Friday, February 29, 2008
Using VoIP to compete
Distributive trends have been part of human lives since the beginning! Just as the mode of transportation has changed the way people move and the way commerce is conducted. Such trends have spurred a slew of other trends to follow and new terms have evolved such as ‘Disruptive Technologies’. For such a trend, the cornerstone of the 20th Century has been the invention of electricity which has started the global industrial revolution!
In today’s recent history, the most notable Distributive Technology has been the Internet! The Internet has had an incredible impact worldwide across many sectors including industrial as well as global commerce. One of the greatest areas where the Internet had the greatest impact is the online industry, namely VOIP (Voice over IP). VOIP has created new term which has defined the future of communication since its invention by Alexander Graham Bell. The introduction of VOIP has created the economical alternative for the world to communicate; not only in regional communication but also in transatlantic communication.
The simplicity and cost effectiveness of VOIP has made it into one of the greatest invention in recent history. The Internet has been the home for all IP communication especially VOIP at the global level. VOIP works through utilization of the global Internet networks providing connectivity between computer-to computer and computer-to-telephony communications. Using the available global Internet connectivity, VOIP delivers the voice communication across a medium that spans borders at very competitive rates than delivering the same signal on dedicated telecom networks.
Initially VOIP was simply adapted because of its wide availability regardless of its quality of service. However, today with the vast improvement in VOIP technology, the number of VOIP terminated calls has multiplied globally and the technology has been adopted by the majority of telecom operators. The view of VOIP model being based on low cost is not the case any longer because the technology has been streamed through dedicated voice networks capacity on the Internet using the latest of voice compression means.
The continued development in VOIP coupled with the wide adoption of it as a means of all future voice communication, has transformed voice communication globally. One of the major areas which have the brunt of this transformation has been pricing structure of international voice communication.
Given that the Internet usage has been exponentially increasing globally, has facilitated for an alternate means for voice communication. Such adaptation has put immense pressure on voice communication charges globally and has destabilize the ‘per minute’ charges for voice communication. Such destabilization has created a slew of alternative voice communication companies utilizing the Internet as the gateway for VOIP communication with its latest technologies. Such transformation has deregulated, as well as significantly increased the level of competition in international voice connectivity offering; and therefore, bringing down the prices for such services.
Examples of which VOIP has created an impact can be seen on international voice communication as well as domestic voice communication.
On the international arena, VOIP has gained an acceptance globally and as such, has pressured the international per minute charges of voice communication to an extremely competitive level. As an example, the per-minute charges for a call between the Middle East and the US on Telco networks averages $1.50, whereas the per-minute VOIP charge averages $0.10. Such price discrepancies have actually increased the number of minutes for international voice minutes in total, in addition, to having increased the total revenue for international voice charges. However, most of the exponential revenue increase has been seen on the VOIP side, especially with its improved quality of service due to advances in technology.
Furthermore, with such transformation as well as financial impact, Telecom companies have transformed their international voice network to greatly adopt VOIP communication in order to increase network efficiency as well as bring competitiveness to its pricing offering.
On the domestic voice communication side, VOIP has transformed the entire offering, whereby forcing most operators to bundle the service at a flat monthly fee with services such as cable TV and high-speed Internet. Such offering has set the standard for domestic voice communication offering and has been adopted by operators globally.
The above examples have illustrated the transition in voice communication on the domestic and global arena by bringing network efficiency to an all time high and by bringing the pricing to meet market dynamics; i.e. supply and demand.
Given these facts of market adoption as well as consumer pricing incentives, VOIP proliferation will continue see an expanding use of the technology globally. As such, full fledge VOIP operators will continue to expand and offer their services across boundaries.
In today’s recent history, the most notable Distributive Technology has been the Internet! The Internet has had an incredible impact worldwide across many sectors including industrial as well as global commerce. One of the greatest areas where the Internet had the greatest impact is the online industry, namely VOIP (Voice over IP). VOIP has created new term which has defined the future of communication since its invention by Alexander Graham Bell. The introduction of VOIP has created the economical alternative for the world to communicate; not only in regional communication but also in transatlantic communication.
The simplicity and cost effectiveness of VOIP has made it into one of the greatest invention in recent history. The Internet has been the home for all IP communication especially VOIP at the global level. VOIP works through utilization of the global Internet networks providing connectivity between computer-to computer and computer-to-telephony communications. Using the available global Internet connectivity, VOIP delivers the voice communication across a medium that spans borders at very competitive rates than delivering the same signal on dedicated telecom networks.
Initially VOIP was simply adapted because of its wide availability regardless of its quality of service. However, today with the vast improvement in VOIP technology, the number of VOIP terminated calls has multiplied globally and the technology has been adopted by the majority of telecom operators. The view of VOIP model being based on low cost is not the case any longer because the technology has been streamed through dedicated voice networks capacity on the Internet using the latest of voice compression means.
The continued development in VOIP coupled with the wide adoption of it as a means of all future voice communication, has transformed voice communication globally. One of the major areas which have the brunt of this transformation has been pricing structure of international voice communication.
Given that the Internet usage has been exponentially increasing globally, has facilitated for an alternate means for voice communication. Such adaptation has put immense pressure on voice communication charges globally and has destabilize the ‘per minute’ charges for voice communication. Such destabilization has created a slew of alternative voice communication companies utilizing the Internet as the gateway for VOIP communication with its latest technologies. Such transformation has deregulated, as well as significantly increased the level of competition in international voice connectivity offering; and therefore, bringing down the prices for such services.
Examples of which VOIP has created an impact can be seen on international voice communication as well as domestic voice communication.
On the international arena, VOIP has gained an acceptance globally and as such, has pressured the international per minute charges of voice communication to an extremely competitive level. As an example, the per-minute charges for a call between the Middle East and the US on Telco networks averages $1.50, whereas the per-minute VOIP charge averages $0.10. Such price discrepancies have actually increased the number of minutes for international voice minutes in total, in addition, to having increased the total revenue for international voice charges. However, most of the exponential revenue increase has been seen on the VOIP side, especially with its improved quality of service due to advances in technology.
Furthermore, with such transformation as well as financial impact, Telecom companies have transformed their international voice network to greatly adopt VOIP communication in order to increase network efficiency as well as bring competitiveness to its pricing offering.
On the domestic voice communication side, VOIP has transformed the entire offering, whereby forcing most operators to bundle the service at a flat monthly fee with services such as cable TV and high-speed Internet. Such offering has set the standard for domestic voice communication offering and has been adopted by operators globally.
The above examples have illustrated the transition in voice communication on the domestic and global arena by bringing network efficiency to an all time high and by bringing the pricing to meet market dynamics; i.e. supply and demand.
Given these facts of market adoption as well as consumer pricing incentives, VOIP proliferation will continue see an expanding use of the technology globally. As such, full fledge VOIP operators will continue to expand and offer their services across boundaries.
Thursday, February 7, 2008
The "Innovation Bazaar"
I remember during college times, we used to hold a “bazaar” once a year at the college campus. The “bazaar” was our marketplace where we present our handmade products, food and many other items. Of course the invitation is extended to our family, students from other schools and businesses as well. I remember a girl who was very talented in drawing and handmade arts that has been sponsored in spot by a company that has organized an exhibition for her work as well as offered her a job after graduation.
Companies do the same thing; they do their shopping from the “Innovation bazaar” where they make their selection out of assortments of different ideas that can vary from raw ideas to market ready ones. In another words, companies can shop for products, business models and technologies that have been developed and are ready to be offered to the market, or shop for undeveloped ideas where they can invest in the development and marketing.
