greater customer attention. A strong content offering can improve your search engine ranking, which brings more people to your website and social pages. You can then share those developed content pieces to that wider audience, who will again improve your search engine rankings. All of this can be done without the expense of a famous endorser or commercial advertising campaign. 

4. Identify competitors that also target your customers.

No matter how original your product or service may be, there is always competition for your target customer's dollar. Small business personnel seldom take the time to study their competitors in-depth or pinpoint companies outside their industry that are just as capable of luring customers away. Knowing who your competitors are, their core competitive advantages, and how they might respond to your offerings – like price cuts or increased communication – helps you devise strategies to combat such losses. 

By seeking out these competitors, you can develop ways to differentiate your business by providing consumers with the things they may be lacking from your competition. Observe how your competitors operate to find ways in which you can stand out and steer your target audience toward your business. 

Did you know? According to SmallBizGenius, 19% of small businesses fail because of their competitors. 

5. State your brand position for your target customers.

Ultimately, your brand – and what it symbolizes for customers – is your strongest advantage. You should be able to write a simple declarative sentence of how you will meet customer needs and beat the competition. The best positioning statements focus on solving a problem for the customer in a way that promotes the best value.

6. Budget the plan. 

When implementing a strategy, consider the marketing budget you will allot. Marketing requires money for various reasons, including paid promotions, marketing software, events and outsourced costs. Consider your budget when creating the plan so that there is money available to spend on marketing tactics to achieve your goals. 

While drafting the plan and evaluating your course of action, note the estimated cost, assets, and time required to achieve the stated goals; this will help when it comes time to set the actual calculated budget. Any goals that you create should be realistically achievable within the budget you have set. 

Key takeaway: When developing your marketing plan, you should know why a customer would use your product, differentiate your brand from competitors, and audit your product offering and message to ensure consistency.

Channels to include in your marketing plan

Once you know the elements of your plan, the next step is to develop the blueprint of how you will reach your target customers. Aside from traditional print and broadcast media, here are three digital marketing channels that many business owners utilize.

Social media

Social media is an essential part of businesses' marketing plans, because every type of customer is on some type of platform – such as Facebook , Twitter or LinkedIn . You may feel overwhelmed at the possibilities, but focus on the sites that can benefit your business the most.

Brett Farmiloe, founder of internet marketing company Markitors, advised companies starting out in social media to get to know their customers and the platforms they use.

"Figure out where your customers are spending their time, and set up shop on those platforms," he told Business News Daily. "Develop a content strategy that can be executed internally, [and then] execute your strategy by posting branded content on your selected platforms."

Though email marketing is not as new as social media marketing, it is an effective and popular choice for small business owners. Companies can implement email marketing techniques in many ways, including newsletters, promotional campaigns and transactional emails. For instance, Mailchimp and Constant Contact help companies manage their email drip campaigns .

Farmiloe added to set your email marketing efforts apart from the others by segmenting your markets.

"Not all subscribers want to receive the same blast," he said. "Smart email marketers take the time to segment subscribers at the outset, and then continue to segment based on subscriber activity. Through segmentation, companies reduce the amount of unsubscribes, increase open rates and, most importantly, increase the amount of actions taken from an email send."

The popularity of smartphones and tablets has changed how companies target consumers. Since people have these devices with them nearly all the time, companies are looking to implement strategies that reach customers on their gadgets.   

"Mobile marketing is interruptive," Farmiloe said. "It's because of this power that a marketer has to let the consumer determine how and when to receive marketing material. That's why almost every app comes with the option to turn notifications on or off. The consumer has to hold the power with mobile marketing."

Key takeaway: Use digital marketing channels – such as social media, email and mobile – to reach customers, but only after researching each channel in depth and developing a strategy to capture consumers' interest. 

Monitoring results

Well-defined budgets, goals and action items – with appropriate personnel assigned to each – can make your marketing plan a reality. Think about how much you're willing to spend, the outcomes you expect and the necessary tasks to achieve those outcomes.

Analytical tools that track customer behavior and engagement rates can serve as a helpful guide for your marketing strategy . Unlike billboards or commercials, digital channels allow you to assess each step of the customer journey and gain insights on the individual patterns and intent of prospects. Intention can soon develop into prediction, empowering your marketing team to develop campaigns that consistently reach target audiences at the right time. 

You can find more tips for measuring your marketing ROI here.

