EU Business Models - Part 1
Introduction
The integration of digital and traditional business models is a growing trend in Europe, allowing companies to leverage technology while maintaining elements of established practices. Businesses that successfully combine these models can create unique value propositions, reach broader markets, and adapt to rapidly changing consumer needs.
Principles of Reconstructing Market Boundaries
To design effective business models, European companies can apply several principles to rethink how they compete and create value:
Look Across Alternative Industries: Identify opportunities outside your primary industry to provide similar services or solve related problems. For example, European transport services like ride-hailing apps compete with car rental companies and public transport providers.
Look Across Strategic Groups Within Industries: Examine how businesses within the same sector differentiate themselves by price and performance. For example, Tesla challenged traditional luxury car manufacturers like Mercedes and BMW by introducing electric vehicles with cutting-edge technology.
Look Across the Chain of Buyers: Consider all potential buyers in the chain, such as users, purchasers, and influencers. For instance, pharmaceutical companies in Europe must consider patients, healthcare providers, and insurance companies when marketing their products.
Look Across Complementary Product and Service Offerings: Understand the entire solution your customers seek, considering what happens before, during, and after using your product or service. For example, a European cinema could increase perceived value by partnering with local restaurants or parking facilities.
Look Across Functional or Emotional Appeal to Buyers: Challenge the industry's functional or emotional orientation. European brands can strip away unnecessary features to focus on functionality or add emotional elements to create a unique customer experience, as seen with TOMS shoes' socially conscious approach.
Examples and Case Studies
NetJets: Demonstrates how looking across alternative industries allows them to differentiate from commercial airlines.
Curves Fitness Center: Offers insights into how companies can redefine competition within strategic groups.
Novo Nordisk (NovoPen): Illustrates how understanding the chain of buyers can lead to more effective marketing strategies.
Group Work and Application
In applying these principles, businesses can form groups to explore these concepts, such as:
Examining alternative industries or strategic groups.
Developing ideas based on complementary products/services or shifts between functional and emotional appeals.
Conclusion By adopting these principles, European businesses can reconstruct market boundaries, create innovative business models, and remain competitive in a rapidly evolving market landscape. This approach enables companies to address diverse consumer needs and explore untapped opportunities for growth.
