3.4 Business model
A business model pivot is one where the customer base changes. If you are unsure of what is meant by the term ‘business model’, review the unit Developing your business model [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .
We have seen a trend towards business model pivoting in a number of businesses. For example, coffee machines, printers and other hardware that perhaps were originally aimed at offices and businesses are now also increasingly aimed at end users (e.g. homeworkers) who also want access to them.
Indeed, the pricing of such machines and gadgets has come down as it has been recognised that often it is the consumable elements (e.g. pods and cartridges) that provide a greater income from a mass market.
Activity 2 From business-to-business to business-to-consumer
Think of any product that was available only to businesses, which later became available to end users or consumers.
What adaptations might the product maker have made to their business’s product and marketing strategy in order to make the product available to this new customer base?
Discussion
Many possible examples come to mind, but here is one: hairdressing.
Hairdressing supplies often start by being available only through salons (think of gels, mousses, straighteners, curling tongs, hair clippers and so on). In this case, the product maker would have to consider a completely different distribution strategy, as they were only targeting hair salons, perhaps through a direct sales force and a wholesaler network. This strategy would not be appropriate for making the product range available to a wider public.
To reach this wider group, a new distribution network through retailers would be required. Some might deploy celebrity endorsement; e.g. making use of famous hairdressers rather than relying on the technical specification of products that professional hairdressers might consider when differentiating between suppliers.
The product maker could consider packaging smaller volumes of product. If they also included user instructions, this would allow amateur stylists to achieve similar results to professionals.
Pricing is also clearly another aspect of the marketing mix that would have to be changed to reflect the smaller purchasing power of individuals versus the bulk buying by salons.
3.3 Customer segment