Business Model

Business Model

Business model is the plan executed by a company to earn profit and generate income from its operations. The model indicates that the functions and components of the business, the revenue and the expenses incurred. It also includes value proposition, customer relationship, channels, and customers segments. It basically describes how a company creates, conveys, and adds value in terms of social, economic, cultural and so on. In fact, business model can be divided into two parts. Part one is the activities done to make or produce something, like purchasing, manufacturing, and so on. While part two is about selling something, like finding and reaching customers, delivering and distributing the products.

Paris Mini Baker

Paris Mini Baker is adopting various business models. There are totally three business models which we are going to describe including manufacturer business (direct) model, direct marketing and viral marketing.

Manufacturer business model is defined as a manufacturer who sells their product directly to their customers without any intermediaries. We can see that Paris Mini Baker who baked their own puff is a manufacturer as they transform the raw materials into a completed product. The raw materials used by Paris Mini Baker including the powder, sugar, eggs, and the other. And the finished product or the final product that is directly sells to the customers is the puff that used to cover the ice cream.

Besides that, direct marketing is also used by Paris Mini Baker in operating their daily business. Direct marketing is actually a quite simple business model. It is a form of advertising which allows the business to communicate directly to the customer. For instances, the owner of Paris Mini Baker is able to communicate and sell their products to the customer who walk in their shop. Direct marketing in more suitable to be apply in a Brick and mortar type of shop which is a traditional “street-side” business that have a physical presence rather than virtual or online. For those shops that apply direct marketing, they undergo their business in a physical shop and verbal communications to deal with customers. Just like Paris Mini Baker, they rented a small shop in New Town Kampar and operate their business by selling products and services directly to customers. Besides that, it can also be called as the disintermediation method.

Direct marketing is one of the business model that focus on the face to face communication. Face to face communication plays an important role in developing customer relationships. Paris Mini Baker had applied face to face communication effectively as the owner will ask the customers about their opinion on the taste of ice cream and also the puff. In this case, face to face communication enables the business to gain a better understanding of the need of customers which indirectly lead the business to achieve their business goal.

Furthermore, Paris Mini Baker also apply viral marketing business model to their business. Viral marketing refers to the marketing technique that uses the pre-existing social networking services and other technologies to try to produce an increase in brand awareness and to achieve other marketing objectives. It can be delivered by word of mouth or enhanced by the network effects of the Internet and mobile networks. In this case, Paris Mini Baker relies on the customers to help promote their business using the word of mouth. The customers will introduce and recommend the ice cream puff of Paris Mini Baker to their friends if the ice cream puff is delicious and worth to try. Besides that, Paris Mini Baker has also created a Facebook page to promote their business. Paris Mini Baker will post photos of their ice cream puffs to the page regularly and constantly in order to maintain the interest of the existing customer and attract more potential customers. Instagram which is becoming more and more popular nowadays are also useful in this case as their customers can take the photos of the ice cream puff and upload them to Instagram along with the hashtag remarks. This is an indirect yet efficient method for Paris Mini Baker to broaden their market.

ET egg tart

Same as Paris Mini Baker, ET egg tart is also one of the manufacturer that product their own product using the raw materials. For example, the baked their own egg tart using the powder, sugar, eggs and the others.

Furthermore, ET egg tart is a traditional shop which adopting the Brick and Mortal business model and sells the products directly to customers. Direct Marketing is apply in this situation as direct marketing is a form of advertising which allows the business to communicate directly to the customer. The direct marketing method is suitable to be used in a Brick and Mortar type of business. Brick and Mortar is a traditional “street-side” business that have a physical presence rather than virtual or online. They undergo their business in a physical shop and verbal communications to deal with customers. It works by selling products and services directly to customers. It is also called the disintermediation method.

By applying the theory to ET egg tart, we know that ET egg tart undergo their business in a shop located at Old Town Kampar. They operate their business from morning until noon and employ workers to assist them in running their daily business.

Besides that, this kind of Brick and Mortal type of business which operate using direct marketing method emphasize on the face to face communication which enable the owner to communicate directly with their customers. The feedback of customer can be got in the shortest time and also the customer relationship can be developed in this situation. As ET egg tart had been operated for more than 20 years, their recurring customers are not only their customers but they are like friends with each other. This kind of customer relationship cans turns their normal customers into loyal customer at the same time attract new customers to visit their shop and hence it guarantees a long term profit for ET egg tart. Although a physical presence may help to increase the legitimacy of the business, it requires higher cost for ET egg tart to continue their daily business operation. For one, they need to pay for the rental, salary and the electric bills.

Furthermore, ET egg tart also applied Viral marketing to their business using the word of mouth. ET egg tart is a shop that has operated for more than 20 years. In this case, they have many different customers who have tried their products. The customers who are satisfied with the egg tarts of ET egg tart will promote it to their friends, relatives, neighbours and others. Word of mouth is always a successful and effective marketing strategy as it is both cost saving and reputable that people will believe in what their friend has told them compared to the other type of marketing method.