Business Model Canvas: Pinterest

Business Model Canvas: Pinterest

Executive Summary:

 

Pinterest is set up as a multi-sided platform business model.  On one side, Pinterest provides consumers the opportunity to find interesting images online, store and categorize them. Users can see what posts and other information is listed in a particular category. This creates a community around different interest topics and is free for users to enjoy.

The other side of the platform is targeted to advertising and retail markets.  The value proposition for these customers is access to aggregate affinity data.  Since the content is user generated, there is significant value to advertisers in how consumers think about the products and categorize them.  Also, through this forum retailers are able to access a hard to reach market. 

Pinterest has a few different ways of how to generate revenue. After the number of users reaches a critical mass, the sale of affinity data will become the number one revenue stream. Today, the company is still building up the user base and figuring out how to analyze the data so that it would be valuable to retailers and advertisers. Other revenue streams include referral traffic & click through advertisement, and paid for advertisement. Pinterest has a user base of about 55 Million people and makes about $0.93 per visitor to the site. 

The cost structure for Pinterest is relatively inexpensive. The distribution channel is through the internet and the primary costs are surrounding the computing and development.  The key activities for Pinterest to continue to grow will include gaining expertise in big data analytics and developing key partnerships. More than half of the Pinterest users access the site through a mobile platform so developing strong relationships with mobile partners, software and hosting companies will be important to their success. Pinterest is a great company and is well positioned for success.

References:

1. Brave, Scott. "Pinterest, We've Got a Business Model for You." Gigaom. Baynote, 24 Mar. 2012. Web. 20 Aug. 2014. <http://gigaom.com/2012/03/24/pinterest-weve-got-a-business-model-for-you/>.
2. "Ben Silbermann Pinterest Stanford Startup School 2012 Part 1 of 2." YouTube. YouTube, 21 Oct. 2012. Web. 20 Aug. 2014. <https://www.youtube.com/watch?v=5a8GskjPE0E>.
3. "Ben Silbermann Pinterest Stanford Startup School 2012 Part 2 of 2." YouTube. YouTube, 21 Oct. 2012. Web. 20 Aug. 2014. <https://www.youtube.com/watch?v=8FMqqYTCocw>.
4. "Press." Pinterest. Pinterest, n.d. Web. 20 Aug. 2014. <http://about.pinterest.com/en/press>.
5. Styles, Kirsty. "Pinterest: ‘There Is Value – It's Just a Question of How We Go to Market’ | Mobile Marketing Magazine." Mobile Marketing Magazine. Mobile Marketing Magazine, 10 Mar. 2014. Web. 20 Aug. 2014. <http://mobilemarketingmagazine.com/pinterest-there-is-value-its-just-a-question-of-how-we-go-to-market/>.
6. Harris, Derrick. "Pinterest, Flipboard and Yelp Tell How to save Big Bucks in the Cloud." Gigaom. N.p., 2 Dec. 2012. Web. 20 Aug. 2014. <http://gigaom.com/2012/12/02/pinterest-flipboard-and-yelp-tell-how-to-save-big-bucks-in-the-cloud/>.
7. Myers, Courtney Boyd. "How Much Does It Cost to Build the World's Hottest Startups?" TNW Network All Stories RSS. N.p., 2 Dec. 2013. Web. 20 Aug. 2014. <http://thenextweb.com/dd/2013/12/02/much-cost-build-worlds-hottest-startups/>.
8. "Pinterest, Twitter And Tumblr (Yes, Tumblr!) Are Starting To Steal Revenues From Facebook." Forbes. Forbes Magazine, 27 Jan. 2014. Web. 20 Aug. 2014. <http://www.forbes.com/sites/roberthof/2014/01/27/pinterest-twitter-and-tumblr-yes-tumblr-are-starting-to-steal-revenues-from-facebook/>.
9. Lomas, Natasha. "Mobile Ad Market Spending To Hit $18BN In 2014, Rising To ~$42BN By 2017, Says Gartner | TechCrunch." TechCrunch. TechCrunch, 21 Jan. 2014. Web. 23 Aug. 2014. <http://techcrunch.com/2014/01/21/mobile-ad-market-forecast-to-2017/>.
10. "ETForecasts - Worldwide PC Forecast." ETForecasts - Worldwide PC Forecast. ETForecasts - Worldwide PC Forecast, n.d. Web. 23 Aug. 2014. <http://www.etforecasts.com/products/ES_pcww1203.htm>.
11. "Online Advertising." Wikipedia. Wikimedia Foundation, 23 Aug. 2014. Web. 23 Aug. 2014. <http://en.wikipedia.org/wiki/Online_advertising>.

