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What do you mean by a business model?

A business model can be explained as a theoretical framework that extends support to the compatibility and demand of a product or an organization and celebrates the functioning of the company, it’s revenue generation and how it aims to attain its ultimate goals.

So coming straight to the point, as there are different kinds of businesses in the world, all then have a different business need and are based on some different types of business models.

Some of these may include

1. Manufacturer

What is a business model, a manufacturer’s business model is the one where the producer makes the goods and all of it done right from the scratch level (beginning). Now it is up to him whether he wants to sell goods directly to the end consumers or decide to get the sales done through a mediator.

• A business model examples that sell goods and services to the end customers

1. 3M

2. General Electric

3. Ford

2. Distributor

A businessman following a distributor business model is someone who will primarily procure or purchase the goods from the producers or the originators of the product later he could decide whether he wants to sell the same to the people or to the retailer.

• The best example of distributor business model is

Automobile agency, taking a car from the company then sold to the customer.

3. Retailer

The retailer business model is one of the most commonly used and heard terms. In this business model, the businessman makes the initial purchase directly from either a wholesaler or distributor of the products and gets it into his shop later he sells directly to his customers.

• Ideal example of Retailer business model is

1. Tesco

2. Amazon

4. Franchise

A business model that has implemented and adopted the franchise model can be either a retailer, a manufacturer or distributor. So in place of manufacturing or developing a whole new product line, the franchiser makes use of the leading company’s (parent organizations) business model and on the other hand paying an amount in the form of royalty to the business.

• The best example of Franchise business models are

1. Pizza Hut

2. Starbucks

3. CCD

4. Costa Caffe

5. Pizza Hut

5. Brick-and-mortar

Any business that has adopted the brick and mortar model is generally the ones whereupon the particular wholesalers, retailers or the manufacturers get together with the customer selling products to them in person in a store, office or a shop which either the business may be renting or owning.

6. Electronic Commerce (E-commerce)

This business model is completely opposite to the above-mentioned business model. As it steps out of the old school methods of selling goods and services to the customer in a face to face approach which was either done in a shop, store or office. It is an update which is running in the trend to all kind of brick and mortar business. It rather stresses on selling goods and services to the customers by making a web-based store.

• The best example of E-commerce business models are

1. Flipkart

2. Amazon

3. AliExpress

4. Alibaba

5. Myntra

6. Jabong etc

7. Bricks-and-clicks

The Bricks-and-clicks business model is generally the one whereupon a company has an existence on both the sectors that are having an old school Bricks-and-mortar store and an online presence as well and also. On the other hand, allowing the customer to pick go and take a look at the products available while having a physical store to let the customers in and purchase the products that they have selected to buy. It offers great flexibility to those customers who have difficulty finding a sore in their vicinity and can select a product and buy it from their online store

• The best example:

Majority of all the fashion and apparel companies

8. Nickel-and-dime

In the Nickel-and-dime business model, the basic or the skeleton product is offered to the customers at a far lower price than what it is and hence priced to the lowest extent. It is ideal for every other product which requires services and a small amount is charged from offering a service to the ones who ask for it.

• The best example of Nickel and dime model are

All sorts of mid-ranged air crafts.

9. Freemium

This business model is one of the most popular and most usual models available and down with the help of an internet connection. Those companies which offer the ordinary services to customers at no cost while asking a small amount from them for the several add ons they have got to offer to the customer. Hence there is a plethora of services and plans a customer can pick from. Usually, the standard services are packed along with the handful of obstructions within the product and bar a customer from having full-fledged use of the product. These may include the storage restricting, in-app promotions, etc.

For the best example, one can take a look at Google Drive which offers 15 GB of free storage to the customer. And once it exceeds the threshold of 15 GB then the company asks the customer to pay a specific amount to keep using and storing data on the platform.

More information 

Also there are a few online image editors which let you get the image revamped with a selected number of tools and images on a demo version while on the other hand if the customer asks for more tools and filters he needs to pay a specific amount which will allow him to use the products other features which are otherwise forbidden to be used on a demo version of the product. For better understanding, one can take a look at the new plan of YouTube which allows a customer with one of the most advanced features but only at the cost of membership which in India is 999 a year.

