A business model provides a framework for a company’s monetization strategies. It focuses on defining the audience (customer segment), unique selling proposition, brand positioning, method of delivery, and distribution channels to create a profit-making formula.
Business models shape all aspects of a company’s development and growth. Therefore, they may change over time to adapt to new marketplace opportunities, technologies, or distribution channels.
In more simple terms, every business model intrinsically has three parts –
- Everything related to designing and manufacturing the product.
- Everything related to selling the product, from finding the right customers to distributing the product.
- Everything related to how the customer will pay and how the company will make money.
Types of Business Models for Startups
Manufacturers are the producers of goods and commodities. They manufacture and process finished good and their by-product processing raw materials and other incidental services. To sell their goods, they either approach the end-users directly or grab the market through agencies and middlemen. They usually work offline.
We can consider the distributor as the intermediary business model between manufacturer and retailer. The distributor buys products from the manufacturer directly in bulk and then disposes it to various retailers in return of the commission. The automobile dealership is the best example to understand the Distributor Business model.
A retailer is anybody who sells products directly to ultimate consumers. They bought these goods either from the manufacturer itself or get it from the distributor. The margin of profit depends on the nature of goods and commodities and the chain of suppliers that a retailer follows.
Under the franchise business model, one can associate with the manufacturer of any brand. In this way, the franchiser himself doesn’t manufacture any product but deals with the goods and products of the manufacturer. In this way, though the franchise is not the original producer, it’s only responsible for the growth of the product’s business in exchange for the royalty amount.
This is the new concept found in modern business models. An aggregator is similar to that of intermediaries that match the 2 parties to the business. To comprehend the concept of aggregator the best example to give is Uber Taxi. Uber is a tech company and an aggregator driver and rider through a virtual platform.
The concept of digital marketing is spreading like forest fire these days, especially for the new young entrants in the digital marketer who believes in startup culture. Digital Marketing is nothing but promoting and selling products online. We can analyze and study the business model of Amazon, Flipkart and others to know better about digital marketing.
2 thoughts on “Business Model”
Thanks very nice blog!
Thanks, Very Useful Post