Week 5 Reflections

Additional Readings:

• Dr. Handler, Jonathan. "Big Data and the Art of Medicine - M*Modal." MModal. N.p., n.d. Web. 19 Aug. 2014. <http://mmodal.com/articles/big-data-and-the-art-of-medicine/>. 
• Article: "Advertisers Get a Trove of Clues in Smartphone," The New York Times, March 11, 2009.  (Download content.) 
• "The Big Data and Privacy Review." The White House. The White House, n.d. Web. 19 Aug. 2014. <http://www.whitehouse.gov/issues/technology/big-data-review>.

Reflections on Big Data:

This week the readings were focused on the power of Big Data.  However, every coin has two sides that both need to be considered. On one hand, Big Data offers countless number of advantages to society. From utilizing aggregate data for improving evidence based medicine to providing an advantage for marketers to target specific consumers for their products. Targeted marketing has advantages for consumers and businesses. Timely placements of coupons and advertisement may steer a person deciding on dinner or a purchase to take advantage of the latest offer available and at the same time benefits the site and restaurant/store. The potential use and power of Big Data extend as far as the imagination will take you.

The other side of the coin, the disadvantage of Big Data, is the compromise that consumers make in terms of privacy. If you are shopping in the grocery store and an advertisement comes up on your phone for the milk that you buy every week it can give someone an eerie feeling like they are being watched. Privacy policy, similar to terms and conditions, that consumers need to approve are not reviewed thoroughly and even if they are reviewed there is not much someone can do to limit the exposure of personal data. If you want access to a particular application or site you need to agree to the terms and privacy policy of the site. Additionally, consumers have no control and limited recourse when policies change.  In some cases people may not even know or realize all the information that is being collected about them and how that information is being used.

Technology is advancing rapidly and the applications available for Big Data are growing quickly. Public policy and privacy laws need to keep up with the changes in technology. There are so many benefits available because of Big Data and it is important to mitigate the risks and negative consequences of this powerful tool.

Week 5 Goals

My Goals for this week:

• Complete the team assignment
• Complete the assigned readings
• Complete the personal branding homework
• Complete Pinterest Canvas 
• Complete the readings for week 5 and week 6

Business Model Canvas: Nordstrom

Business Model Canvas: Nordstrom:

Note: If you would like to see a larger image, please let me know.

Executive Summary

Nordstrom is a leader in fashion and customer service. With over $12 Billion in revenue in 2013 including over 3% growth from 2012, the company continues to differentiate themselves through their value proposition. Nordstrom is known for exceptional customer service including personalized shoppers and providing fashion forward merchandise.  They are expanding and continuing to invest in this space with the acquisition of Trunk Club.  Trunk Club is the leading men’s personalized clothing service. 

Nordstrom is also expanding their online sales in both the full price and half price customer segments.  As they expand further into online sales their overall cost structure will go down as it is less expensive to support online orders than brick and mortar stores. 

The key partnerships for Nordstrom include fashion designers and clothing manufacturers. Morningstar’s analysis of Nordstrom indicated their competitive advantage to turn inventory faster than the competition.  This enables them to stay focused on their strategy to be a fashion leader. Faster inventory turns also suggest a flexible supply chain set up with the key partners.  A key resource is the ERP system that helps in the management of inventory and customer order fulfillment. Another key resource for Nordstrom is their sales team. There is an incentive structure in place consisting of base pay plus commission to encourage excellent customer service. 

Nordstrom has laser focus on their value proposition and this enables them to be successful. They are investing in being a fashion leader with outstanding customer service. The key resources, partnerships and activities (including employee incentives) all line up well to support Nordstrom’s business model.

References

"Shared Publication." Nordstrom, Inc 2013 Annual Report. Nordstrom, 10 Mar. 2014. Web. 16 Aug. 2014. <https://materials.proxyvote.com/Approved/655664/20140310/AR_198982/>.

