Business Model Innovation can be generated and implemented and there are different ways to do it: including some techniques that help seeing situations in a more objective and realistic way. Planning the strategy helps in the whole process. In a marketing department some of these tools can be extremely useful especially when a more creative approach is requested. Integrating the traditional Marketing tools with Business model Innovation creates competitive advantage and makes companies more profitable.
Business Model Innovation is important for managers, new entrepreneurs and for academic purposes (Amit and Zott, 2012). BMI can be easily developed, understood and integrating with other disciplines. It is a field that provides a fresh and creative way to think and allows to gain competitive advantage and to increase the growth of a company in the nowadays challenging world (Bucherer et al., 2012).
But how can Business Model Innovation's tools and techniques be used appropriately in a Marketing department? Are they really useful in this context to solve issues and simplify the achieving of objectives? What are the limitations and what are the advantages?
Marketing and Business model innovation have in common that they both try to address questions about customers' needs and to add value to a certain product or service.
This report goes through some of the tools that, in my opinion, could be more relevant in a marketing job: a well-constructed Value Proposition (including a customer profile) and the planning of Scenarios plus the Disruptive Theory. Tailored business models need to be provided to target different markets.
Taking as sources reviewed articles, books and websites I am going to try to define how these tools can be used and implemented and include their strengths, weaknesses and limitations.
"Regardless of what triggered the innovation, new technologies must be linked with new market needs, which is a crucial challenge for all innovation management activities". (O'Connor & Rice, 2001, Bucherer, 2012)
" VALUE PROPOSITION
Integrated with a customer profile
Since the value proposition of a business model is heavily influenced by the products and services offered (Bucherer, 2012) it is an useful instrument of evaluation in a marketing department.
A Value proposition is composed of two main parts: a value proposition that aims to create or add value to a certain product for your customers and a customer profile that is designed to identify the success of a product in a real market. Depending on the level from where the company is starting from it needs to be structured accordingly (Osterwalder, 2014).
A Value proposition is useful when multiple products are considered at the same time, to narrow down the options. It focuses on the most important aspects of products and services aligned with the company's strategies and values and evaluates them carefully. Since the testing of the prototype of a product is expensive it is important to first consider if its development it is worth it.
An understanding of the customer is important to decide whether your product could be successful and bring high revenues to your company or not. Focusing on the customers' needs helps to create a customer experience. Creating a value proposition based on the business model is useful to take into account all the variables and using an additional customer profile can implement it and help to create a more valid and realistic one. A good value proposition should include certain elements and arrange them in a way that makes it look outstanding. Adding some personal creativity is useful to think outside of the box and to add value to it. To determine if your value proposition is a good one it must differentiate from all the others and take into account pains and gains of customers.
The Value Proposition is used to establish the value but in addition to that it also considers the costs and labour to produce it.
It is an instrument of theoretical evaluation of the market and it analyses carefully the market segments. It can be used both for B2B and B2C companies.
The Value Proposition provides alternatives and needs to outcompete the other options. You need to demonstrate that you are providing the biggest value while making and explaining the value proposition. It needs to contain up to date material otherwise it is not useful.
It is useful to frame new ideas Osterwalder (2014) and see if they can be realistic. Overall it needs to be clear, concise and relevant.
Emotional factors create more involvement, especially when it is presented.
Weaknesses: it is a theoretical approach without a practical experimentation.
Integrating it with a whole customer journey could be a more complete option to see the bigger picture. The customer's perspective needs to be used when analysing the segments and whend identifying an ideal type of costumer.
DEVELOPING SCENARIOS AND DISRUPTIVE THINKING
A new business model does not have to be disruptive in every single case, but using a disruptive approach helps to find another point of view and to see new solutions, it also helps to stand above competitors. A traditional marketing approach to attract customers is not always enough, this is why a disruptive approach and the flipping of the clichÃ©s could help to find new ways to penetrate the market. For example, using a disruptive method of advertisement can help to target more appropriately the audience, especially if there is a lack of involvement from the customers. Data collection, observations and surveys are practical activities that could be integrated with a theoretical disruption approach to make it become more real.
Scenarios in Marketing are important because they help to set a scene for the customer and for the expected revenues. Scenarios are not made to predict the future, but they can help to identify the possible changes in the future and to include all the implications as well. Different areas have to be covered in the scenario thinking approach. They can be added to a PESTLE analysis because rather than examining all the external factor they try to create a scene. Using scenarios can help the businesses to know what will happen in the future, in order to be prepared. (Ringland year) Scenarios do not focus on historical data, this is why they can perform better at making predictions instead of solely making forecasts based on events that happened already in the past (article scenarios). Different scenarios can be developed to include all the different implications and replies from the external environment. It is important to know on which aspects in particular the company want to focus on. Internal and external factors within the company need to be considered. (Baines)
" KEY FINDINGS
When you are working on a project whether it is a new one or an improvement it is important to look at it in a critical way and to think about how it could be better to obtain the best outcome possible. Asking for feedback helps you to improve and to see mistakes that you were not able to see before. Creativity in marketing plays a key role and through the tools of Business Model Innovation it can be freely expressed. Being able to visualise important key aspects about markets, competitors and customers and actually produce Value Propositions and new ways of thinking from the start makes them look more understandable for yourself and for an eventual board of directors that needs to give approval. Both Value propositions and Scenarios can be produced graphically. e.g. Using Post-it or drawings. The limitations of these techniques is that they include theoretical steps that do not include the testing of a prototype so they need an additional evaluation to decide if they are valid and if the project is worth development. Another limitation is that sometimes data gathering is made in a subjective way. It is important to be as objective as possible when throwing the basis for a new or updated innovation in the business model.
Business Model Innovation tools are useful both for a new start-up and for an already established company even if they require a different approach. They can be used to create new ideas or to evolve some types of businesses. Together with Marketing tools they can be used by Managers to help them visualise better a certain situation or product. They give support to improve performances (article colorato).
Through Innovating the Business, it becomes avoidable to change completely the processes or the products and it is possible to add value from the start.
I just explained few of the tools but there are many others that can be integrated and added to generate innovation.
It is important to use these tools to have an holistic picture instead of considering individual choices. A coherent and cohesive Value Proposition needs to be produced in order to be approved and all the situations created with scenarios need to be carefully analysed remembering the limitations that could influence a good outcome.
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