Customer segments.To build an effective business model, a company must identify which customers it tries to serve. Various sets of customers can be segmented based on their different needs and attributes to ensure appropriate implementation of corporate strategy to meet the characteristics of selected groups of clients. Please use information from the company to determine which of the following market segments they focus on.Here are some different types of segments you may consider:Mass Market: There is no specific segmentation for a company that follows the Mass Market element as the organization displays a wide view of potential clients. e.g. CarNiche Market: Customer segmentation based on specialized needs and characteristics of its clients. e.g. RolexSegmented: A company applies additional segmentation within existing customer segment. In the segmented situation, the business may further distinguish its clients based on gender, age, and/or income.Diversify: A business serves multiple customer segments with different needs and characteristics.Multi-Sided Platform/Market: For a smooth day-to-day business operation, some companies will serve mutually dependent customer segments. A credit card company will provide services to credit card holders while simultaneously assisting merchants who accept those credit cards.Here is a question you can answer to help you determine this:On what customer segments do we want to focus?To what customers are they trying to deliver their value proposition?Channels.A company can deliver its value proposition to its targeted customers through different channels. Effective channels will distribute a company’s value proposition in ways that are fast, efficient and cost-effective. An organization can reach its clients through its own channels (store front), partner channels (major distributors), or a combination of both. This is NOT simply marketing! This is about HOW the company delivers on their value proposition.Here is a question you can answer to help you determine this:How is the company delivering the value proposition to their customer?Through which channels do our customer segments want to be reached?Customer relationships.To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments. Using company information, please identify what form of customer relationship your company focuses on.Various forms of customer relationships include:Personal Assistance: Assistance in a form of employee-customer interaction. Such assistance is performed during sales and/or after sales.Dedicated Personal Assistance: The most intimate and hands-on personal assistance in which a sales representative is assigned to handle all the needs and questions of a special set of clients.Self Service: The type of relationship that translates from the indirect interaction between the company and the clients. Here, an organization provides the tools needed for the customers to serve themselves easily and effectively.Automated Services: A system similar to self-service but more personalized as it has the ability to identify individual customers and their preferences. An example of this would be Amazon.com making book suggestions based on the characteristics of previous book purchases.Communities: Creating a community allows for direct interactions among different clients and the company. The community platform produces a scenario where knowledge can be shared and problems are solved between different clients.Co-creation: A personal relationship is created through the customer’s direct input to the final outcome of the company’s products/services.Here are some questions you can answer to help you determine this:How does the relationship with the customer help to deliver the promise of the value proposition?What kind of customer relationships do we provide?How do we get, keep and grow customers?Which customer relationships have we established?How are they integrated with the rest of our business model?How costly are they?Revenue streams.The way a company makes income from each customer segment.Here are several ways to generate a revenue stream:Asset Sale – (the most common type) Selling ownership rights to a physical good. e.g. retail corporationsUsage Fee – Money generated from the use of a particular service. e.g. UPSSubscription Fees – Revenue generated by selling access to a continuous service. e.g. NetflixLending/Leasing/Renting – Giving exclusive right to an asset for a particular period of time. e.g. Leasing a CarLicensing – Revenue generated from charging for the use of a protected intellectual property.Brokerage Fees – Revenue generated from an intermediate service between 2 parties. e.g. Broker selling a house for commissionAdvertising – Revenue generated from charging fees for product advertising.Here are some questions you can answer to help you determine this:How will the value proposition create revenue for the company?For what value are our customers really willing to pay?For what do they currently pay?What is the revenue model?What are the pricing tactics?Behind the Scenes (+/-2 pages – single spaced)Key resources.In this section you will identify the key resources used and needed by your company in order to execute the operating functions.Here are some questions you can answer to help you determine this:What key resources do our value propositions require?How do these key resources help deliver on the value proposition?Our distribution channels?Our customer relationships?Our revenue streams?What types of resources are needed? (e.g. physical, intellectual, human, financial)Key partners.In this section you will identify the key partners for your company.Here are some questions you can answer to help you determine this:How will the key partners help the company deliver on the promise of their value proposition?Who are our key partners?Who are our key suppliers?Which key resources are we acquiring from our partners?Which key activities do partners perform?Key activities.In this section you will identify the key activities for your company.Here are some questions you can answer to help you determine this:What key activities does the company need to conduct to deliver on their value propositions?Our distribution channels?Our customer relationships?Our revenue streams?Cost structure.In this section you will identify the cost structure for your company.Here are some questions you can answer to help you determine this:What are the most important costs in order for the company to deliver on their value proposition?Which key resources are most expensive?Which key activities are most expensive?What is your business structure, cost driven or value driven?Cost-Driven – This business model focuses on minimizing all costs and having no frills. e.g. Low-cost airlinesValue-Driven – Less concerned with cost, this business model focuses on creating value for products and services. e.g. Louis Vuitton, RolexResources:Use Library Resources. There is Libguide for HFT 4294 that will have several helpful databases listed. You will need to login to the Library website using your FIU credentials. Then go to: https://library.fiu.edu/hft4294. Use the “Company Analysis” tab on the left side.https://www.google.com/financehttps://finance.yahoo.com/Company websites

 

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