"Webcasts and Presentations. JWN: Earning Call Q2 2014" Nordstrom Investor Relations. Nordstrom, n.d. Web. 16 Aug. 2014. <http://investor.nordstrom.com/phoenix.zhtml?c=93295&p=irol-audioArchives>.

"JWN : Nordstrom Inc Analyst Report | Analyst Report." JWN : Nordstrom Inc Analyst Report | Analyst Report. Morningstar, 15 Aug. 2014. Web. 16 Aug. 2014. <http://analysisreport.morningstar.com/stock/research?t=JWN®ion=USA&culture=en-US&productcode=MLE>.

"Company Research: Nordstrom's." Company Research: Nordstrom's. N.p., n.d. Web. 15 Aug. 2014. <http://legacy.earlham.edu/~hendest/nordstrom.html>.

Kucera, Danielle. "E-Tailor Startups Challenge Amazon in $200 Billion Market." Bloomberg.com. Bloomberg, 7 Aug. 2012. Web. 16 Aug. 2014. <http://www.bloomberg.com/news/2012-08-08/e-tailor-startups-challenge-amazon-in-200-billion-market.html>.

Week 4 Goals and Reflection on Readings

My goals for this week:

• Read the required reading
• Finish the evaluations for the team homework
• Complete the first Canvas assignment
• Work on the personal branding assignment

Reflections
This week the Seth Godin: Ted Talk on: How to Get Your Ideas Spread really stood out to me as the new way marketers should be approaching to target prospective buyers. "Ideas that spread win" (Godin, ~1-3min into the talk). Godin said to focus the marketing attention at the front of the curve, where the enthusiasts and early adopters will help spread the ideas. This reminds me of concepts that Malcolm Gladwell presented in The Tipping Point.  This will be the most effective way to spend resources. 

Another point that Godin made was that the ideas themselves and the message needs to be "remarkable".  Something unique and when people walk away they will remember the product or concept.  This made me think of the video commercial for the Dollar Shave Club.  That video was very memorable, new, funny, and a great promotion. It helped spread the idea of Dollar Shave Club and launched the business to be where it is today.  This example proves Godin's message that the ideas that spread do so much more effectively when they are memorable and unique.

References:
Seth Godin: Ted Talk on: How to Get Your Ideas Spread
https://www.youtube.com/user/DollarShaveClub
Dollar Shave Club: Using old media to sell on the web.

Week 3 Accomplishments

My accomplishments for this week:

• Read the required reading
• Completed the Twitter assignment
• Finished the research on premium car segment competition for the team homework

Additional reflections on this week will be posted on 8/10.

Applying my digital marketing learning at work

Last week I had a personal goal to think of ways I can apply my learning from this class to my everyday work. My job responsibility includes global supplier relationship management and commodity strategy development.  I'm always on the lookout for the best sources and suppliers to engage with. New suppliers that enable better cost competitiveness or bring in new technology bring value to my company.  Even though I'm not in a marketing function, I know there are ways I can apply the learning from this class to my everyday role.

I thought about the ways I could use blogs or other forms of media (LinkedIn, YouTube, Twitter, etc) to interact with my suppliers. I could follow my suppliers on Twitter and Facebook to get a better understanding of their marketing direction. This would also help me stay up to date with the latest technology and business developments. I could also start to read blogs related to the commodities I purchase. This should also help with my scouting efforts and provide me with a broader perspective on what is available: market competition and technology.

As a sourcing professional, I am a consumer of the digital marketing and I should engage with my suppliers, and potential suppliers, in new ways. Being more involved with the online community related to my commodities will enable me to stay ahead of trends and create stronger commodity strategies. I'm excited to start to apply these concepts at work over the next few weeks.

Week 3 Goals

My goals for this week:

• Read the required reading
• Complete the Twitter assignment
• Finish the research on premium car segment competition for the team homework
• Start on the first Canvas assignment
• Start on the personal branding assignment

Week 2 Learning Accomplishments & Reflection

• Started discussion with my team on group homework and developed a plan of attack for the next few weeks.
• Read required reading
• Read additional articles:
• http://venturebeat.com/2014/05/19/why-twitch-is-worth-1
  b-to-google/?obref=obinsite 
• Crowdsourcing Evolution from YouTube 5 minutes by "the blogtv".
• Why You Should Tweet Your Way Into A Career-Changing Mentor's Heart | Fast Company | Business + Innovation http://m.fastcompany.com/3012703/dialed/why-you-should-tweet-your-way-into-a-career-changing-mentors-heart?utm_source=twitter 
• The social marketing playbook "Chapter 3. Making the transition to the social web"

 
Reflection  

This week's readings offer an insight into the emerging market place of crowdsourcing! This is such a fascinating concept: how do you engage the power of the crowd to contribute and develop products? Companies such as Kickstarter offer an opportunity for business owners to get funding and product feedback.  Products now emerge that would not have had the opportunity previously due to lack of venture capital or our funding sources. This provides more opportunities for entrepreneurs to succeed and greater diversity of products. 