Companies have discovered tremendous value from shopping out of external sources of innovation; they navigate carefully the “Innovation bazaar” and then cherry pick the solutions from the various vendors (inventors).
InnoCentive.com
Companies rely on innovation intermediaries to find solutions for their dilemmas through the inventors, and “InnoCentive.com” is an example of an electronic intermediary that takes R&D problems in a broad range of disciplines (e.g. Engineering, Computer Science, Math, Chemistry and business), frames them as “challenge problems” and opens them up for anyone to solve them. Cash rewards are given to the “solvers” who come up with the best solutions that meet the challenge criteria.
InnoCentive.com has signed an agreement with Rockerfeller Foundation in 2006 to add a non-profit area designed to generate science and Technology solutions to critical problems in developing world.
It worth mentioning that InnoCentive.com forces its “seekers” companies to agree to “Intellectual Property” audits so that once a solution is provided to the company, it can guarantee that the IP is not used if the company decided not to award it.
Problems Solved
InnoCentive.com provides a solution for the following:
1. The Companies (seekers)
They find solutions for their blocked projects and review the delayed ones. The companies also would have the chance to improve their current products/services or to complement it with a new invention. Companies can reduce their R&D costs by finding the solutions through the intermediary companies as well as they can save the time if the invention was almost ready to market.
2. The innovators (solvers)
They are given the chance to have an intellectual challenge and to work on business development opportunities. Also, solvers are rewarded financially and get the recognition internationally.
3. The website developers
They got the chance to host and incubate all the inventions submitted by the solvers, as well as, build a long lasting relationship with the big companies. They will be the first to know about the obstacles facing big companies and therefore, try to find suitable solutions for them.
Description of the customer groups served
Companies like InnoCentive.com and others are serving mainly two parties, the first one is the company (the seeker) which lacks the internal innovation capabilities and is searching for ways to improve its reach and process.
As to the innovators, they are striving to be recognized and appreciated; they are thrilled with the challenges thrown at them, and enjoy working on finding the suitable solutions. They are intelligent individuals that are stimulated by the financial incentives.
Revenue sources
The website of InnoCentive.com does note clearly specify the revenue collection method, therefore, I assume the following could be the sources of revenue:
• The commission from the companies “seekers”
• Fees for consultancy services offered targeting the “seekers” to enable them to make the most of its solvers solutions
• Fees for consultancy services offered targeting the “solvers” to advise them and help them define the problem.
Competitors’ websites
1. Ninesigma.com
2. Yet2.com
Ninesigma.com has been launched in the year 2000 to leverage the revolution in open innovation. They have leveraged the independent inventors and have developed huge proprietary network of scientists, university, researchers who signed up to become partners. Ninsigma.com keeps it clients informed and updated on the current requirement of the seekers. The company sends an RFP to the inventors based on their specific area of expertise. Also, the company uses the newsletter and appearances at conferences and information forum as a method of communicating with its clients.
The compensation method used is based on a shared risk model between them and the clients. Therefore, they are rewarded by helping the client make the suitable connections that would result in transaction that solve the client problems. (http://www.ninesigma.com)
Yet2.com founded in 1999, it focused on bringing buyers and sellers to technologies together so that all parties maximize the return on their investment. The company offers a full suit of services for technology evaluation, licensing, technology acquisition, business development and R&D needs. Yet2.com is dealing with most of the leading companies in the sector of Technology that have an enormous R&D capacity. (http://www.yet2.com)
Applicability of the model offline
InnoCentive.com business model is applicable offline for sure as the same concept could be taken up by a company that can build a wide network connection with (seekers) and the (solvers).
Scalability and Sustainability of the model
Innocentive.com business model is for sure sustainable, however, as to the scalability; I can’t see a way to scale up this business model more than how it is right now, because it touches all areas and disciplines without restriction.
If I owned the business, I will develop it on the following areas:
1. Increase the customers
By expanding globally and exist in important markets like India, Russia and China. Target the local companies (seekers) on these markets as well as the inventors (solvers), will surely increase the customers’ base for the company.
2. Expand the revenue
InnoCentive.com can spread out its revenue by specializing in providing client companies with access to an extensive array of innovation product or technology ideas that are nearly market ready, thus, they mitigate early stage innovation risks and reduce the time to market. In return they demand a share of the revenue that client companies get from commercializing the new products.
Another source could be by investing on developing the invention ideas and therefore, guarantee a share with the inventor royalties on revenue generated for the company that acquired the innovation.
Companies do the same thing; they do their shopping from the “Innovation bazaar” where they make their selection out of assortments of different ideas that can vary from raw ideas to market ready ones. In another words, companies can shop for products, business models and technologies that have been developed and are ready to be offered to the market, or shop for undeveloped ideas where they can invest in the development and marketing.
Companies have discovered tremendous value from shopping out of external sources of innovation; they navigate carefully the “Innovation bazaar” and then cherry pick the solutions from the various vendors (inventors).
InnoCentive.com
Companies rely on innovation intermediaries to find solutions for their dilemmas through the inventors, and “InnoCentive.com” is an example of an electronic intermediary that takes R&D problems in a broad range of disciplines (e.g. Engineering, Computer Science, Math, Chemistry and business), frames them as “challenge problems” and opens them up for anyone to solve them. Cash rewards are given to the “solvers” who come up with the best solutions that meet the challenge criteria.
InnoCentive.com has signed an agreement with Rockerfeller Foundation in 2006 to add a non-profit area designed to generate science and Technology solutions to critical problems in developing world.
It worth mentioning that InnoCentive.com forces its “seekers” companies to agree to “Intellectual Property” audits so that once a solution is provided to the company, it can guarantee that the IP is not used if the company decided not to award it.
Problems Solved
InnoCentive.com provides a solution for the following:
1. The Companies (seekers)
They find solutions for their blocked projects and review the delayed ones. The companies also would have the chance to improve their current products/services or to complement it with a new invention. Companies can reduce their R&D costs by finding the solutions through the intermediary companies as well as they can save the time if the invention was almost ready to market.
2. The innovators (solvers)
They are given the chance to have an intellectual challenge and to work on business development opportunities. Also, solvers are rewarded financially and get the recognition internationally.
3. The website developers
They got the chance to host and incubate all the inventions submitted by the solvers, as well as, build a long lasting relationship with the big companies. They will be the first to know about the obstacles facing big companies and therefore, try to find suitable solutions for them.
Description of the customer groups served
Companies like InnoCentive.com and others are serving mainly two parties, the first one is the company (the seeker) which lacks the internal innovation capabilities and is searching for ways to improve its reach and process.
As to the innovators, they are striving to be recognized and appreciated; they are thrilled with the challenges thrown at them, and enjoy working on finding the suitable solutions. They are intelligent individuals that are stimulated by the financial incentives.
Revenue sources
The website of InnoCentive.com does note clearly specify the revenue collection method, therefore, I assume the following could be the sources of revenue:
• The commission from the companies “seekers”
• Fees for consultancy services offered targeting the “seekers” to enable them to make the most of its solvers solutions
• Fees for consultancy services offered targeting the “solvers” to advise them and help them define the problem.
Competitors’ websites
1. Ninesigma.com
2. Yet2.com
Ninesigma.com has been launched in the year 2000 to leverage the revolution in open innovation. They have leveraged the independent inventors and have developed huge proprietary network of scientists, university, researchers who signed up to become partners. Ninsigma.com keeps it clients informed and updated on the current requirement of the seekers. The company sends an RFP to the inventors based on their specific area of expertise. Also, the company uses the newsletter and appearances at conferences and information forum as a method of communicating with its clients.
