Revenue Model Innovation at Roche Diagnostics

London Business School

This case study involves the merger of Roche Diagnostics’ Molecular Diagnostics and Applied Science business areas in Germany. The merger, which was initially motivated by a combination of converging needs among commercial diagnostic laboratories and research hospitals, product-portfolio synergies, operational efficiencies, improved customer management, and an increasingly competitive marketplace, brought to light potentials in the way Roche Diagnostics generated revenue from its products and services. While these go-to-market-strategies may have well existed for a number of years, the move to a single sales force calling on customers across the two business areas required the need for a sustainable, integrated pricing approach. One of the key questions occupying Doctor Bodo Eickhoff (Senior Vice President of Sales and Marketing for Applied Science and Molecular Diagnostics in Germany) and his team concerned the appropriate revenue model under the revised organizational structure.

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What’s the Deal with LivingSocial?

Harvard Business School

Tim O’Shaughnessy, the 29-year-old CEO of LivingSocial, is growing a revolutionary worldwide business of “daily deals”-in which retailers offer a heavily-discounted product or service available for purchase for brief (often 24-hour) windows. The case explores the complicated sharing of risks and rewards between LivingSocial, participating retailers, and customers, focusing on the return on investment in both the short- and longer-term for LivingSocial’s retail partners. In addition, given the rapid growth of the daily deals space and the accompanying proliferation of competitors including Groupon and Amazon.com, the case focuses on the need for constant innovation in product offerings to maintain differentiation from copycats.

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Barceló Hotels and Resorts (A)

Harvard Business School

Barcelo Hotels and Resorts must decide whether to allow its many hotels to continue to undertake separate promotional campaigns or to run, for the first time, a broad corporate-level promotion. Complicating the decision is the fact that the many hotels in its portfolio vary greatly in their character, clientele, positioning, and locations.

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Global Graphics: Pricing in a New Market

London Business School

It is October 2009 and Gary Fry, chief executive officer of Global Graphics, is faced with a tough decision. Global Graphics — a technology expert with 20 years experience in developing and selling printing equipment and software exclusively to original equipment manufacturers — is about to release a revolutionary desktop PDF application targeted directly at office workers. With less than two months before the official launch, however, there is still considerable debate on what the actual price of the product should be. Fry is adamant that the “right” price will help Global Graphics achievethe ambitious sales and customer acquisition objectives set by the management team. In addition, he understands the importance of establishing Global Graphics as a viable alternative to Adobe, the undisputed leader in the end user market for business software. What is the price point that best serves these seemingly conflicting goals?

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The London 2012 Olympic Games

Harvard Business School

It’s 2009 and Paul Williamson, Head of Ticketing, must finalize ticket prices for the 2012 London Olympic Games. Yet, there are many criteria to consider. First, given the importance of ticketing to the Games’ bottom line, he has a strong incentive to maximize revenues. Second, because the entire world will be watching, he wants to maximize attendance – not just at the Opening Ceremony and swimming finals, which are easy sells, but also at events such as handball and table tennis, which are not. Third, he wants to fill seats with the right people – knowledgeable fans who add to the energy and atmosphere of the event. Finally, tickets had to be accessible not only to the world’s elite but also to average Londoners, many of whom lived around the corner from the Olympic Park.

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BT Business: Responding to ‘Free Forever‘

London Business School

This case describes the actions taken by British Telecom’s business unit (BT Business) in response to the radical ‘free broadband forever’ offer introduced by The Carphone Warehouse (TCW) in April 2006. At the time of the campaign, BT Business held a dominant share of the lucrative (and fast growing) broadband market in the UK. TCW’s bold move clearly threatened that position. More important, BT Business was concerned that larger competitors (Vodafone, BSkyB, O2, etc) would follow suit, therefore initiating a price war that in all likelihood would erase profitability in the industry. The main learning points from this case involve pricing and competitive strategy. In particular, BT Business’ problem touches on a number of important questions, including: (1) maintaining price leadership; (2) managing price competition and the threat of customisation; and (3) designing product bundles that capture customer value and act to discourage competition. In addition, this case provides a good example of the challenges often faced by large firms (especially former monopolies) attempting to improve customer orientation. Prior to ‘free broadband forever’, BT had tried unsuccessfully on a number of occasions to shift its organisational structure away from product lines (fixed telephony, mobile voice and data, broadband, etc). Interestingly, they succeeded only in the face of a significant and immediate competitive that ‘helped’ generate the necessary motivation and momentum.

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Viagogo (A) (B)

London Business School

This is two-case series discusses some of the key marketing decisions faced by Eric Baker and the rest of his management team immediately before and after the launch of viagogo in the United Kingdom and other European markets. viagogo is an on-line marketplace where sellers and buyers can exchange live event tickets (sports, entertainment, etc) in a legal and secure manner. The underlying business model replicated the one introduced by StubHub in the United States, a company founded by Eric Baker and a fellow Stanford MBA a few years earlier. The first part of the case is set in June 2006, just two months before the official launch of the website. At that time, the case protagonists faced important decisions with respect to the company’s revenue model. In particular, they had to determine what level of commission to charge, how to split this commission across sellers and buyers, and what pricing mechanism(s) to use (ie, fixed price, auction, and / or declining price). Eric was also considering a potential partnership with a major football club in the UK. A deal was expected to generate considerable exposure for viagogo but, on the other hand, required significant investment and likely constrained the company’s promotional options. The second part of the case takes place in early 2008. Following a brief review of viagogo’s initial performance, a series of new challenges are introduced: (1) how to deal with increasing competition; (2) how to improve the general perception of secondary ticketing in the marketplace; and (3) how to scale the business up from start-up to middle-sized enterprise. Overall, the case highlights common challenges when launching a new business venture. It also questions the common belief that a successful business model in one country can be easily replicated in another. Finally, the case allows for a discussion of how business models tend to change as industries ‘mature’ and new opportunities arise.

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