1. J.A.S. Fernando – AS2010362
M.K.K. Gunasekara – AS2010377
CSC 368 2.0 Enterprise Computing and ERP Systems
Department of Statistics and Computer Science

2. Overview
 Introduction
 Target Customer Element
 Criterion Element
 Reaching Customers
 Channel Element
 Link Element
 Channel Strategy
 Channel Conflicts
 Relationship Element
 Mechanism Element
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J.A.S. Fernando - AS2010362

3. Introduction
 The second pillar of the business model ontology.
 Who the company's target customers are, how it delivers them
products and services, and how it builds a strong relationships
with them.
 ICT has had a very strong influence on the ways companies
organize their customer relationships.
 ICT has contributed to the facilitation of customer-related
information gathering and customer- and product-related
information diffusion.
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4. Introduction
 In order to serve customers better or to reach new markets
companies introduce new distribution and communication
channels, such as the Internet or mobile phones, but also new
relationship mechanisms, such as personalization and trust.
 Three elements
 Target Customer
 Distribution Channel
 Relationship
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5. Introduction
Relationship
Mechanism
CUSTOMER
INTERFACE
Value Proposition
Distribution Channel
Target Customer
Offering
Link
Criteria
Revenue
Pricing
Customer Interface
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J.A.S. Fernando - AS2010362

6. Target Customer Element
 A TARGET CUSTOMER segment defines the type of customers a
company wants to address.
 Selecting a company's target customers is all about
segmentation.
 Effective segmentation enables a company to allocate
investment resources to target customers.
 The most general distinction of target customers exists between
business and/or individual customers, commonly referred to as
business-to-business (B2B) and business-to consumer (B2C).
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7. Target Customer Element
Value proposition
Target Customer
setOf
isA
Criterion
Target Customer
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8. Criterion Element
 Defines the characteristics of a TARGET CUSTOMER
 Cardinality
 0-n
 Attributes
 NAME {abc}
 DESCRIPTION {abc}
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9. Reaching Customers
 Intermediaries
 Independent organizations involved in the process of making a
Product or service available for use or consumption.
 Disintermediation
 The elimination of intermediaries in the supply chain, also
referred to as “cutting out of the middlemen”.
 Cybermediary
 A firm that offers intermediary services over the web , is a
cybermediary.
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10. Channel Element
 A distribution CHANNEL describes how a company delivers a
VALUE PROPOSITION to a target CUSTOMER SEGMENT.
 The connection between a firm's VALUE PROPOSITIONs and its
TARGET CUSTOMERs.
 Allows a company to deliver value to its customers either directly
or indirectly.
 Direct or indirect CHANNEL(s) that can be decomposed into their
LINK(s).
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11. Channel Element
Value proposition
Distribution Channel
setOf
isA
Offering
Link
isA
by
Actor
Distribution Channel
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Target Customer

12. Channel Element
 ICT, and particularly the Internet, has a great potential to
complement rather than to cannibalize a business’s existing
channels.
 However, selling through several channels simultaneously
eventually causes channel conflict when they compete to reach
the same set of customers.
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13. Link Element
 The CHANNEL element can be further decomposed into its
channel LINKs.
 Describes a specific channel role.
 It may be part of the VALUE PROPOSITION and it may be
related to an other LINK.
 The channel LINKs of the different CHANNELs may sometimes
be interrelated.
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14. Link Element
 Have a potential for value creation and thus contribute to a
firm's VALUE PROPOSTION.
 Attributes
 Inherited from OFFERING
 CUSTOMER BUYING CYCLE {AWARENESS, EVALUATION,
PURCHASE, AFTER SALES}
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15. Link Element
REASONING
 Similar to the reasoning on OFFERINGs.
 Contribute to value creation in three distinct ways.
 Use
 Reducing risk
-Integrating customers into the value creation process
through
customization.
 Reducing a customer's efforts
- Many companies have reduced customer efforts through
online troubleshooting, manuals, FAQs or direct links to
product engineers.
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16. Link Element
CUSTOMER BUYING CYCLE (CBC)
 The Customer Buying Cycle reflects all possible contact points
between a supplier and a customer in the context of the
acquisition, possession and disposal of the product or service.
 The cycle is divided into four phases.
 Awareness
 Evaluation
 Purchase
 After sales
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17. Link Element
CUSTOMER BUYING CYCLE (CBC)
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18. Link Element
CBC and channel functions
CHANNEL
{Awareness}
Advertising
Promotions
Public relations
Partnerships
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{Evaluation}
Company
information
Product
catalogues
Advice
(requirements)
.
Specification
Community
Testing
J.A.S. Fernando - AS2010362
{Purchase}
{After sales}
Offer
Negotiation
Decision
Contract
Orders & tracking
Billing & payment
Fulfillment &
delivery
Implementation & use
Training
Monitoring
Maintenance/Service
Troubleshooting support
Reverse logistics
(disposal)
Community
Product life cycle
manage