The compensation method used is based on a shared risk model between them and the clients. Therefore, they are rewarded by helping the client make the suitable connections that would result in transaction that solve the client problems. (http://www.ninesigma.com)
Yet2.com founded in 1999, it focused on bringing buyers and sellers to technologies together so that all parties maximize the return on their investment. The company offers a full suit of services for technology evaluation, licensing, technology acquisition, business development and R&D needs. Yet2.com is dealing with most of the leading companies in the sector of Technology that have an enormous R&D capacity. (http://www.yet2.com)
Applicability of the model offline
InnoCentive.com business model is applicable offline for sure as the same concept could be taken up by a company that can build a wide network connection with (seekers) and the (solvers).
Scalability and Sustainability of the model
Innocentive.com business model is for sure sustainable, however, as to the scalability; I can’t see a way to scale up this business model more than how it is right now, because it touches all areas and disciplines without restriction.
If I owned the business, I will develop it on the following areas:
1. Increase the customers
By expanding globally and exist in important markets like India, Russia and China. Target the local companies (seekers) on these markets as well as the inventors (solvers), will surely increase the customers’ base for the company.
2. Expand the revenue
InnoCentive.com can spread out its revenue by specializing in providing client companies with access to an extensive array of innovation product or technology ideas that are nearly market ready, thus, they mitigate early stage innovation risks and reduce the time to market. In return they demand a share of the revenue that client companies get from commercializing the new products.
Another source could be by investing on developing the invention ideas and therefore, guarantee a share with the inventor royalties on revenue generated for the company that acquired the innovation.
Thursday, January 24, 2008
Wednesday, January 23, 2008
Social Entrepreneur
I was amazed with the amount of information I found on social entrepreneurs when I did my research through google.com. It seems that the topic has caught everyone’s attention because many had been interested to contribute and write about out. Many people have discussed the topic explicitly and have tackled many aspects thoroughly.
I went through many web sites, read amazing stories, and I was so much inspired by those people’s great jobs. It just reminded me of how much I was and still concerned about the case of “reject individuals” if I can call them so, back home. Those individuals were once upon a time leading their lives normally as others, but because of certain reasons or maybe wrong decisions they have taken, they ended up in jails or became drugs addicts. Those people found themselves aliens within their own community; they can’t re-integrate themselves, and others are always dealing with them in inferiority, in another way, they are totally rejected by their own community. As a result of this behavior, those rejects, go back and commit more offenses, maybe at a higher degree than the first time.
After doing my research on social entrepreneurs, I thought, well for sure a solution can be found to help those people and re-integrate them back in the community. Those people can be productive, and some of them are very smarts, their talents should be utilized effectively for communities’ advancement in various aspects. I thought, crimes will always exist, drugs will always remain as a lure for young people, mistakes will always be committed by individuals, so the solution proposed has to be a sustainable one that reflect back positively not just on few of those “rejects” and their community, but rather on a larger scale where the solution could be copied and improved somewhere else, in different part of the world. That’s the aim, to help all the “rejects” worldwide and transform them into productive individuals instead of sending them back to jails or drugs addiction.
Now let’s look and analyze the term “social entrepreneur” more carefully. Big names like Mahatma Ghandi, Martin Luther King to more contemporary personality like Shaikh Mohammed Bin Rashid Al Maktoum (vice president of UAE and the president of Dubai city) who has sponsored the huge project “Dubai Cares” recently, to help and educate more than a million poor children worldwide. Are these big names could be identified as social entrepreneurs? Those people have inspired millions around the world, help nations to survive and get their rights back, cant we call them social entrepreneurs? The answer is NO they are not social entrepreneurs, they are “social activists” and in case of Shaikh Mohammed Bin Rashid Al Maktoum, he is providing amazing social services.
It’s very essential to define correctly the term “social entrepreneur” and distinguish it from the terms “social activist” and “social services”.
First let’s define the word “entrepreneur”. The entrepreneur is the person who has the ability to think out of the box and has a great determination to create something new. The entrepreneur is inspired to change the unpleasant situations and thinks creatively by developing new solutions that might cease the existing ones. Also, the entrepreneur takes direct action once he is inspired by an opportunity and shows signs of courage through the process of innovation. In addition, the entrepreneur takes the burden of risk or failure and most importantly, he or she has the determination to force his creative solutions through to execution and adoption.
And “Social entrepreneur” is the person who has all the entrepreneur’s characters mentioned above mixed with the aspiration for values and the eagerness to transform the benefits discovered to the targeted people within the society or to the society as a whole. Generally, social entrepreneur targets the underserved, neglected, or highly disadvantaged population that lacks the financial means or political power.
“Social service” provision means when an individual or an organization identifies an unfortunate situation and set up a program to address it. The social services never escape out of their limited frame as their impact remains constrained. In another words, it stays limited to a local population.
“Social activist” is the motivator of an activity who is as well the unfortunate who is suffering from a problem. The social activist attempts to create change through indirect action, by influencing other and they may or may not form organizations to progress the changes they seek.
Now by defining these terms, I believe the confusion will be eliminated between them, and “social entrepreneur” will be better identified, though all of them are considered as noble jobs.
The question is why so many are interested on the social entrepreneur topic? Is it a trend or a real shift to corporate responsibility?
Generally from my point of view, people might be mixing up between the terms mentioned above, and they are unable to draw the line between the social entrepreneur boundaries and the other terms boundaries, therefore, they identified so many works as social entrepreneur and in reality its not.
In my opinion, the interest taken by so many could be a hybrid interest that made of trend and corporate responsibility. Think of it, companies or organization could gain a great reputation by being identified as social entrepreneur which most probably reflect positively on their net income by end of the year, not necessarily from the underprivileged people but the normal customers (e.g. pharmaceutical companies). So as you can see, these companies are trying to help the underprivileged plus they are gaining the fame which lead to increase their revenue from a different source.
That doesn’t mean that there are no genuine social entrepreneurs, to the contrary, I am sure that there are many out there who truly interested on helping others and assisting them through to lead a better life.
I went through many web sites, read amazing stories, and I was so much inspired by those people’s great jobs. It just reminded me of how much I was and still concerned about the case of “reject individuals” if I can call them so, back home. Those individuals were once upon a time leading their lives normally as others, but because of certain reasons or maybe wrong decisions they have taken, they ended up in jails or became drugs addicts. Those people found themselves aliens within their own community; they can’t re-integrate themselves, and others are always dealing with them in inferiority, in another way, they are totally rejected by their own community. As a result of this behavior, those rejects, go back and commit more offenses, maybe at a higher degree than the first time.
After doing my research on social entrepreneurs, I thought, well for sure a solution can be found to help those people and re-integrate them back in the community. Those people can be productive, and some of them are very smarts, their talents should be utilized effectively for communities’ advancement in various aspects. I thought, crimes will always exist, drugs will always remain as a lure for young people, mistakes will always be committed by individuals, so the solution proposed has to be a sustainable one that reflect back positively not just on few of those “rejects” and their community, but rather on a larger scale where the solution could be copied and improved somewhere else, in different part of the world. That’s the aim, to help all the “rejects” worldwide and transform them into productive individuals instead of sending them back to jails or drugs addiction.
Now let’s look and analyze the term “social entrepreneur” more carefully. Big names like Mahatma Ghandi, Martin Luther King to more contemporary personality like Shaikh Mohammed Bin Rashid Al Maktoum (vice president of UAE and the president of Dubai city) who has sponsored the huge project “Dubai Cares” recently, to help and educate more than a million poor children worldwide. Are these big names could be identified as social entrepreneurs? Those people have inspired millions around the world, help nations to survive and get their rights back, cant we call them social entrepreneurs? The answer is NO they are not social entrepreneurs, they are “social activists” and in case of Shaikh Mohammed Bin Rashid Al Maktoum, he is providing amazing social services.