Jordan Beier and Adryan Corcione contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

Every successful company needs a well-thought-out business plan to outline its course of action. A marketing strategy is

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Omnichannel vs Multichannel Marketing

Learn about omni-channel and multi-channel marketing so you can diversify your sales channels.

marketing strategy and business model

As an online business owner, having a marketing plan can increase your potential for sales.  Whether you sell exclusively on one platform, multiple apps, or have both a physical and online store, the internet offers plenty of opportunities to reach out to interested customers. 

While learning about online marketing strategies, you might read about omnichannel and multichannel marketing strategies. Although some may use them interchangeably, there are big differences between the two and how they affect your overall strategy. 

The key differences between multichannel marketing vs. omnichannel marketing

To decide which strategy is right for your business, it’s important to understand the difference between omnichannel vs. multichannel marketing. 

What is omnichannel marketing?

Omnichannel marketing is a strategy designed for a seamless experience. Whether your customers shop in your physical store, e-commerce store, your social media page , website, or app, they’re treated to the same products and shopping experience. 

Global network connections of Omni Channels

Let’s say for example that you sell clothes online. With an omnichannel marketing strategy, you sell your clothes on different platforms. However, your marketing efforts are working together to provide the same experience.

You could advertise your products on social media, offer more details on your website, and then provide the best deals on your app or any platform where you sell your products. 

When done correctly, your customers will feel like they’ve interacted with a single brand. This is because of their seamless experience despite exploring different channels. 

Omnichannel marketing pros and cons

What is multichannel marketing?

Multichannel marketing uses various platforms to give customers the choice of which channel they want to engage with and purchase from. Unlike omnichannel marketing where it’s a seamless experience, you have the flexibility to provide independent marketing strategies tailored to each channel. 

Multichannel Marketing

Let’s go back to the clothing store example: Under multichannel marketing, you can sell your clothes through your brick-and-mortar store or on multiple e-commerce platforms. The experience provided in each option is different.

For example, only one e-commerce platform offers free shipping, while there are exclusive sales if your customers shop in your physical store. 

The point of multichannel marketing is to increase your business’ reach and visibility. If you have a diverse customer base, you can create different strategies based on what works best per group. 

Multichannel Marketing Pros And Cons

How to choose the right model for your business?

Omnichannel and multichannel can both work for small online businesses. However, given their pros and cons, it’s important to weigh in which advantages are more important to your business. 

Multichannel marketing may be best for small businesses if they:

  • Have very limited resources and can’t initially invest in tools needed to create centralized data.
  • Want to operate channels that are independently run. 
  • Seek to grow their customer base by exploring different strategies that don’t necessarily play off each other. 

On the other hand, omnichannel marketing is best for those who:

  • Have the resources to execute a better, more seamless experience for customers.
  • Want to focus less on casting a wide net and more on the overall experience of one customer. 
  • Can focus less on increasing sales and more on the long-term advantages of positive client experiences. 

Which marketing strategy works best for your business?

There are several instances where either omnichannel or multichannel works best for your online store. Ultimately, it depends on your business’ current goals and status. A multichannel marketing strategy is great for increasing your visibility and sales, while an omnichannel strategy focuses on client experience. 

Regardless of which marketing strategy you choose, don’t forget the other aspects of running an online store that can affect your brand and customer satisfaction. When it comes to on-time, streamlined order fulfillment, Ninja Van is your trusted partner.

Learn how Ninja Van’s solutions go above and beyond for our customers. 

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JUST RELEASED: View the 2024 Franchise 500 Ranking

Which Franchise Model Is Right for You? Here's How to Choose There are thousands of brands and concepts, but franchises generally fall under two business models: "brick-and-mortar" and "service-based." Which is the best choice for you?

By David Busker • Feb 13, 2024

Opinions expressed by Entrepreneur contributors are their own.

A major decision potential business owners must make when considering a franchise is determining what type of business they should run. There are thousands of brands and concepts, but franchises generally fall under two business models: "brick-and-mortar" and " service-based ."

Think about a franchise you know. Any franchise. Possibly one that offers services that you use consistently. Is it a hair salon? A fitness studio? A lawn care company? Maybe a moving service?

All of these are franchises, but in terms of a business model, the hair salon and fitness studio fall under one umbrella — location-based businesses with retail storefronts where the customer receives the service at a fixed-base location. Meanwhile, the lawn care company and moving service fall under another umbrella — service-based brands — which do not have a storefront or customer-facing real estate and the service is provided at the customer's location.

