BUSINESS MODEL L.O.O.P. (Life Out of Plastic)
“A business model describes the rationale of how an organization creates, delivers, and captures value. It is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems. ” The business model is created for and about L.O.O.P.. In order to set up a clear overview of all the fields that have been researched during this phase of the project, a business model is created which can be found in the figure on the left. A standard business model consists of thirteen elements but it is important to keep in mind that in business model only a few of these elements were being researched. The business model is created on the current state of the project. This means that the value proposition is about an undefined product. After designing an actual product further research on several factors is needed. Below a description of these elements is given.
The customer segment describes the group of people L.O.O.P focuses on. This target group is a niche market: The younger upper middle class society of Lima with an age of 25 - 35 years. The upper middle class of Peru consists of approximately of 3% of Peruvian population. Both men and women. This group is able to provide themselves with their basic needs and still have money left to spend on their desires. Because this group of people has a lot of time left on this planet they see the importance of contributing to an improvement of their own future: saving the planet. More numbers and facts about the customer segment can be found in chapter ‘persona’ and ‘conclusions data’.
This block describes the added value that must be created by the undefined product. Important values that come along with a future product for the customer are: a useful, high quality and appealing product. Besides these important values, a future product could come along with the following values as well: Peruvians highly value their different climates, find the environment important but do not really know a way to recycle; The product provides a way to keep the environment cleaner and is a way to recycle: the more products are sold, the more plastic is re-used. It is an easy way to contribute, without a lot of effort. An optional extra value is being a member of a movement. This will, together with the product, give people the feeling of living a more conscious life. With the future product they can distinguish oneself and show other people they are “green”. Also highly valued is the aspect of family and appreciation for food. The future product could enrich the customer while combining these values: spending time with your family while enjoying dinner. Another important aspect that could come along with the future product is the upcoming trend of sharing products and services. Nowadays people share almost everything: houses, workspaces, food and so on. By considering this aspect while designing a product L.O.O.P. will join an ongoing trend and will satisfy the target group in their ‘sharing desires’. A final value that could be considered during the design of a future product is the importance and appreciation of packaging. Not only packaging the product nicely but also think about the message the packaging will send.
The Channels Building Block describes how L.O.O.P communicates with and reaches its Customer Segment to deliver the Value Proposition. Channels have five distinct phases. Each channel in this business model covers one or more of these phases. The five distinct phases are awareness, evaluation, purchase, delivery and after sales.
The customers will get aware of the product by social media, the L.O.O.P website, publications, television performances, their volunteers network, the exposition in the shop, workshops and other events, like fairs.
To be able to evaluate the value of the product the story behind the product is very important. This will be told by L.O.O.P through a label/ tag attached to the product. This story will also be told through social media. The green image of the product will also be depending on the store it is in. The “good/ healthy/ green” store will give the right feeling to the product.
Purchasing L.O.O.P.’s products will be available through different channels. Online people can buy their products via Facebook, a store’s web shop and eventually L.O.O.P.’s own web shop. Besides the online purchasing, people can buy L.O.O.P’s products in stores that enhance L.O.O.P.’s image and also on occasional entrepreneurial events. Knowing that average time that the customer wants to travel to buy products (34 minutes) an area for L.O.O.P.’s selling points can be found in the ‘Place’ in the marketing mix. Increasing the number of stores L.O.O.P. sells in is important.
There are different delivery options, when selling in store or on a fair the products are directly delivered to the customer. When the customer buys a product through Facebook there are two options: The customer can pick up the product at the L.O.O.P office or it will be send by local post services. Be aware: this will cause more costs for L.O.O.P.. An arrangement with a delivery service could be useful in the future.
5. After sales
After the product is being sold questions or problems will be handled through personal contact. People can come by the office, send an email, send a message on facebook, etc. In the future after sales could be more personalized by becoming a member of the L.O.O.P. community. More information about the customers can be gathered and specific deals on products can be offered. Another possibility for after salses is to guaranty the high quality of the products L.O.O.P. sells, it could be useful to add some sort of warranty to the products. This will show people L.O.O.P. only sells high quality products.
The Customer Relationships Building Block describes the types of relationships L.O.O.P establishes with the Customer Segment. If the product is sold in one of the selling points in Lima there will be no personal contact with the customer. In case they are sold on fairs there is short term personal contact. The contact is personal as well when selling through Facebook, because L.O.O.P. does not use an automated delivery system. When people decide to be part of the L.O.O.P volunteers network their will be longterm personal contact. L.O.O.P. could also realize long term personal contact with a customer by setting up a community in which people that are interested can join. This can be used as a platform for ‘semi’-volunteers: people who like to show that they contribute to the environment by buying L.O.O.P.’s yearly collection without all the other obligations that come along with being a volunteer. Through this kind of customer relation more information about the customers can be gathered and specific deals on products can be offered to keep them a happy buyer.
The four elements mentioned above are not the only elements of L.O.O.P.’s business model. Once a final product has been designed which contains (all of) the aspects within the value proposition, more research needs to be done about the remaining 9 elements (grey areas in figure) in order to implement the product. A few aspects that have been researched within these 9 elements are currently illustrated in the business model. But, because these nine factors diverge too much depending on the chosen final product, the Plastic Waste Lima team decided not to include these elements in L.O.O.P.’s current business model. In the next phase of the project specific research on these elements is recommend in order to succesfully implement a product.