It’s very essential to define correctly the term “social entrepreneur” and distinguish it from the terms “social activist” and “social services”.
First let’s define the word “entrepreneur”. The entrepreneur is the person who has the ability to think out of the box and has a great determination to create something new. The entrepreneur is inspired to change the unpleasant situations and thinks creatively by developing new solutions that might cease the existing ones. Also, the entrepreneur takes direct action once he is inspired by an opportunity and shows signs of courage through the process of innovation. In addition, the entrepreneur takes the burden of risk or failure and most importantly, he or she has the determination to force his creative solutions through to execution and adoption.
And “Social entrepreneur” is the person who has all the entrepreneur’s characters mentioned above mixed with the aspiration for values and the eagerness to transform the benefits discovered to the targeted people within the society or to the society as a whole. Generally, social entrepreneur targets the underserved, neglected, or highly disadvantaged population that lacks the financial means or political power.
“Social service” provision means when an individual or an organization identifies an unfortunate situation and set up a program to address it. The social services never escape out of their limited frame as their impact remains constrained. In another words, it stays limited to a local population.
“Social activist” is the motivator of an activity who is as well the unfortunate who is suffering from a problem. The social activist attempts to create change through indirect action, by influencing other and they may or may not form organizations to progress the changes they seek.
Now by defining these terms, I believe the confusion will be eliminated between them, and “social entrepreneur” will be better identified, though all of them are considered as noble jobs.
The question is why so many are interested on the social entrepreneur topic? Is it a trend or a real shift to corporate responsibility?
Generally from my point of view, people might be mixing up between the terms mentioned above, and they are unable to draw the line between the social entrepreneur boundaries and the other terms boundaries, therefore, they identified so many works as social entrepreneur and in reality its not.
In my opinion, the interest taken by so many could be a hybrid interest that made of trend and corporate responsibility. Think of it, companies or organization could gain a great reputation by being identified as social entrepreneur which most probably reflect positively on their net income by end of the year, not necessarily from the underprivileged people but the normal customers (e.g. pharmaceutical companies). So as you can see, these companies are trying to help the underprivileged plus they are gaining the fame which lead to increase their revenue from a different source.
That doesn’t mean that there are no genuine social entrepreneurs, to the contrary, I am sure that there are many out there who truly interested on helping others and assisting them through to lead a better life.
Tuesday, January 22, 2008
Vente-Privee
Sales are all over France now a day, and the next one most probably will be in August. The French government allows retailers to offer sales twice a year only, as well as, they allowed retailers to have private sales for their best clients only. Does that mean customers’ chances of having sales on their favorite products are very limited? I don’t think so, not when a web site like vent-privee.com is there!!!
Describing the business
“Vente-privee” means private sale in French. Vent-privee.com web site was founded in 2001 and it is offering a whole year around sale for its members. It is a private club that organizes on-line sales for it members at big discounts that reaches 30% to 70% on various types of products lines. The company has successfully persuaded luxury brands that they can create the desirable presentation for their goods online. Recently, the business model expanded into near-luxury and other non-luxury prestige brands. These products will be available only for limited time, which helps from my point of view to maintain the sense of scarcity needed especially to the luxury brands.
The company has used a unique approach to sale the merchandises as it hires models, make-up artist, hairdressers and photographers to produce daily fashion shots and videos featuring their exclusive products, as well as using original music that add a glow to the merchandises. The company as well employs a team of journalists to put out its own glossy fashion magazine, called Rosebuzz that is distributed to 50,000 top customers. Add to that, the company has a recording studio where the music for their advertising is created.
Members can scroll through the up-coming sale items and sign up for the product’s sale they are interested in, and accordingly, they will receive an e-mail notification to access the sale on the date specified or when the sale begins.
The membership of vente-privee.com is absolutely free, but you can get access to the web site only through invitation or by referring to an existing member.
This business model solves a problem for the following:
The consumers
Consumers benefit out of the discount offered on top quality brands. Also, acquiring the membership through invitation can create an environment that appears exclusive and special which appeals to a certain group of customers.
The retailers/suppliers:
It helps them to get rid of their surplus stocks, especially for the designer’s labels who want to maintain the exclusivity by reaching most probably a new promising market over the web.
Partner
By investing in a successful company, and helping it to expand into new geographic markets.
The web site publisher
The idea of offering discounted products is not unique but what makes it different in case of vent-privee.com is that the company was able to persuade big luxury brands names to participate and offer their products through the web site, not only that, they were able to gain their trust by presenting their products in a very prestigious way, exactly as the retailers were aiming for. Thus, vente-privee stands for a better chance than others to gain access to more luxurious brands that have always existed offline.
Customer groups served descriptions
Vente-privee.com customers are most probably really found of fashion and luxurious brands but cannot afford its prices during the normal season retail. They could be as well, the type who likes to be distinguished and circle themselves among groups who share them the same lifestyle and interest. Vente-privee does offer those customers this feeling by the exclusivity of their membership and the private invitation they receive.
Source of revenue
The sources of revenue for vente-privee varies as following:
• The profit margin of 20%-40% per sale of every item.
• Sells of CD of that contains the tracks of the web site advertisement.
• I am not sure if the magazine is sent complementary to their top customers, but if its not, then magazine sale could be a source of revenue.
Two web-sites that are using the same business model
The following two sites found using the same business model:
• Ideeli.com is an on-line shopping site that aims to attract luxury brands by allowing a select group of customers through its virtual red rope. Members can go through the upcoming sale items in the preview section, but in an effort to further elevate the excitement, the site keeps sale start times secret. Those who sigh up for the free membership, receive email notifications when sales begin, and for $7.99 per month, the premium members receive sale notification via cell phone text message and are granted access to sales an hour early. (http://www.ideeli.com)
• brands4friends.com is a closed community web shop. The company is selling brands at relatively low prices over the web. They are aiming for customers’ loyalty and are in direct contact with their customers. They focus on impulse shopping. The company offers up to 70% discount under the motto of “brands at budget friendly prices”. (http://www.brands4friends.com)
Is the business model unique to the web?
This business model has been applied long time off-line, so it is not exclusive to the web only. Most of the retailers are offering their surplus stocks or items that have not been sold during the season at a discount. Also, discounted products can be found in the following places:
• Factory outlets
• Liquidation stores
Sustainability and Scalability of the model
The model is sustainable because overstock is unavoidable especially in manufactured goods. Add to that, fashions misses, production planning mistakes and unexpected weather, all have contributed positively to the oversupply of products.
The model as well is scalable, because it can be applied to different sectors, like travel and tourism businesses. The same concept could be applied as the following example:
Say we have created a site called www.voyageprivee.com where only selective members are invited based on certain profile criteria’s. Special holiday’s offers could be reviewed from the web site for limited periods of time. The idea can be escalated and varieties of services could be designed to exceed the members’ expectation.
If i were the owner of the business, i will do the following:
1. Increase users or customers
I will keep the same strategy of choosing a selective customers but an invitation could be extended to more carefully selected people that their profile would meet certain criteria that is agreed on. I believe exclusivity is a very important feature in such kind of business, and that how the business model is distinguished from other types of web discounted products.
2. Expand revenue sources
The following are my recommendations:
• Life fashion show could be arranged sometimes, where their will be direct contact with the company’s exclusive top customers. It will be a social gathering to get some valid suggestions from the customers.
• A premium customer can be added to the web-site facility. Those who would like to be a premium customer should be certain fees monthly. In return, customized services could be designed for them, for example, LV bags lovers can have more timely information about the brand’s discount and an earlier access to the sale.