Here are some of the key differences between brick-and-mortar and service-based businesses, as well as the criteria to build one, so you are more informed when choosing a franchise model.

Related: 7 Essential Questions to Ask Yourself Before Starting a Franchise

1. Investment cost

Real estate is what usually drives franchising investment costs . The more real estate intensive, the greater the investment level. Location-based, brick-and-mortar franchises generally have higher initial investments. Building the retail space can be pricey. Picture a fitness studio — you need equipment, like bikes or pilates machines, but also a high-tech sound system, televisions, changing rooms, showers, etc. Not to mention the flooring, interior architecture (walls, stage, various rooms), trade dress and more.

On the other hand, a service-based brand doesn't necessarily require real estate (some may even operate from a home office). Some service-based brands require storage space to house vehicles or equipment that are deployed at the customer's location. Less visible and lower cost industrial spaces are ideal for these franchises. Typically, these spaces require few leasehold improvements compared to a customer-facing retail space.

So what can you expect the investment costs to be for each of these options for a single unit or territory?

While it isn't definitive (there are always exceptions), common ranges are:

  • Brick-and-mortar: $250,000+
  • Service-based brands: under $300,000

2. Ramp-up time

Ramp-up time goes hand-in-hand with investment costs. The time it takes to ramp up to a monthly positive cash flow and establish repeat business both indicate important benchmarks for any sustainable business. In terms of speed, service-based brands are more likely to ramp up quickly because of a lower investment cost upfront and lower fixed overhead costs . Let's consider a moving service brand. Once you have the equipment and employees in place, the month-over-month operation costs are more closely linked to revenue growth; thus, these models can often grow to cash flow more quickly.

Alternatively, a brick-and-mortar brand (like a salon) will have high upfront investment costs (retail space, individual stations, chairs, mirrors, hair wash/dry stations, etc.) and will likely take time to establish a strong customer base in a particular community. But they tend to have more repeat business and durable income streams over time.

Related: The Rise of Click and Mortar — Why Online Businesses Should Consider Opening a Physical Store

3. Scalability

Brick-and-mortar businesses are typically more scalable . Once you have a single successful franchise, it's easier to manage and build an empire by spreading costs over multiple locations. But remember, due to the costly initial investments, building costs will be similar each time you open a new location.

With a service-based brand, rather than building more physical locations to expand, you can expand your territory and drive more penetration within your territories. While this isn't without additional costs (consider gas money, employees to keep up with demand, more frequent equipment maintenance, etc.), it requires incremental investments since your revenue justifies it and creates economies of scale. By purchasing additional territories in a service-based brand, you scale your revenue and income multiplier without the same proportional increase in capital investment.

4. Technology

One area that is relatively equal in terms of usefulness and accessibility is technology. In recent years, technology has transformed the franchise world . Specifically, repeatable but necessary tasks have been streamlined and simplified through technology. For brick-and-mortar brands, it's common to see customers scheduling services directly (hair appointments, fitness class bookings, etc.). For service-based brands, customers can book service calls, and employees can perform tasks in real time to keep business moving, such as ordering parts, creating estimates, etc.

5. Location risk

Location is key for brick-and-mortar franchise brands. It's often a balancing act of finding real estate that is within an acceptable price range and in a popular location that creates consistent repeat business. You will be offering services in a fixed location, so the further away you are from the customer, the less likely the customer will travel to your location. For example, a fitness studio needs to be convenient for customers to come to your location three to four times per week. The more frequently a customer would ideally like to visit your franchise, the higher density is needed for the same market radius.

For a service-based brand, location is not as important for overall success. Since you or your employees will be traveling to the customer's location, there is no site selection risk and you are free to penetrate deeper and deeper into a market. However, it is worth noting that, if you do expand to multiple territories, you may want to consider renting additional warehouse or storage space to optimize efficiency.

Related: Start Your Own Business or Buy a Franchise: Which Is Right For You?

6. Recession resistance

Lastly, one factor to consider lies in the recession resistance of your franchise. Brick-and-mortar brands often offer more discretionary services. These are everyday services to be sure — hair care, nail salon, etc. — but they are not always considered everyday essential services. On the other hand, service-based brands often are essential everyday services that must be performed despite fluctuating market trends — think HVAC, plumbing, yard care or restoration.

