The Marketing Book 5th Edition

Manufacturer

or primary

service provider

B Direct product

sales of product

or service

B

1

Marketplace

position

2

Revenue

model

Fixed-price

sale

Y

A

B

3

Commercial

model

Reseller/retailer

(intermediary)

Marketplace/

exchange

(intermediary)

Supply chain

provider or

integrator

Not for profit

organization

Y

A

Subscription

or rental

of service

Commission-

based sales

(affiliate, auction,

marketplace)

Advertising

(banner ads,

sponsorship)

Y

Y

A

B Brokered

or negotiated

deal

Auction

or spot

Y

Y

Y

A

B

Yahoo!

Amazon

Book publisher

Key:

Y

652 The Marketing Book

now part of Yahoo! (www.yahoo.com)
services.
7 Third-party marketplaces. Marketplaces are
described in the ‘Focus on’ section of
Chapter 9.
8 Value-chain integrators. Offer a range of
services across the value chain.
9 Value-chain service providers. Specialize in
providing functions for a specific part of the
value chain, such as the logistics company
UPS (www.ups.com).
10 Information brokerage. Providing information
for consumers and businesses, often to assist
in making the buying decision or for business
operations or leisure.
11 Trust and other services. Examples of trust
services include Which Web Trader
(www.which.net/webtrader) or Truste
(www.truste.org), which authenticate the
quality of service provided by companies
trading on the web.

Evaluating new models is important, since if
companies do not innovate then competitors
and new entrants will and companies will find
it difficult to regain the initiative. Equally, if
inappropriate business or distribution models
are chosen, then companies may make sub-
stantial losses.
One example of how companies can
review and revise their business model is
provided by Dell Computers. Dell gained early
mover advantage in the mid-1990s when it
became one of the first companies to offer PCs
for sale on-line. Its sales of PCs and peripherals
grew from the mid-1990s with on-line sales of
$1 million per day to 2000 sales of $50 million
per day. Based on this success, it has looked at
new business models it can use in combination
with its powerful brand to provide new ser-
vices to its existing customer base and also to
generate revenue through new customers. In
September 2000, Dell announced plans to
become a supplier of IT consulting services
through linking with enterprise resource plan-
ning specialists such as software suppliers,
systems integrators and business consulting

firms. This venture will enable the facility of

Dell’s Premier Pages to be integrated into the

procurement component of ERP systems such

as SAP and Baan, thus avoiding the need for

rekeying and reducing costs.

In a separate initiative, Dell launched a

B2B marketplace aimed at discounted office

goods and services procurements, including

PCs, peripherals, software, stationery and

travel (www.dellmarketplace.com).

Chaffey (2002) describes three different

perspectives for considering business and reve-

nue models, shown in Figure 25.7. Yahoo!

(marked with Y in the figure) has been one of

the more successful Internet pure-plays, since it

has developed a range of revenue sources

through growth and acquisition.

1 Marketplace position perspective. Here Yahoo! is

both a retailer and a marketplace intermediary.

2 Revenue model perspective. Yahoo! has

commission-based sales through Yahoo!

shopping and also has advertising as a revenue

model.

Figure 25.7 Alternative perspectives on business

and revenue models.

Source: Chaffey (2002).