BU121 SI Midterm Review Session Worksheet

Business Models:

What is a Business Model?

➔ How a company _____create___, _____deliver____ and ____captures___ value.

Which components of the Business Model Canvas falls under:

1. Creates Value: value propositions, customer relationship, channel, customer segment

2. Delivers Value: key partner, key activities, key resources
3. Captures Value: revenue streams, cost structure

Identify two companies that sell similar products but have different business models. Choose
1 block of the business model canvas and explain how each company would fill this block out
differently. (3 marks)
1. Vogue and Consumer report both sell magazines but have different business models
2. One way that these companies are different with respect to their business models is their re
venue streams.
(1) Vogue earn their revenue through listing advertisement space in their magazines
(2) Consumer Reports earns their revenue by making consumers pay for a subscription in
order to access their magazine.

Types of Business Models

Type of Business Model Characteristics Examples

1. Multi-sided platform  Value is created by facilit Mastercard, Ebay, Twitter, go

ating interactions betwee ogle, Magazines
n 2 or more distinct BUT i
nterdependent groups of
customers
 Network effect
 One segment subsidize a
nother
 2. Free  At least one substantial c
ustomer segment is able
to continuously benefit fr
om a cheap/free-of-char
ge offer, financed by ano
ther part of the business
model or by another cust
omer segment

a) Advertising  Advertiser pay for promo Facebook

tion via your business to
customers

b) Freemium  Free initially with optiona Spotify

l upgrades for a cost

c) Bait & Hook  Offering low cost base ite Gillette Razors
m then profiting from rec
urring sales of associated
product

Identify and explain the business model Spotify uses. Name one way it might affect its busine
ss model canvas. (3 marks)
Identify: Spotify use a Freemium Model
Explain: In a Freemium model, the initial purchase is free but later, there are options to pay for
premium feature.
Name: effect “key activities” section, since one of the most important activities for Spotify will
be promoting the paid upgrades as this is their main source of revenue.
What are the differences between the Social business model canvas and the for-profit BMC?

Charities Social Enterprises For-profit/Traditional

Focus: social impact Focus: Social impact alongsid Focus: financial value
e financial return

Income/Funding: Funding fro Income/Funding: Profits rein Income/Funding: profits fro

m grants, donations or endo vested into business, sponso m providing goods or service
wments rship and donation s, investors
 Stakeholders: Under-served Stakeholders: Under-served Stakeholders: investors, shar
community community eholders, customers

Example: UNICEF, canadian C Example: SOS, EarthSuds Example: Microsoft, Apple

ancer Society

Critical Thinking:

What is Critical Thinking?

A cognitive process of actively and carefully evaluating the reasoning and evidence behind kn
owledge and arguments and developing defensible knowledge and arguments ourselves.

What are Three Aims of Critical Thinking?

1. Quality of Argument
2. Strength of evidence
3. Clarity of Communication

Components of an Argument
Claim Premise Link

the position or answer to the the reason for your claim; connection between your clai
question being asked provide justification m and premise

Approaches to Arguments
Stage Characteristic

Follower Blindly accept all arguments, ignoring reasoning and assumin

g evidence presented is reliable
 Cynic Rejects all arguments, assume all reasoning is flawed and all
evidence presented is biased or false

Healthy Sceptic Actively assess arguments based on reasoning, and evidence

based on reliability

Types of Evidence
Type When to Use It Examples

Examples Helpful to demonstrate or ex Crime in Waterloo is increasi

plain a premise or claim ng. Eg. My bike was stolen las
t week, therefore, current pol
icing practices are ineffective

Research Findings Very useful, especially when t In a 2018 survey conducted b

he knowledge is reliably sour y WLU, 47.5% of Masters stu
ced and credible dents said they would recom
mend this university to their
others

Knowledge from Other Sourc Can strengthen your premise Emotions capture attention h
es as long as it’s from a credible arness memory, and enhance
source motivation(Cavanagh, 2016).
Therefore, lecturers should u
se students’ emotions to impr
ove learning

Approaches to Knowledge
Stage Approach Characteristic

Early Assume that “correct knowle Continuous search

dge” exists, even if we don’t
possess it.

