CORE FACTORS
OF BUSINESS MODELS
To have an effective and practical business model, businesses need to clearly and specifically define the core elements of the business model.
5 core factors to build a complete and effective business model include operation factors, product factors, customer factors, accessibility factors and financial factors.
The task of the business is how to identify and clearly analyze these factors.
Resources
Main
activities
Partnerships
OPERATION FACTORS
PRODUCT ELEMENTS
Value
Price
Market
Distribution
Marketing
ACCESSIBILITY FACTOR
Cost
Revenue &
profit
FINANCIAL FACTORS
Customer
Segmentation
Customer
Relations
CUSTOMER FACTORS
OPERATION FACTORS
Resources
Synthesize all the most important and necessary resources of an enterprise for business operations to exist and develop sustainably. To create products and services, establish communication channels, market and distribute, maintain relationships with customers, etc., businesses need to have certain resources. Without these resources, it is difficult for businesses to do business easily.
These can be natural resources (such as environmental resources, land...), knowledge resources (such as patents, important certifications...), human and financial resources.
Main activities
Includes the key activities of the business that need to be maintained to maintain and develop the business. More specifically, it is the activities in which the enterprise uses its resources to create unique and specific target values and thereby earn profits from customers.
For example Amazon company, the main activity of this business is trading digital goods, physical goods, developing, designing and optimizing website and application platforms. In addition, Amazon's main activity is logistics and supply chain management.
Partnerships
Bring together resource providers and partners to support the best performing business and drive growth. On the market today, there are 4 types of cooperation with partners including:
Strategic partnerships between businesses are not rivals.
Partners between businesses are competitors to each other to develop the market.
Partners invest together to create new business, improve trading relationships to ensure input for businesses.
PRODUCT ELEMENTS
Value
The value of a product is one of the effective elements in a marketing strategy. When a product has clear, practical and novel values, it will bring a lot of benefits to the business as well as create strong differences that only your business can have. Besides, a product with real value will increase the number of potential customers and loyal customers. Not only that, if the product is appreciated in terms of value, it will bring the business a very high profit.
Price
In business, product pricing is always an important step. They ensure to bring benefits to the producer, suitable to the market ground and customer's conditions, stabilizing the ability to consume. With each product, based on many factors that will be priced differently.
CUSTOMER FACTORS
Customer segmentation
Customer segmentation makes your marketing activities more personalized (more goal-focused). Personalization helps businesses communicate with customers effectively, especially when identifying the bottom line they need, and how you can meet those needs.
Customer segmentation helps businesses:
Identify your target customers.
Tailor your message to resonate specifically with each audience.
Meeting a specific need increases conversion rates.
Build relationships with customers and earn their loyalty.
Bring in leads to accelerate the sales cycle.
Customer relations
Any business that wants to survive and develop long-term in the market needs customers. In today's competitive business environment, in order to attract and retain customers, it is imperative to build close relationships with them.
The question is: How does the business retain old customers while attracting new customers?
ACCESSIBILITY FACTOR
Market
The first thing for businesses when starting a business as well as doing business is market research. If you want to grow your business, market research is extremely important to do. By doing market research, businesses have the opportunity to understand customers well and can win customers through collecting and processing reliable information about the market, product sources and competitors.
Distribution
Includes distribution channels that businesses use to reach customer segments. Thereby bringing to customers the target values that customers want.
There are three main types of distribution channels including:
Direct distribution channel: direct distribution business.
Indirect distribution channels: businesses cooperate with third parties to distribute.
Combined distribution channel: Enterprises both directly distribute and cooperate with third parties to distribute.
Marketing
Marketing activities act as an intermediary between business activities and the market. Marketing activities also ensure to help businesses target potential markets and create new customers for businesses. An effective marketing campaign will help customers understand and know about your products and services in the most effective way.
FINANCIAL FACTORS
Cost
Includes all expenses necessary to maintain and run the business. Businesses need to determine which financial investments should be focused on, but at the same time should not focus on investing only and too much in a certain operational aspect.
Revenue & Profit
Shows the stream of profits the business derives from its customer segments. If customers are considered the heart of a business model, then profit streams are considered its arteries.