• A service like D&D could be introduced. It means describe and demand service. Client can post their say favorite bag descriptions and ask the site to fetch the closet branded bag that matches their demand. This service could be for a fee.
• A service like “be the first” could be introduced, where clients are given tips and advices on the latest fashion trends with the recommendation of the right outfits and accessories. All the recommendations will be passed to customers after receiving their photos which should be clear or a video that shows how they look like exactly. This service could be for a fee.
• A personalized gift delivery service could be established for a fee. For example, a gift during Valentine day could be sent with lots of heart shape balloons and a song performed by few singers assigned to do so. All for a fee.
Describing the business
“Vente-privee” means private sale in French. Vent-privee.com web site was founded in 2001 and it is offering a whole year around sale for its members. It is a private club that organizes on-line sales for it members at big discounts that reaches 30% to 70% on various types of products lines. The company has successfully persuaded luxury brands that they can create the desirable presentation for their goods online. Recently, the business model expanded into near-luxury and other non-luxury prestige brands. These products will be available only for limited time, which helps from my point of view to maintain the sense of scarcity needed especially to the luxury brands.
The company has used a unique approach to sale the merchandises as it hires models, make-up artist, hairdressers and photographers to produce daily fashion shots and videos featuring their exclusive products, as well as using original music that add a glow to the merchandises. The company as well employs a team of journalists to put out its own glossy fashion magazine, called Rosebuzz that is distributed to 50,000 top customers. Add to that, the company has a recording studio where the music for their advertising is created.
Members can scroll through the up-coming sale items and sign up for the product’s sale they are interested in, and accordingly, they will receive an e-mail notification to access the sale on the date specified or when the sale begins.
The membership of vente-privee.com is absolutely free, but you can get access to the web site only through invitation or by referring to an existing member.
This business model solves a problem for the following:
The consumers
Consumers benefit out of the discount offered on top quality brands. Also, acquiring the membership through invitation can create an environment that appears exclusive and special which appeals to a certain group of customers.
The retailers/suppliers:
It helps them to get rid of their surplus stocks, especially for the designer’s labels who want to maintain the exclusivity by reaching most probably a new promising market over the web.
Partner
By investing in a successful company, and helping it to expand into new geographic markets.
The web site publisher
The idea of offering discounted products is not unique but what makes it different in case of vent-privee.com is that the company was able to persuade big luxury brands names to participate and offer their products through the web site, not only that, they were able to gain their trust by presenting their products in a very prestigious way, exactly as the retailers were aiming for. Thus, vente-privee stands for a better chance than others to gain access to more luxurious brands that have always existed offline.
Customer groups served descriptions
Vente-privee.com customers are most probably really found of fashion and luxurious brands but cannot afford its prices during the normal season retail. They could be as well, the type who likes to be distinguished and circle themselves among groups who share them the same lifestyle and interest. Vente-privee does offer those customers this feeling by the exclusivity of their membership and the private invitation they receive.
Source of revenue
The sources of revenue for vente-privee varies as following:
• The profit margin of 20%-40% per sale of every item.
• Sells of CD of that contains the tracks of the web site advertisement.
• I am not sure if the magazine is sent complementary to their top customers, but if its not, then magazine sale could be a source of revenue.
Two web-sites that are using the same business model
The following two sites found using the same business model:
• Ideeli.com is an on-line shopping site that aims to attract luxury brands by allowing a select group of customers through its virtual red rope. Members can go through the upcoming sale items in the preview section, but in an effort to further elevate the excitement, the site keeps sale start times secret. Those who sigh up for the free membership, receive email notifications when sales begin, and for $7.99 per month, the premium members receive sale notification via cell phone text message and are granted access to sales an hour early. (http://www.ideeli.com)
• brands4friends.com is a closed community web shop. The company is selling brands at relatively low prices over the web. They are aiming for customers’ loyalty and are in direct contact with their customers. They focus on impulse shopping. The company offers up to 70% discount under the motto of “brands at budget friendly prices”. (http://www.brands4friends.com)
Is the business model unique to the web?
This business model has been applied long time off-line, so it is not exclusive to the web only. Most of the retailers are offering their surplus stocks or items that have not been sold during the season at a discount. Also, discounted products can be found in the following places:
• Factory outlets
• Liquidation stores
Sustainability and Scalability of the model
The model is sustainable because overstock is unavoidable especially in manufactured goods. Add to that, fashions misses, production planning mistakes and unexpected weather, all have contributed positively to the oversupply of products.
The model as well is scalable, because it can be applied to different sectors, like travel and tourism businesses. The same concept could be applied as the following example:
Say we have created a site called www.voyageprivee.com where only selective members are invited based on certain profile criteria’s. Special holiday’s offers could be reviewed from the web site for limited periods of time. The idea can be escalated and varieties of services could be designed to exceed the members’ expectation.
If i were the owner of the business, i will do the following:
1. Increase users or customers
I will keep the same strategy of choosing a selective customers but an invitation could be extended to more carefully selected people that their profile would meet certain criteria that is agreed on. I believe exclusivity is a very important feature in such kind of business, and that how the business model is distinguished from other types of web discounted products.
2. Expand revenue sources
The following are my recommendations:
• Life fashion show could be arranged sometimes, where their will be direct contact with the company’s exclusive top customers. It will be a social gathering to get some valid suggestions from the customers.
• A premium customer can be added to the web-site facility. Those who would like to be a premium customer should be certain fees monthly. In return, customized services could be designed for them, for example, LV bags lovers can have more timely information about the brand’s discount and an earlier access to the sale.
• A service like D&D could be introduced. It means describe and demand service. Client can post their say favorite bag descriptions and ask the site to fetch the closet branded bag that matches their demand. This service could be for a fee.
• A service like “be the first” could be introduced, where clients are given tips and advices on the latest fashion trends with the recommendation of the right outfits and accessories. All the recommendations will be passed to customers after receiving their photos which should be clear or a video that shows how they look like exactly. This service could be for a fee.
• A personalized gift delivery service could be established for a fee. For example, a gift during Valentine day could be sent with lots of heart shape balloons and a song performed by few singers assigned to do so. All for a fee.
Wednesday, January 9, 2008
How Customers are Like Lab Rats !!!
I hope people won’t get offended by the heading of this article. I laughed loud my self when I received this information. It seems we are more like animals than we may think!!!
In 1930, research revealed animals tended to work harder as they got closer and closer to a reward. According to the information I have received, research at Columbia and Fordham universities found that consumers in a café loyalty program bought coffee more frequently the closer they got toward earning a free cup of joe.
Another study found that internet users, who received reward certificates for rating songs, rated more songs and visited the web site more often as they neared their goal.
The main idea here is how customers perceive the offers might improve their uptake.
The reason why I started this article by breaking this news is because I found it very much similar to our up-coming discussion subject “freemium” as in both cases the bottom line is customer’s behavior and their reaction to business offers whether through the loyalty program, in case of established customers base, or stimulating them for the first time through various technique like:
• Free downloads of music, software and photos
• Limited period free downloads of software as a trial
• Free upload of files, photos and music up to limited storage capacity
As per Chris Anderson, today’s disrupter’s motto is “Be the first to give away what other charge for”.
The dominant business model on the internet today is making money by giving things away. This business model is called “freemium” and it works by offering basic services for free, while charging a premium for advance features.
But the critical question is can we make money by doing so?
Yes we can, if and only if a premium level of services has been tied up with the free services offered, otherwise the business will be bearing costs no matter how cheap the bandwidth and storage costs could be today.
Many companies like Skype, Box.net and last.fm have demonstrated the success of the “freemium” phenomenon.