Also, this business model is acclaimed to be one of the most opted business models the companies are opting for these days as a dominant tool but an affordable method to grow-expand and get more new customers.

10. Subscription

The Subscription-based business models are ideal for those whose business assets are already costing him a lot of money and the business if opting for services would just like to get it for a specific time and stop using it as and when he wants. This ensures a long-lasting relationship that is developed between the user and the brand.

• The best example of Subscription-based models are

1. Dollar shave club
2. Netflix
3. Amazon
4. Hotstar

11. Mediator / Aggregator

A Mediator or in simpler words the Aggregator business models are the ones that are designed and developed whereupon there is a need for a company to get the various products and services sold to the customer but under their brand name. The commission earned is the income for such companies who have adopted the Aggregator business model

• An ideal example of the aggregator business model is

1. Ola

2. Oyo

3. Uber

12. Online Marketplace

The online marketplaces are the ones who let the various sellers come together on a single platform where they come along and try to compete with each other to offer a customer a similar kind of product or service at an affordable price. Also, this kind of business model is the one that has its brand built on various factors such as on-time delivery, home delivery, best quality etc and bags a fair share of commission as a cut to let the business done on the platform.

• Ideal examples are

1. Alibaba

2. Amazon

3. Flipkart

13. Advertisement

The advertising business models have seen tremendous growth and development due to the growing use of the internet. Like in the old times the businesses were popular using hoarding and print media today’s generation business is popular on social media platforms such as Facebook, Twitter, Instagram and most importantly YouTube. That is because people spend a lot of time on YouTube and the engagement there is quite high. As the information on those sites or platforms is free one just has to go through the advertisements which create awareness for a particular brand or product. The brands that are making use of advertisement models rely greatly on the internet.

14. Data Selling / Data Licencing

Just when the internet started gaining huge popularity there had been a remarkable increase in the total data that had been piled up based on the user activity over the websites. This resulted in the forming of a brand new business sector. This business sector mainly replied on the model of data selling which was originated from social media platforms such as Facebook, Snapchat, Instagram, etc. The huge corporations such as Onesignal and Twitter take the same data and trade it with other companies that make use of the customer data for preparing an analysis report for advertising campaigns and other promotional purposes.

15. Agency-Based

A company that is an expert in handling those activities which do not fall in the category of core business activities of an organization usually has opted for the agency business model. The activities that most organizations opt to outsource are promotion, public relations, Online Reputation Management, digital marketing, security and so on. Such types of organizations usually get into a collaboration with those organizations who would like to focus more on business than on what does not add any value to their business operations. Also, such companies are accountable for confidentiality retained in terms of a company’s internal data so to avoid any data breach

• A few examples that could be considered are

1. Dentsu Aegis Network,

2. Ogilvy & Mathers,

16. Affiliate Marketing

Whichever company has adopted for an Affiliate marketing business model is working on a cut-based approach wherein the affiliate creates the business based approach around a free promotion of namely any product of his choice on his website, blog, page, etc. But can create an impact on selling other goods and services on one’s page when one has a good influence over the people or the specific audience.

So as and when people go through the content, like the product, click on the link and eventually buy the product they (Affiliate marketing company) is likely to get a cut based on what was the total amount of the product. The commission share may vary from one product to another depending on the product listed price. Costlier products that sell slowly may have a huge commission while the pines which go fast may have a small commission rate.

• A great example can be

Lifewire.com

These were the different type of types of business models.

Final Words

No doubt, the majority of the companies do not run on just a single business model but rather a combination of a few. So a business may begin with just one model and eventually with time may begin slight use of other models as well. The above mentioned are just a few of the numerous business models types, in reality there are over 22-25 business models that any business can choose to operate their business with.

This was the complete article on what is a business model in which we told you about business models types and business model examples.

I hope this article was helpful to you and if you have any suggestions then you can mention them in the comments down below.