1 Chapter 3 Internet Business Models

2 Definitions of Internet Business Model An Internet Business Model is a set of Internet and non-Internet –related activities —planned or evolving — that allows a firm to make money long term using the Internet. An Internet Business Model describes, as a system, how the pieces of a business fit together with emphasis on competition and organizational dynamics.

3 Components of Internet Business Model 1)A value proposition or a value cluster for target customers; 2)A market offering: product, service, information, or all three; 3)A unique and defendable resource system; 4)A financial model.

4 Value Construction 1)Choice of target segment. a) market size and growth rate; b) unmet or insufficiently met customer needs; c) weak or nonexistent competitors. 1)Choice of focal customer benefits; 2)Rationale for why the firm can deliver the benefit package significantly better than competitors in the same space.

5 Online Offering Construction 1)Scope of offering a)category-specific dominance b)cross-category dominance 2) Identify customer decision process

6 Resource System The resource system shows how a company must align its internal systems (and partners) to deliver the benefits of the value proposition or cluster.

7 Financial Models 1)Revenue models a) advertising ; b) product, service, or information sales; c) transaction; d) subscription. 2) Shareholder value models 3) Growth models