Skype for example is offering the basic in network voice for free, while charging premium for out of network calling. Also, the company makes its users productive by letting them communicate with each other for free. www.skype.com
Box.net is an on-line based business that enables users to share, store and access files of any type from anywhere. Box.net gives its customers individual Box A/C with certain storage capacity for free. www.box.net
Such companies their core strategy is to build a massive customers base first, where they eliminate all the possible factors that could lead to lose them. They would offer the customers for instance free downloads only a click away, so simple and could be obtained with the minimal effort. On the other hand, in order to push the customers to buy their products and services, those companies need to either meet or exceed the customers’ expectations.
From my point of view “freemium” is a very smart business model. It solves many customers’ problems especially those who are normally hesitant to buy directly from the web. “freemium” gives them the chance to experiment and explore the offered services/products before taking the buying decision.
As to the business owners, “freemium” is their marketing tool. Their free services/products are the lures that would hopefully entice customers to buy their others supplementary products/services.
Customers who would us “freemium” could be described as either skeptical type who does not consider buying products/services unless they are sure of the value they would get in return, or they could be experimental type who likes to explore new services and products. I guess young people would be the one who like to try and explore “freemium” with a percentage much higher than the older ones.
Revenue sources for “freemium” business model could be as following:
• Revenue from selling premium services/products
• Advertisements
• Revenue from selling support and maintenance products
• Consultancy could be a source of revenue
“freemium” business model can be applied offline for sure, in fact, it has been exiting offline way back before being applied on the web. Giving away customer free samples of products, is considered very classical way of promotion used by companies offline. Similarly, companies on the service sector use the same tactic. Orange (France) for example, has offered recently bunch of new channels bouquets one of those was the Arabic bouquet that contain Rotana’s channels. They broadcasted the channels for free for one month only then they asked for premium subscription. I don’t need to tell you, I was among I guess the first people who subscribed for the service.
The advantages of the “freemium” business model are:
For customers
• Minimize the risk involve of buying new products.
• Expanding their knowledge horizons.
• Adapt to more practical (e.g. software download) and economical (e.g. cheap internet phone calls) methods of doing tasks.
• Share and communicate with larger number of people around the world instantly. ( e.g. photos exchanges, video conferencing, and internet phone calls)
For business
• Promoting their products and services through the free trial period of download or generating revenue through the sell of enhanced software or support programs.
• In case of successful business, they build up a huge customer base (e.g. Skype) and their business could be bought out by other investors with millions of dollars.
The disadvantages of “freemium” business model are:
• Businesses send their files over the web and there is a chance that hackers might get access to those files.
• There is a chance that customer would lose their photos and files stored on line.
• Premium services offered could not meet customer’s expectation of value.
In 1930, research revealed animals tended to work harder as they got closer and closer to a reward. According to the information I have received, research at Columbia and Fordham universities found that consumers in a café loyalty program bought coffee more frequently the closer they got toward earning a free cup of joe.
Another study found that internet users, who received reward certificates for rating songs, rated more songs and visited the web site more often as they neared their goal.
The main idea here is how customers perceive the offers might improve their uptake.
The reason why I started this article by breaking this news is because I found it very much similar to our up-coming discussion subject “freemium” as in both cases the bottom line is customer’s behavior and their reaction to business offers whether through the loyalty program, in case of established customers base, or stimulating them for the first time through various technique like:
• Free downloads of music, software and photos
• Limited period free downloads of software as a trial
• Free upload of files, photos and music up to limited storage capacity
As per Chris Anderson, today’s disrupter’s motto is “Be the first to give away what other charge for”.
The dominant business model on the internet today is making money by giving things away. This business model is called “freemium” and it works by offering basic services for free, while charging a premium for advance features.
But the critical question is can we make money by doing so?
Yes we can, if and only if a premium level of services has been tied up with the free services offered, otherwise the business will be bearing costs no matter how cheap the bandwidth and storage costs could be today.
Many companies like Skype, Box.net and last.fm have demonstrated the success of the “freemium” phenomenon.
Skype for example is offering the basic in network voice for free, while charging premium for out of network calling. Also, the company makes its users productive by letting them communicate with each other for free. www.skype.com
Box.net is an on-line based business that enables users to share, store and access files of any type from anywhere. Box.net gives its customers individual Box A/C with certain storage capacity for free. www.box.net
Such companies their core strategy is to build a massive customers base first, where they eliminate all the possible factors that could lead to lose them. They would offer the customers for instance free downloads only a click away, so simple and could be obtained with the minimal effort. On the other hand, in order to push the customers to buy their products and services, those companies need to either meet or exceed the customers’ expectations.
From my point of view “freemium” is a very smart business model. It solves many customers’ problems especially those who are normally hesitant to buy directly from the web. “freemium” gives them the chance to experiment and explore the offered services/products before taking the buying decision.
As to the business owners, “freemium” is their marketing tool. Their free services/products are the lures that would hopefully entice customers to buy their others supplementary products/services.
Customers who would us “freemium” could be described as either skeptical type who does not consider buying products/services unless they are sure of the value they would get in return, or they could be experimental type who likes to explore new services and products. I guess young people would be the one who like to try and explore “freemium” with a percentage much higher than the older ones.
Revenue sources for “freemium” business model could be as following:
• Revenue from selling premium services/products
• Advertisements
• Revenue from selling support and maintenance products
• Consultancy could be a source of revenue
“freemium” business model can be applied offline for sure, in fact, it has been exiting offline way back before being applied on the web. Giving away customer free samples of products, is considered very classical way of promotion used by companies offline. Similarly, companies on the service sector use the same tactic. Orange (France) for example, has offered recently bunch of new channels bouquets one of those was the Arabic bouquet that contain Rotana’s channels. They broadcasted the channels for free for one month only then they asked for premium subscription. I don’t need to tell you, I was among I guess the first people who subscribed for the service.
The advantages of the “freemium” business model are:
For customers
• Minimize the risk involve of buying new products.
• Expanding their knowledge horizons.
• Adapt to more practical (e.g. software download) and economical (e.g. cheap internet phone calls) methods of doing tasks.
• Share and communicate with larger number of people around the world instantly. ( e.g. photos exchanges, video conferencing, and internet phone calls)
For business
• Promoting their products and services through the free trial period of download or generating revenue through the sell of enhanced software or support programs.
• In case of successful business, they build up a huge customer base (e.g. Skype) and their business could be bought out by other investors with millions of dollars.
The disadvantages of “freemium” business model are:
• Businesses send their files over the web and there is a chance that hackers might get access to those files.
• There is a chance that customer would lose their photos and files stored on line.
• Premium services offered could not meet customer’s expectation of value.
Monday, January 7, 2008
easyGroup
Fly to Rome, eat pizza, catch a movie, go on a cruise, listen to music, surf the net, whatever you want to do, do it for less!!!
This is possible if you use easyGrop services!. The “easyGroup” founded in 1998, is the holding company controlling the “easy” ventures.
The easyGroup brand relies on a low cost format, with stripped down service and internet reservation.
Thanks to easyGroup, many people with low budgets can enjoy travelling with affordable air ticket fairs within Europe. Not to mention the other bunch of services offered to the customers with less costs than the market price. In fact the company has made what it sees as expensive or elitist products available to budget conscious consumers. So in another words, easyGroup has solved a problem for those people whom are price sensitive and looking for lower affordable prices that match their budgets.
The success of easyGroup has pushed the company’s brand beyond the national borders and created a global brand name. All the company’s suppliers ranging from the huge one like Boeing and Airbus to the smallest one like Pizza suppliers, all are benefiting from the company’s success and are receiving more orders in bulks.