At the end of the day, there is no one-size-fits-all franchise for every potential franchisee. But by understanding the basics of these umbrella categories, you can start to consider which business model type matches most closely with your business goals.

Entrepreneur Leadership Network® Contributor

Founder & Principal of FranchiseVision

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College of Nursing

Driving change: a case study of a dnp leader in residence program in a gerontological center of excellence.

View as pdf A later version of this article appeared in Nurse Leader , Volume 21, Issue 6 , December 2023 . 

The American Association of Colleges of Nursing (AACN) published the Essentials of Doctoral Education for Advanced Practice Nursing in 2004 identifying the essential curriculum needed for preparing advanced practice nurse leaders to effectively assess organizations, identify systemic issues, and facilitate organizational changes. 1 In 2021, AACN updated the curriculum by issuing The Essentials: Core Competencies for Professional Nursing Education to guide the development of competency-based education for nursing students. 1 In addition to AACN’s competency-based approach to curriculum, in 2015 the American Organization of Nurse Leaders (AONL) released Nurse Leader Core Competencies (updated in 2023) to help provide a competency based model to follow in developing nurse leaders. 2

Despite AACN and AONL competency-based curriculum and model, it is still common for nurse leaders to be promoted to management positions based solely on their work experience or exceptional clinical skills, rather than demonstration of management and leadership competencies. 3 The importance of identifying, training, and assessing executive leaders through formal leadership development programs, within supportive organizational cultures has been discussed by national leaders. As well as the need for nurturing emerging leaders through fostering interprofessional collaboration, mentorship, and continuous development of leadership skills has been identified. 4 As Doctor of Nursing Practice (DNP) nurse leaders assume executive roles within healthcare organizations, they play a vital role within complex systems. Demonstration of leadership competence and participation in formal leadership development programs has become imperative for their success. However, models of competency-based executive leadership development programs can be hard to find, particularly programs outside of health care systems.

The implementation of a DNP Leader in Residence program, such as the one designed for The Barbara and Richard Csomay Center for Gerontological Excellence, addresses many of the challenges facing new DNP leaders and ensures mastery of executive leadership competencies and readiness to practice through exposure to varied experiences and close mentoring. The Csomay Center , based at The University of Iowa, was established in 2000 as one of the five original Hartford Centers of Geriatric Nursing Excellence in the country. Later funding by the Csomay family established an endowment that supports the Center's ongoing work. The current Csomay Center strategic plan and mission aims to develop future healthcare leaders while promoting optimal aging and quality of life for older adults. The Csomay Center Director created the innovative DNP Leader in Residence program to foster the growth of future nurse leaders in non-healthcare systems. The purpose of this paper is to present a case study of the development and implementation of the Leader in Residence program, followed by suggested evaluation strategies, and discussion of future innovation of leadership opportunities in non-traditional health care settings.

Development of the DNP Leader in Residence Program

The Plan-Do-Study-Act (PDSA) cycle has garnered substantial recognition as a valuable tool for fostering development and driving improvement initiatives. 5 The PDSA cycle can function as an independent methodology and as an integral component of broader quality enhancement approaches with notable efficacy in its ability to facilitate the rapid creation, testing, and evaluation of transformative interventions within healthcare. 6 Consequently, the PDSA cycle model was deemed fitting to guide the development and implementation of the DNP Leader in Residence Program at the Csomay Center.

PDSA Cycle: Plan

Existing resources. The DNP Health Systems: Administration/Executive Leadership Program offered by the University of Iowa is comprised of comprehensive nursing administration and leadership curriculum, led by distinguished faculty composed of national leaders in the realms of innovation, health policy, leadership, clinical education, and evidence-based practice. The curriculum is designed to cultivate the next generation of nursing executive leaders, with emphasis on personalized career planning and tailored practicum placements. The DNP Health Systems: Administration/Executive Leadership curriculum includes a range of courses focused on leadership and management with diverse topics such as policy an law, infrastructure and informatics, finance and economics, marketing and communication, quality and safety, evidence-based practice, and social determinants of health. The curriculum is complemented by an extensive practicum component and culminates in a DNP project with additional hours of practicum.

