Creating a business model – why and how?
Time keeps pressing on, and the environment is rapidly changing. Creating a new business model is necessary to meet the demands of today’s quickly evolving business environment. It is also important to align the business model with the brand’s identity and objectives.
Why is creating a new business model necessary, and why might the old one no longer work?
Technological advancements and digital transformation
Rapidly advancing technology is fundamentally changing the business environment. New technological possibilities open up new markets and ways of interacting with customers. For example, artificial intelligence, blockchain, cloud computing, and Internet of Things (IoT) technologies offer companies new opportunities to increase efficiency and promote innovation.
This race is becoming real!
Changing customer expectations
Customers today expect faster, more convenient, and more personalized service. This requires companies to adopt new approaches and technological solutions. For instance, shopping through e-commerce platforms and mobile apps has become increasingly popular, prompting companies to reconsider their sales and service models.
We talk about customer-centricity, but we still have a long way to go!
Globalization and international markets
Companies have the opportunity to expand their operations internationally. This requires the development of new business models to adapt to the different cultures, regulations, and needs of various markets. Almost all our customers are looking beyond borders!
Sustainability and responsible business
There is a growing emphasis on environmental and social responsibility. New business models allow companies to integrate sustainability principles into their operations, creating value for society and the environment. We can joke about it, but in Western Europe, it has become the standard!
Customer experience and service innovations
New business models enable companies to better understand customer needs and provide them with customized services. By analyzing data and adopting a more personalized approach, companies can add value to the customer and thereby increase customer loyalty. Data must become valuable information!
A rapidly changing business environment brings about intense competition. Companies that can adapt quickly and find new, innovative ways to develop their business are in a significantly stronger position. Searching for and realizing the new “me” becomes a daily task!
Creating a business model involves a strategic approach that essentially determines how a company creates, delivers, and exchanges value with its customers.
Creating a business model: how to ensure sustainability?
Customer-centricity and value delivery
Yes, customer-centricity is key. I know it’s talked about a lot but not always understood. But let’s leave that aside. Creating a business model is based on setting hypotheses. These hypotheses may include market needs, target audience preferences, competitor behavior, and more. Using the scientific method, these hypotheses can be systematically formulated and then tested through experiments, surveys, or analyses to validate them. For example, if we assume that our product meets a specific need, we can conduct market research and surveys to confirm or refute this hypothesis.
Evidence-based strategy development
A scientific approach involves systematically collecting and analyzing data, both quantitative and qualitative. This allows us to understand market behavior, target audience preferences, and competitor strategies. In Estonia, this is somewhat complicated because the costs of obtaining quality information are relatively high.
The relationship between brand and business model
A company’s brand and business model are closely intertwined and significantly influence each other. These two components essentially form the strategic framework of the company, shaping its activities and relationships with customers.
The brand establishes identity and adds value
The brand is essentially the identity of the company. It includes the company’s name, logo, visual identity, values, and, most importantly, its mission, positioning, attitude, and ways of communicating with customers and the public. The brand essentially shapes how the company wants to be perceived. Quality branding enhances the company’s value and credibility, which can, in turn, support the success of the business model.
Brand promise and customer satisfaction
The brand is the promise the company makes to its customers. This includes the expectations that customers attribute to the company’s products or services. If a company can fulfill its brand promises, it increases customer satisfaction and loyalty. Therefore, the brand is linked to the value the company offers customers, directly affecting the business model’s profitability.
Brand influences customer purchase decisions
Creating a strong brand can positively influence customer purchase decisions. A strong brand builds trust in customers, making them more loyal and willing to spend more. A strong brand can also attract new customers because it generates interest and trust.
Alignment of brand and business model
A company’s brand should reflect the essence of its business model. For example, if a company’s business model focuses on high-quality, premium-priced products, the brand should convey a sense of exclusivity and luxury. Conversely, if the business model is based on affordable mass-produced goods, the brand’s message and visual identity should reflect affordability and accessibility.
Brand development and adaptation
Creating or developing a business model may also require adjustments to the brand. For instance, if a company expands its product range or target audience, it may need to adapt its brand image to align with new needs and expectations.
The Importance of Creating a Business Model for the Brand
In summary, a company’s brand and business model are closely connected and mutually influence each other in various ways. A successful company can balance these elements, creating a strong brand that reflects and supports the core objectives of the business model. Therefore, when making significant changes or developments to a business model, let’s not neglect the brand.