The easyGroup has conducted many partnership deals with so many successful businesses like Avis (easyCar), Burger King and Macdonald (easy internetcCafe), LIoyds TSB Group PLC (easyMoney), Monester.com (easyJob), Zeon (easyWatch) and Love film (easyCinema DVD rental). From my point of view all those partners have succeeded to reach out to more and different customers than their own because of easy brand name.
Stelios Haji Loannou the “serial entrepreneur” is the dynamo behind the fame and success of easyGroup. He was 28 years old when founded easyJet, so young and so rich as well. He believes that taken a product or a service and makes it significantly cheaper than the competitors; as a result, a lot more people will use it. The sky seemed to be the limit for this self proclaimed entrepreneurial Robin Hood. EasyJet grew now into the largest no-frills airline in Europe
The easyGroup brand tends to target budget conscious consumers who care more about price than perks. In fact, easyJet grew to attract even business travellers as well, those who travel frequently within Europe as well as people who travel to holiday homes frequently. Add to that, easyCruise is targeting those footloose travellers in their 20s, 30s and 40s, a younger market than many cruises attract.
How easyGroup makes money if they are offering their services with less cost? To answer this question we should understand the company’s pricing strategy.
EasyGroup is an internet based Service Company and is known of its no-frills services. They offer discounts based on the flexible management of supply and demand. The more customers want a service at a particular time and place the more they are charged.
The Customers who buy early and choose slack times of day, get better deals out of the services offered by the company. For example:
• The more people that hire the company’s car, the greater the cost will be to the remaining customers
• The first seats sold on easyJet flights are cheap, while the last few are the most expensive
• Charges for internet cafes rise as the seat fill up.
Many businesses failed to apply the yield management role correctly as easyGroup did. So many of these businesses turn away customers when, say, the cinema showing or flight is full. They might end up as well losing money at peak times when they buy extra capacity to provide customers with services they want at promised price. On the other hand, easyGroup model is different; they milk the demand curve for every penny they can get. They can pocket the extra that the impatient and spendthrift are willing to pay to have just what they want, when they want it.
The company’s sources of revenues vary as following:
• Sale out of products/services offered.
• Advertisements
• Commission per sale (e.g. easy value)
• Franchising (e.g easyInternetcafe)
• Selling the easy brand name (e.g. easyCar)
• Sale of out extra demanded services (e.g. easyHotel, easyCruise)
The easy Group is not immune from competitors whether in UK or on the global market an example could be Ryanair and Virgin Group.
Ryanair is the most successful budget airline in Europe. Ryanair is an Irish low cost carrier, headquartered in Dublin and its biggest operational base at London Standsted airport. As easyJet, Ryanair business model is based on low fares and no-frills models. www.ryanair.com
Virgin Group is a conglomeration of separately run companies. It’s a private company founded in UK, headquartered in London. Virgin brand is the group’s greatest single assets exactly as easyGroup. We can say that Virgin Group is a brand franchising organisation. The group product varies from aviation industry to wine products. Virgin could be considered as a competitor to easGroup because of the following reasons:
• Both companies are services companies
• Both are providing financial services on a competitive cost
• Both offer music on line
• Both run internet cafes
• Both are involved on the aviation industry.
www.virgin.com
The easyGroup business model is truly unique to the web and cannot be applied offline because basically it’s a web based business. Beside it’s a sustainable and scalable business model.
Two factors would surely enhance the sustainability of this business model, quality and excellent customer relation. Low budgets customers will always exist for sure but to keep them as loyal customers to the company that’s could be a challenging task especially with the price reduction war among the competitors.
We have witnessed how easyGroup and Virgin Group have extended their business models to other type of products and services and this is by itself reflect the scalability of the business model. Of course not all of their new ventures were that successful, they had their ups and downs but by end of the day it works. I truly liked what easyGroup did when they venture with MacDonald’s and Burger kings to set up their computers for internet surf when they realized that there is no enough demand on their internet cafes. It’s a very smart move; they decided to follow the customers instead of waiting for them at the shops.
Sources used: http://www.fastcompany.com/magazine/64/ioannou.html
http://www.iht.com/articles/2003/08/09/easy_ed3_.php
If I were the owner of the business
I found it very exciting to own a business like easyGroup because it’s challenging and so many constraints could be faced in order to succeed.
If I owned the business, I would concentrate first on the most profitable businesses like easyJet and easyHotel because from my point of view they form the core businesses for easyGroup.
EasyJet can attract more customers if they select their route carefully by targeting the served or un-served routes of the existing carriers with high fares. Of course they are going to stimulate demand by undercutting them keeping in mind that the new routs selected have large leisure and attraction for the travellers.
Acquisition of other low cost airline/hotels could be a way to increase the number of customers.
easyJet can expand their revenue sources through different ways as following:
• Fly to and from secondary airports to reduce the landing and the ground handling fees. (if this is not against their overall strategy).
• Take over certain promising routes (after doing the proper forecast study of the future demand on a route)
• Develop more continental operating bases (e.g. Geneva). easyGroup should stimulate demand in continental market segment that have little overlap with incumbents’ route.
• Start to serve packaged tour market by offering for example scheduled no-frills service to holiday destinations.
• They could expand on the international routes.
• Use the web site to earn commissions on travel related services and insurance.
• Cabin crew can sell more products and services like tickets for ground transportation, tourist attraction and other entertainments during flights.
• Credit card fees could be a source of revenue
As to the other easyGroup businesses like easyValue, easyCar, easyMoney, easyJob, and the other businesses, from my point of view they are not as profitable as easyJet or let say their value has not been materialize. They can be kept for the brand name sake.
This is possible if you use easyGrop services!. The “easyGroup” founded in 1998, is the holding company controlling the “easy” ventures.
The easyGroup brand relies on a low cost format, with stripped down service and internet reservation.
Thanks to easyGroup, many people with low budgets can enjoy travelling with affordable air ticket fairs within Europe. Not to mention the other bunch of services offered to the customers with less costs than the market price. In fact the company has made what it sees as expensive or elitist products available to budget conscious consumers. So in another words, easyGroup has solved a problem for those people whom are price sensitive and looking for lower affordable prices that match their budgets.
The success of easyGroup has pushed the company’s brand beyond the national borders and created a global brand name. All the company’s suppliers ranging from the huge one like Boeing and Airbus to the smallest one like Pizza suppliers, all are benefiting from the company’s success and are receiving more orders in bulks.
The easyGroup has conducted many partnership deals with so many successful businesses like Avis (easyCar), Burger King and Macdonald (easy internetcCafe), LIoyds TSB Group PLC (easyMoney), Monester.com (easyJob), Zeon (easyWatch) and Love film (easyCinema DVD rental). From my point of view all those partners have succeeded to reach out to more and different customers than their own because of easy brand name.
Stelios Haji Loannou the “serial entrepreneur” is the dynamo behind the fame and success of easyGroup. He was 28 years old when founded easyJet, so young and so rich as well. He believes that taken a product or a service and makes it significantly cheaper than the competitors; as a result, a lot more people will use it. The sky seemed to be the limit for this self proclaimed entrepreneurial Robin Hood. EasyJet grew now into the largest no-frills airline in Europe
The easyGroup brand tends to target budget conscious consumers who care more about price than perks. In fact, easyJet grew to attract even business travellers as well, those who travel frequently within Europe as well as people who travel to holiday homes frequently. Add to that, easyCruise is targeting those footloose travellers in their 20s, 30s and 40s, a younger market than many cruises attract.
How easyGroup makes money if they are offering their services with less cost? To answer this question we should understand the company’s pricing strategy.
