Lesson one in how to set up an online business.


This week was spent defining what business model and product/service to use and brainstorming businesses.

We also used Adword key planner to determine the competition and hits in a certain area.  We compared Chess and Snowboards.  It was fascinating to see the difference in amount of searches.

The different models are below as well as the brainstorming process.

Brokerage Model

Brokers are market-makers: they bring buyers and sellers together and facilitate transactions. Brokers play a frequent role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a broker charges a fee or commission for each transaction it enables. The formula for fees can vary.

Advertising Model

The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. The advertising model works best when the volume of viewer traffic is large or highly specialized.

Infomediary Model

Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market.

Community Model

The viability of the community model is based on user loyalty. Users have a high investment in both time and emotion. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.

Utility Model

Users are charged a periodic — daily, monthly or annual — fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined.

Manufacturer (Direct) Model

The manufacturer or “direct model”, it is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences

Affiliate Model

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model, provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model — if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs.

Brainstorming Businesses http://bizthoughts.mikelee.org/brainstorming-business-ideas.html

  1. The Problem & Solution Method – problems you see
  2. The Market-First Method – Choose a specific target market
  3. The Personal Strengths Method – Analyze your innate talents, learned skills, and experiences
  4. The Mix & Match Method – Take two seemingly unrelated concepts, products, or services and see if you can combine them
  5. The Importation Method – Travel the world. Take note of all the products and services you see. Consider how each could be imported back to your country
  6. The Lateral Thinking Method – Look at an existing problem and apply lateral thinking principles to its solution. Shift your thinking and redefine the problem. Consider alternate possibilities
  7. The Godin Method (or The Edgecraft Method) – creating remarkable products or services and the art of Edgecraft. For many businesses, remarkable marketing and branding help garner success, even with products and services that aren’t new. Edgecraft is the concept of “going all the way to the edge” of an existing product or service. It means looking at an idea and adding a special twist, a unique element, that makes the original idea remarkable.
  8. The Christensen Method (or The Disruptive Innovation Method) – Disruptive innovations are new products or services that fundamentally change an industry, oftentimes shaking the top companies from their pedestals
  • Low-end disruptions- These serve less demanding customers with low-priced, relatively straightforward offerings using low-cost business models. Look for markets with over-served customers and offer a simpler product or service.
  • New-market disruptions – These serve new customers by making it easier for them to do something that previously required being or hiring specialists. Look for unfulfilled needs and create new products or services for them.
  1. The Borrowed Ideas Method –

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