19. Link Element
VALUE LIFE CYCLE
 If a channel LINK is also a part of the VALUE PROPOSITION the
attribute value life cycle, overwrites the attribute customer
buying cycle.
Awarene
ss
Awareness
Evaluation
Evaluatio
n
Creation
Purchase
Purchase
After Sales
Use
Renewal
Transfer
VALUE LEVEL and PRICE LEVEL
 Inherited from the OFFERING if the LINK is also part of the
VALUE PROPOSITION.
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20. Channel Strategy
 Distribution Channel has important implications for
management.
 The appropriate strategy varies from one product to
another.
 Management tools
 Customer Buying Cycle
 Hybrid Grid Model
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21. Example – Customer Buying Cycle
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Channels at Barnes & Noble (based on (Moriarty and Moran 1990; Dolan
2000))
M.K.H.Gunasekara - AS2010377

22. Channel Conflicts
 More than one channel competes for the same
customers.
 An important element of a channel strategy in a
business model
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23. Relationship Element
 The Relationship element describes the relationship a
company establishes with a target customer segment.
 based on customer equity
 can be decomposed into several relationship
mechanism
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24. Relationship Element
 Cardinality
 1-n
 Inherits from relationship MECHANISM
 Related to value Proposition and Target Customer
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25. CUSTOMER EQUITY
 classify relationships according to their customer
equity goals
 Acquisition
 Retention
 Add-on selling
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26. Mechanism Element
 A relationship mechanism is part of a relationship
 Describes the function it accomplishes between the
company and its customers
 It may also be a channel link or a part of the value
proposition.
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M.K.H.Gunasekara - AS2010377

27. Mechanism Element
 Element of RELATIONSHIP
 Inherits from LINK element
 Similar to the reasoning on OFFERINGs
 Cardinality
 0-n
 Function
 This attribute describes which function the relationship
MECHANISM fulfills.
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28. Mechanism Element
 Function - Attributes
 Personalization
 Trust
 Brand
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29. Example – Mini Orange
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30. References

Customer Relationship Management,
<http://www.bing.com/search?q=customer+relationship+management+software&
qs=n&form=QBLH&pq=customer+relationship+management+s&sc=0-0&sp=1&sk=>,[16 January 2014]


Market segmentation, Available
From:<http://en.wikipedia.org/wiki/Market_segmentation >, [16 January 2014]

What is Transaction Cost Theory? ,Available
From:<http://www.businessmate.org/Article.php?ArtikelId=182 > , [17 January
2014]

Transaction Cost Theory , Available From: <http://ousest.com/transact.html >,
[17 January 2014]

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Target Market, Available From:<http://en.wikipedia.org/wiki/Target_market>[16
January 2014]
David Steele, Disintermediation and Reintermediation by E-business, 2009,
Available
From:<http://www.cbpp.uaa.alaska.edu/afef/disintermediation_and_reintermed.ht
m >, [17 January 2014]
 Sarkar,Bulter,Steinfield, Intermediaries and Cybermediaries, 1995, Available
J.A.S. Fernando - AS2010362
From:<http://onlinelibrary.wiley.com/doi/10.1111/j.1083-