EasyGroup is an internet based Service Company and is known of its no-frills services. They offer discounts based on the flexible management of supply and demand. The more customers want a service at a particular time and place the more they are charged.
The Customers who buy early and choose slack times of day, get better deals out of the services offered by the company. For example:
• The more people that hire the company’s car, the greater the cost will be to the remaining customers
• The first seats sold on easyJet flights are cheap, while the last few are the most expensive
• Charges for internet cafes rise as the seat fill up.
Many businesses failed to apply the yield management role correctly as easyGroup did. So many of these businesses turn away customers when, say, the cinema showing or flight is full. They might end up as well losing money at peak times when they buy extra capacity to provide customers with services they want at promised price. On the other hand, easyGroup model is different; they milk the demand curve for every penny they can get. They can pocket the extra that the impatient and spendthrift are willing to pay to have just what they want, when they want it.
The company’s sources of revenues vary as following:
• Sale out of products/services offered.
• Advertisements
• Commission per sale (e.g. easy value)
• Franchising (e.g easyInternetcafe)
• Selling the easy brand name (e.g. easyCar)
• Sale of out extra demanded services (e.g. easyHotel, easyCruise)
The easy Group is not immune from competitors whether in UK or on the global market an example could be Ryanair and Virgin Group.
Ryanair is the most successful budget airline in Europe. Ryanair is an Irish low cost carrier, headquartered in Dublin and its biggest operational base at London Standsted airport. As easyJet, Ryanair business model is based on low fares and no-frills models. www.ryanair.com
Virgin Group is a conglomeration of separately run companies. It’s a private company founded in UK, headquartered in London. Virgin brand is the group’s greatest single assets exactly as easyGroup. We can say that Virgin Group is a brand franchising organisation. The group product varies from aviation industry to wine products. Virgin could be considered as a competitor to easGroup because of the following reasons:
• Both companies are services companies
• Both are providing financial services on a competitive cost
• Both offer music on line
• Both run internet cafes
• Both are involved on the aviation industry.
www.virgin.com
The easyGroup business model is truly unique to the web and cannot be applied offline because basically it’s a web based business. Beside it’s a sustainable and scalable business model.
Two factors would surely enhance the sustainability of this business model, quality and excellent customer relation. Low budgets customers will always exist for sure but to keep them as loyal customers to the company that’s could be a challenging task especially with the price reduction war among the competitors.
We have witnessed how easyGroup and Virgin Group have extended their business models to other type of products and services and this is by itself reflect the scalability of the business model. Of course not all of their new ventures were that successful, they had their ups and downs but by end of the day it works. I truly liked what easyGroup did when they venture with MacDonald’s and Burger kings to set up their computers for internet surf when they realized that there is no enough demand on their internet cafes. It’s a very smart move; they decided to follow the customers instead of waiting for them at the shops.
Sources used: http://www.fastcompany.com/magazine/64/ioannou.html
http://www.iht.com/articles/2003/08/09/easy_ed3_.php
If I were the owner of the business
I found it very exciting to own a business like easyGroup because it’s challenging and so many constraints could be faced in order to succeed.
If I owned the business, I would concentrate first on the most profitable businesses like easyJet and easyHotel because from my point of view they form the core businesses for easyGroup.
EasyJet can attract more customers if they select their route carefully by targeting the served or un-served routes of the existing carriers with high fares. Of course they are going to stimulate demand by undercutting them keeping in mind that the new routs selected have large leisure and attraction for the travellers.
Acquisition of other low cost airline/hotels could be a way to increase the number of customers.
easyJet can expand their revenue sources through different ways as following:
• Fly to and from secondary airports to reduce the landing and the ground handling fees. (if this is not against their overall strategy).
• Take over certain promising routes (after doing the proper forecast study of the future demand on a route)
• Develop more continental operating bases (e.g. Geneva). easyGroup should stimulate demand in continental market segment that have little overlap with incumbents’ route.
• Start to serve packaged tour market by offering for example scheduled no-frills service to holiday destinations.
• They could expand on the international routes.
• Use the web site to earn commissions on travel related services and insurance.
• Cabin crew can sell more products and services like tickets for ground transportation, tourist attraction and other entertainments during flights.
• Credit card fees could be a source of revenue
As to the other easyGroup businesses like easyValue, easyCar, easyMoney, easyJob, and the other businesses, from my point of view they are not as profitable as easyJet or let say their value has not been materialize. They can be kept for the brand name sake.
easyJet
easyJet was founded in 1995 by Sir Stelios Haji-Loannou. Stelios and his family remain major shareholders in easyJet PLC.
easyJet is a low-cost airlines which rely on a simple business design: one kind of aircraft, one class of passenger, and more seats crammed into the airplane—as well as no airport lounges, no choice of seats, no newspapers, no food, no frequent-flyer programs, no connecting flights, no refunds, and no possibility of rebooking to other airlines. Also, there are no travel agents and expensive computer reservation systems.
easyJet maximise the utilisation of each aircraft in order to reduce the unit cost. The company issue no tickets for the passengers and therefore succeeded to reduce significantly the cost of issuing, distributing, processing and reconciling million of tickets each year.
The company simplified its working practices by embracing the concept of the paperless office. The employees can access the company’s IT system through secure servers from anywhere in the world enabling great flexibility in running the airline company.
easyJet flies to main destination airports throughout Europe but gain efficiencies through rapid turnarounds timing. By doing so, easyJet can achieve extra rotations on the high frequency route, thereby maximising utilisation rates of its aircrafts.
EasyJet is stimulating and exploiting pent-up demand for cheap travel. They are attracting those travellers who would otherwise travel by train or car.
The company is targeting the following groups:
• Business people
• VFR (visit friends and relatives) and commuters
• Short breakers
• Long Breakers
In order to attract these groups, the company has provided the following advantages:
• Low fairs
• Convenient airports
• Right times of day
• Range of destinations
easyJet highly relies on yield management to maximise its profit. Customers who do their booking in advance are guaranteed to have a lower air tickets fairs. Those who come in late, unfortunately, end up with higher fairs.
Stelios believes that as demand goes up, so should prices.
easyJet is a low-cost airlines which rely on a simple business design: one kind of aircraft, one class of passenger, and more seats crammed into the airplane—as well as no airport lounges, no choice of seats, no newspapers, no food, no frequent-flyer programs, no connecting flights, no refunds, and no possibility of rebooking to other airlines. Also, there are no travel agents and expensive computer reservation systems.
easyJet maximise the utilisation of each aircraft in order to reduce the unit cost. The company issue no tickets for the passengers and therefore succeeded to reduce significantly the cost of issuing, distributing, processing and reconciling million of tickets each year.
The company simplified its working practices by embracing the concept of the paperless office. The employees can access the company’s IT system through secure servers from anywhere in the world enabling great flexibility in running the airline company.
easyJet flies to main destination airports throughout Europe but gain efficiencies through rapid turnarounds timing. By doing so, easyJet can achieve extra rotations on the high frequency route, thereby maximising utilisation rates of its aircrafts.
EasyJet is stimulating and exploiting pent-up demand for cheap travel. They are attracting those travellers who would otherwise travel by train or car.
The company is targeting the following groups:
• Business people
• VFR (visit friends and relatives) and commuters
• Short breakers
• Long Breakers
In order to attract these groups, the company has provided the following advantages:
• Low fairs
• Convenient airports
• Right times of day
• Range of destinations
easyJet highly relies on yield management to maximise its profit. Customers who do their booking in advance are guaranteed to have a lower air tickets fairs. Those who come in late, unfortunately, end up with higher fairs.
Stelios believes that as demand goes up, so should prices.
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