New program. The DNP Leader in Residence program at the Csomay Center is designed to encompass communication and relationship building, systems thinking, change management, transformation and innovation, knowledge of clinical principles in the community, professionalism, and business skills including financial, strategic, and human resource management. The program fully immerses students in the objectives of the DNP Health Systems: Administration/Executive Leadership curriculum and enables them to progressively demonstrate competencies outlined by AONL. The Leader in Residence program also includes career development coaching, reflective practice, and personal and professional accountability. The program is integrated throughout the entire duration of the Leader in Residence’s coursework, fulfilling the required practicum hours for both the DNP coursework and DNP project.

The DNP Leader in Residence program begins with the first semester of practicum being focused on completing an onboarding process to the Center including understanding the center's strategic plan, mission, vision, and history. Onboarding for the Leader in Residence provides access to all relevant Center information and resources and integration into the leadership team, community partnerships, and other University of Iowa College of Nursing Centers associated with the Csomay Center. During this first semester, observation and identification of the Csomay Center Director's various roles including being a leader, manager, innovator, socializer, and mentor is facilitated. In collaboration with the Center Director (a faculty position) and Center Coordinator (a staff position), specific competencies to be measured and mastered along with learning opportunities desired throughout the program are established to ensure a well-planned and thorough immersion experience.

Following the initial semester of practicum, the Leader in Residence has weekly check-ins with the Center Director and Center Coordinator to continue to identify learning opportunities and progression through executive leadership competencies to enrich the experience. The Leader in Residence also undertakes an administrative project for the Center this semester, while concurrently continuing observations of the Center Director's activities in local, regional, and national executive leadership settings. The student has ongoing participation and advancement in executive leadership roles and activities throughout the practicum, creating a well-prepared future nurse executive leader.

After completing practicum hours related to the Health Systems: Administration/Executive Leadership coursework, the Leader in Residence engages in dedicated residency hours to continue to experience domains within nursing leadership competencies like communication, professionalism, and relationship building. During residency hours, time is spent with the completion of a small quality improvement project for the Csomay Center, along with any other administrative projects identified by the Center Director and Center Coordinator. The Leader in Residence is fully integrated into the Csomay Center's Leadership Team during this phase, assisting the Center Coordinator in creating agendas and leading meetings. Additional participation includes active involvement in community engagement activities and presenting at or attending a national conference as a representative of the Csomay Center. The Leader in Residence must mentor a master’s in nursing student during the final year of the DNP Residency.

Implementation of the DNP Leader in Residence Program

PDSA Cycle: Do

Immersive experience. In this case study, the DNP Leader in Residence was fully immersed in a wide range of center activities, providing valuable opportunities to engage in administrative projects and observe executive leadership roles and skills during practicum hours spent at the Csomay Center. Throughout the program, the Leader in Residence observed and learned from multidisciplinary leaders at the national, regional, and university levels who engaged with the Center. By shadowing the Csomay Center Director, the Leader in Residence had the opportunity to observe executive leadership objectives such as fostering innovation, facilitating multidisciplinary collaboration, and nurturing meaningful relationships. The immersive experience within the center’s activities also allowed the Leader in Residence to gain a deep understanding of crucial facets such as philanthropy and community engagement. Active involvement in administrative processes such as strategic planning, budgeting, human resources management, and the development of standard operating procedures provided valuable exposure to strategies that are needed to be an effective nurse leader in the future.

Active participation. The DNP Leader in Residence also played a key role in advancing specific actions outlined in the center's strategic plan during the program including: 1) the creation of a membership structure for the Csomay Center and 2) successfully completing a state Board of Regents application for official recognition as a distinguished center. The Csomay Center sponsored membership for the Leader in Residence in the Midwest Nurse Research Society (MNRS), which opened doors to attend the annual MNRS conference and engage with regional nursing leadership, while fostering socialization, promotion of the Csomay Center and Leader in Residence program, and observation of current nursing research. Furthermore, the Leader in Residence participated in the strategic planning committee and engagement subcommittee for MNRS, collaborating directly with the MNRS president. Additional active participation by the Leader in Residence included attendance in planning sessions and completion of the annual report for GeriatricPain.org , an initiative falling under the umbrella of the Csomay Center. Finally, the Leader in Residence was involved in archiving research and curriculum for distinguished nursing leader and researcher, Dr. Kitty Buckwalter, for the Benjamin Rose Institute on Aging, the University of Pennsylvania Barbara Bates Center for the Study of the History of Nursing, and the University of Iowa library archives.