Amazon's Mechanical Turk is another example of how to utilize the power of the crowd. This is a similar example to the one provided in the reading where NASA had a screensaver program available to the public that helped speed up very long & complex computations by using excess computer capacity.  In the case of Amazon, people get paid a few pennies to do small tasks like clicking a button or taking a short survey that provides input to businesses. The critical lesson here is how can businesses divide up tasks into small bits that are easy to execute to save time and money by using such programs. Theoretically, this could reduce the time to market of product and revolutionize some types of product development. This hinges on the idea that complex problems or tasks are broken down to very simple easy to do tasks and can be divided amongst many people to execute.

Another interesting article that I read this week was about using Twitter to find mentors. Twitter can be an effective tool to get your message across to many people and a way to build a brand, however I do not see how you can use Twitter to build a meaningful relationship with a mentor.  There are thought leaders that you can follow on Twitter and learn from their advice, but a mentor - protege relationship needs to be a two way dialogue and discussion. The relationship should develop over time and be mutually beneficial. Twitter can provide a forum for communication and a way to get advice from a large group.  LinkedIn also has forums and group discussions where people seek and provide advice.  These types of communication methods do not faciliate the type of relationship and engagement that I consider an important element of a mentor - protege relationship.

Week 2 Goals

My goals for the week are to:

• Learn about empowering the customer
• Begin the Online Marketing Assignment
• Begin the Twitter and Brand Equity Assignment
• Start to think of ways I can apply the learning from this class to my job and career goals.

The Marketing Journey Begins

This week I began my journey to learn about digital marketing. My goal for the week was to:

• Learn about the class and class expectations and deliverables
• Set up a Twitter account and this blog
• Start to learn about Business Model Canvas
• Read about the Internet an how it has changed marketing

I successfully accomplished my goal for the week and in addition to the required readings also read and listened to the following articles and NPR audio:

"Does the Internet Make You Dumber? (by Nicholas Carr, the Wall Street Journal, June 6, 2010)

"Does the Internet Make You Smarter? (by Clay Shirkey, the Wall Street Journal, June 6, 2010) Books 2.0 (Audio from NPR "On the Media", July 2, 2010; 6 minutes)  Reflections and Comments on What I Learned:

The articles by Nicholas Carr and Clay Shirkey provided two very interesting and competing views on the impact of the Internet to modern society.  However, the two positions are not mutually exclusive and both provide an insight into the impacts of the Internet.  A more appropriate representation would be that the Internet is what you make it out to be. It can be a source of entertainment, a way to connect and interact globally, and also a very power tool for information and collaboration.

Carr argues that the Internet has caused a lot of distraction to learning; people comprehend and remember less when they multi-task or are distracted.  I agree with Carr that the Internet can be very distracting and is full of information that may not necessarily be accurate or useful. However, when used for a focused purpose and as a productivity tool there are many advantages the Internet provides. Shirkey provides a few examples including, PatientsLikeMe, where many people can collaborate for a good cause to help advance medicine.  Among all the entertainment and inaccurate information there are sites that help connect people and produce great results. The Internet doesn't make you dumber or smarter but should be thought of as a tool in a marketers handbook to gain and share  information.

Chapter 1 of the book, "Made to Engage" (in The Age of Engage, pp. 1-26.) discusses how marketing strategies have evolved over the decades and in the age of Web 3.0 there is great opportunity to interact with your customers. In this case, the Internet is viewed as a marketing tool: all communications are interactions with the customer and represent the brand.  The internet, and more specifically Web 3.0 has made it even more important to deliver a clear message of what your brand represents and give your customers the opportunity to collaborate and provide feedback on your products. 

I'm looking forward to learn more about how I can utilize the internet as a tool to better deliver my personal brand message. (Maybe one day company brand message).