Intermediate Accept that knowledge is disp Giving up on finding a “right”

uted and there are multiple a answer
nswers, but it’s not possible t
o distinguish between them

High Accept that knowledge is disp Making judgments via critical

uted and multiple answers ex thinking
ist with different attributes w
 hich can be evaluated

Lori and Ben are trying to determine whether red or blue signs are better for their new restau
rant. Lori says that red is a better colour for the sign, as the colour red has been proven to ind
uce hunger. No matter what, Ben always disagrees and insists on blue signage.
a) Identify the claim, premise, and link in Lori’s argument. (1.5 marks)
 Claim- “red is a better colour for the sign”
 Premise- “the colour red has been proven to induce hunger”
 Link- “as”
b) What kind of approach to Lori’s argument is Ben taking? Explain. (2 marks)
 Ben is being a cynic
 Cynics reject all argument, and Ben is noted to always disagree, no matter what

Marketing:

What is Marketing?
“the entire process of creating relationships with customers by offering goods, services, and e
xperiences that they value.”
“.. provide goods and services that satisfy customers’ needs through a coordinated set of acti
vities”

What is the Marketing mix? (4Ps)

 Product -> value proposition
 Pricing -> Revenue Streams
 Place/Distribution -> Channels
 Promotion -> Customer relationship

What are the steps to defining a target market?

To determine who we should target and what problem to target, we use STP
1. Segmentation: identify and describe subsets of customers
2. Target Marketing: identify the customers who have similar unfulfilled wants and needs
 3. Positioning: Fix, adapt, and communicate the nature of the product to your target market.

What are the steps to Market Segmentation?

1. Market segmentation: define possible customer segments
2. Perceptual Mapping: How the customer perceives the competition is currently meeting thos
e needs.
3. Preference Analysis: customer wants/needs

Marketing Segmentation Activity:

You and your friends are looking to enter the gum industry. Together you need to decide wha
t group of customers you would like to aim your product towards. Begin by segmenting the m
arket into 3 groups based on your prior knowledge about gum and its benefits.

Step 1: Market Segmentation

Francine the Minty Fres Heath the Healthy Chew Bobby the Fun Bubbler
her
Benefits sought Fresh Breath Positive Health Effects Entertainment

Demographic Young Adults (18-25) Elderly (65+) Retired Children (8-12)

working professionals Medium income from pe Students
Medium-high income nsion Very low income

Lifestyle/ Social, busy, place high i i Money conscious relaxed Fun-seeking, adventurou
Psychographic mportance on image lifestyle, healthy s, high energy

Behavioural High product usage, bran Medium product usage, Low product usage, Bran
d loyalty=medium-high Brand loyalty= low d loyalty = low

Step 2: Perceptual Mapping

Step 3: Preference Analysis

Step 4: Combine the 2 Maps

What is a Product?
 A product is a bundle of attributes that provides the right features and offers the right featu
res and offers the right benefits that satisfy customers’ wants and needs
 Features = tangible AND intangible
 Benefits are the results of the features
 Could be a physical good or a service

Packaging serves as in- store advertisement,

identifies features and benefits
and reduces risk of damage, breakage, or spoilage.
Product Life Cycle
1. Introduction Eg. Commercial space flight
2. Growth Eg. Handheld computers and smartphones
3. Maturity Eg. Social Media
4. Decline: Eg. Landline Phones

Identify the 5 Brand Insistence Drivers. Explain how Starbucks implements 2 of these drivers t
o create brand insistence / loyalty.
Identify: The 5 Drivers of Brand insistence are Emotional Connection, value, accessibility, Aware
ness and Relevant Differentiation.

Explain:
-Accessibility: Starbucks ensures that customers see their products as convenient and accessibl
e by having stores in many locations(on campuses, in malls. etc). Additionally, they have drive-t
hrough and options to order online beforehand to make your experience with them even more
convenient.
-Relevant Differentiation: Starbucks makes its products unique in several customer-compelling
ways such as providing customization drinks, a loyalty program, writing your name on your cup,
providing comfortable seating and Wi-Fi, etc. These ensure that customers have an enjoyable, r
elaxed and comfortable experience at their stores.
The Means-Based Approach
Who am I? What do I know? Who do I know?

Education Close contacts

Traits/abilities Experience Friends of friends
Values Expertise Possible contacts
Interests/Activities

Components of a Valuable Idea

1. Desirability
2. Viability
3. Feasibility

Exam tips:
● Use the exam outline and learning objectives
● Allocate your time! (120 minutes, 70 marks)
○ ~1.5 minutes per mark = time leftover
● Answer in bullet form
● Highlight questions being asked to fully understand the question
● Answer ALL parts of the question
● Get to the point!
● Back up with examples if possible
 ● If you ever make assumptions, just state them!
● Wear something comfortable the day of the exam
● Get a good night of sleep
● Eat breakfast!
● Have everything you need with you (pens, pencils, highlighters, water)
● Make sure you know which room you are writing at
● Arrive early
● BREATHE! You got this J

Reminder: SI will not review ALL the content that will be on your midterm. You are responsibl
e to review all testable material.