Suggested Evaluation Strategies of the DNP Leader in Residence Program

PDSA Cycle: Study

Assessment and benchmarking. To effectively assess the outcomes and success of the DNP Leader in Residence Program, a comprehensive evaluation framework should be used throughout the program. Key measures should include the collection and review of executive leadership opportunities experienced, leadership roles observed, and competencies mastered. The Leader in Residence is responsible for maintaining detailed logs of their participation in center activities and initiatives on a semester basis. These logs serve to track the progression of mastery of AONL competencies by benchmarking activities and identifying areas for future growth for the Leader in Residence.

Evaluation. In addition to assessment and benchmarking, evaluations need to be completed by Csomay Center stakeholders (leadership, staff, and community partners involved) and the individual Leader in Residence both during and upon completion of the program. Feedback from stakeholders will identify the contributions made by the Leader in Residence and provide valuable insights into their growth. Self-reflection on experiences by the individual Leader in Residence throughout the program will serve as an important measure of personal successes and identify gaps in the program. Factors such as career advancement during the program, application of curriculum objectives in the workplace, and prospects for future career progression for the Leader in Residence should be considered as additional indicators of the success of the program.

The evaluation should also encompass a thorough review of the opportunities experienced during the residency, with the aim of identifying areas for potential expansion and enrichment of the DNP Leader in Residence program. By carefully examining the logs, reflecting on the acquired executive leadership competencies, and studying stakeholder evaluations, additional experiences and opportunities can be identified to further enhance the program's efficacy. The evaluation process should be utilized to identify specific executive leadership competencies that require further immersion and exploration throughout the program.

Future Innovation of DNP Leader in Residence Programs in Non-traditional Healthcare Settings

PDSA Cycle: Act

As subsequent residents complete the program and their experiences are thoroughly evaluated, it is essential to identify new opportunities for DNP Leader in Residence programs to be implemented in other non-health care system settings. When feasible, expansion into clinical healthcare settings, including long-term care and acute care environments, should be pursued. By leveraging the insights gained from previous Leaders in Residence and their respective experiences, the program can be refined to better align with desired outcomes and competencies. These expansions will broaden the scope and impact of the program and provide a wider array of experiences and challenges for future Leaders in Residency to navigate, enriching their development as dynamic nurse executive leaders within diverse healthcare landscapes.

This case study presented a comprehensive overview of the development and implementation of the DNP Leader in Residence program developed by the Barbara and Richard Csomay Center for Gerontological Excellence. The Leader in Residence program provided a transformative experience by integrating key curriculum objectives, competency-based learning, and mentorship by esteemed nursing leaders and researchers through successful integration into the Center. With ongoing innovation and application of the PDSA cycle, the DNP Leader in Residence program presented in this case study holds immense potential to help better prepare 21 st century nurse leaders capable of driving positive change within complex healthcare systems.

Acknowledgements

         The author would like to express gratitude to the Barbara and Richard Csomay Center for Gerontological Excellence for the fostering environment to provide an immersion experience and the ongoing support for development of the DNP Leader in Residence program. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

  • American Association of Colleges of Nursing. The essentials: core competencies for professional nursing education. https://www.aacnnursing.org/Portals/42/AcademicNursing/pdf/Essentials-2021.pdf . Accessed June 26, 2023.
  • American Organization for Nursing Leadership. Nurse leader core competencies. https://www.aonl.org/resources/nurse-leader-competencies . Accessed July 10, 2023.
  • Warshawsky, N, Cramer, E. Describing nurse manager role preparation and competency: findings from a national study. J Nurs Adm . 2019;49(5):249-255. DOI:  10.1097/NNA.0000000000000746
  • Van Diggel, C, Burgess, A, Roberts, C, Mellis, C. Leadership in healthcare education. BMC Med. Educ . 2020;20(465). doi: 10.1186/s12909-020-02288-x
  • Institute for Healthcare Improvement. Plan-do-study-act (PDSA) worksheet. https://www.ihi.org/resources/Pages/Tools/PlanDoStudyActWorksheet.aspx . Accessed July 4, 2023.
  • Taylor, M, McNicolas, C, Nicolay, C, Darzi, A, Bell, D, Reed, J. Systemic review of the application of the plan-do-study-act method to improve quality in healthcare. BMJ Quality & Safety. 2014:23:290-298. doi: 10.1136/bmjqs-2013-002703

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