Skip to content
  • Digital Marketing
International Branding Online

International Branding Online

International Branding Blog – Conneting brands to the universe

  • xfinity Speed Test
  • Free Job Posting in Dubai
  • Web Design Dubai
  • Coconut Cream
  • Saffron
  • Dubai Offers
  • Toggle search form
  • LEADERS Magazine: Digital Darwinism – An Interview with Brian Solis Branding
  • 7 Keys To Marketing Under Economic Adversity Branding
  • INFOSECURITY Magazine: Solving the Gen-N Security Dilemma Branding
  • 12 Principles For Building Successful Brands Branding
  • How to Cultivate Customer Empathy in Experience Design and Innovation – A Conversation with Janelle Estes UserTesting Branding
  • Transforming Marketing Teams For The Digital Age Branding
  • The Evolution of the Trump Brand Branding
  • THE POWER OF SWEARING Branding

Brands As Business Models

Posted on November 22, 2022 By aathif No Comments on Brands As Business Models

As a professor of business and management consultant I find myself in a variety of organizations. One of the questions I often ask both senior managers and line personnel is how their organization makes money. Another way to ask the question is to ask for a description of the firm’s business model. In many organizations the answers are a best superficial. In the worst cases the answers are misleading. The answers frequently take the form of describing what the organization produces and sells.

Among more thoughtful managers the answer may reflect the strategy or competencies of the organization: we are rapid innovators in information technology or we deliver premium customer service in the hospitality business. Yet, such answers are inadequate and fail to provide real direction for an organization. The reason is simple. The same answers could be offered by organizations that do not make money, or at least do not make a profit. So, if the same answer applies to organizations that are profitable and those that are not, they cannot really be the answer to the question how does your organization make money?

A useful answer to “how does your organization make money” is a description of the organization’s business model. A business model defines several key dimensions of a business. First, it identifies whom the organization defines as its customer(s) and does so with greater insight than simply who buys the organization’s products and services. Rather the answer should be in terms of the characteristics of customers and the value they obtain from the products and services they buy. For example, a hospitality company might define its customers as affluent travelers seeking luxurious accommodations and highly personalized service. Alternatively, another hospitality organization might define their customers as budget conscious business travelers who seek comfortable accommodations at the end of busy day. These two sets of customers are quite distinct, and the differences have very significant implications for how the organization organizes and promotes itself, how it prices, and the organizational competencies necessary for success. Although both organizations may be broadly a part of the hospitality industry they clearly are not in the same business and make money in very different ways. They will also be perceived as different by customers, or potential customers, which means their brands are different, whether by intention or not.

A second element of a business model is defined by the activities that the organization carries out in order to deliver value to its defined customer base. This includes not only what the organization itself might do but also whom it partners with to serve its customers. Partners include suppliers, distributors, retailers, and service providers, among others. Indeed, a fundamental strategic decision for a business is what activities the organization will do itself and what activities it will out source to partner organizations. As one simple illustration in the context of the hospitality industry, an organization could elect to operate its own restaurant within a hotel property or out source food service to another organization. How an organization organizes its activities and the partners it employs have implications for both the competencies required of the organization and its cost structure.

Also integral to an organization’s business model is how it prices its offerings, that is, what it charges for and how. To continue the example in the hospitality industry the luxury hotel may charge a substantial price premium for a room but also offer an expensive restaurant and catering services that are substantial sources of revenue. The organization focused on the budget business traveler may charge less for a more Spartan room but include a modest breakfast and perhaps a happy hour with free or reduced cost beverages as part of the room cost. Again, these are two very different revenue and cost models.

Finally, a business model addresses how an organization will promote itself and how it will brand and differentiate itself. The luxury hotel may promote self-indulgence and pampering. The budget hotel may emphasize value and comfort. To be effective these messages must be consistent with the other elements of the business model. For example, indifferent staff members are not consistent with a luxury brand.

Successful managers are able to articulate the business model(s) of their organizations. Indeed, every employee in the organization should have an understanding of the business model and how what they do every day contributes to that model. The business model is not strategy, which focuses on how the organization will compete in a competitive marketplace. Rather, the business model is a fundamental statement of the underlying viability and sustainability of an organization. Winning against the competition is important, but making money is necessary to play over the long term. Every successful brand has embedded within it a successful business model. Firms compete using different business models or by better execution of the same business model used by competitors. Thorough and systemic analysis of a firm’s business models, and any given firm may have more than one business model depending on its business(es) and the customers it chooses to serve, should be a routine part of a firm’s annual business planning cycle. Such review can identify opportunities for innovation and suggest times when it is time to change one of more elements of the business model, or the whole business model.

Contributed to Branding Strategy Insider by: David Stewart, Emeritus Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions.

At The Blake Project we are helping clients from around the world, in all stages of development, reach their next stage of growth. Please email us for more. 

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

FREE Publications And Resources For Marketers

Post Views: 1

Share this:

Branding

Post navigation

Previous Post: The Age Of The Sustainable Brand
Next Post: Watch: The Future of Experience Design – exploring the need for human-centered experiences

Related Posts

  • Is the Future of Business Growth Tied to a New Generation of 360 Experience Marketers? Branding
  • CX Network: The top customer experience influencers to follow in 2023 Branding
  • Brand Tracking For Brand Insistence Branding
  • How Too Few Choices Impact Brand Success Branding
  • Humanizing AI, Automation, Robotics, and the Future of Business Branding
  • Lessons From Bud Light’s Brand Management Mistakes Branding

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • Lessons From Bud Light’s Brand Management Mistakes
  • Media Context and Brand Suitability
  • An Entrepreneurial Process For De-risking Disruptive Ideas
  • How Leadership Marketing Drives Wayfair’s Growth
  • Keys To Building An Innovation Capability

International Branding Blog - The best branding blog | Articles on brand strategy, terminology, design, exceptional brands, and interviews.

  • xfinity Speed Test
  • Free Job Posting in Dubai
  • Web Design Dubai
  • Coconut Cream
  • Saffron
  • Dubai Offers
  • Avis Branding
  • A Few to Remember Branding
  • shopping cart abandonment Branding
  • How Same-Day Delivery Works Branding
  • Personal Branding is Vital Now Branding
  • Your Brand: The Space In-Between Branding
  • inflation, shrinkflation, and skimpflation Branding
  • Transforming Marketing Teams For The Digital Age Branding

International Branding Blog - The best branding blog | Articles on brand strategy, terminology, design, exceptional brands, and interviews. Copyright © 2022 International Branding Online.

Powered by PressBook News Dark theme