“They (the figures) show that this would probably become a profitable business.”
This week we first did some things that were due last week. We met with our advisor Raphael and course assistant Robert from whom we got vital feedback of our iteration process as well as valuable ideas for future development. We also gave the third presentation about the current state of our project on Friday. The iteration results will be edited into our last week’s blog post.
Our project has progressed well during the week. We divided our group into two working groups of which one takes care of theory and data validation, whereas the other is responsible for raw programming of the model itself. We scheduled the overall work into two phases (checkpoints after 2 and 5 weeks) so that our model will be ready by the beginning of the December.
The theory group has started to analyze the data collected with the questionnaire as well as found some theory to back up our analysis. Currently, we have 145 responses to our questionnaire which we can use, for example, to analyze the competition of VR and the main drivers of what makes people to choose a certain transportation method. The outcome of these analyses will be iterated information about the most important features (such as cost and/or demand factors): what will be implemented to our UI and what will be left out. The programming group has began establishing the technical set-up and writing the code of the UI. The next step we will take is finishing our theory/data analysis so that we can decide which features should be implemented and how these could be programmed to our UI.
The main challenges we faced this week concerned the weekly assignment that made us to think the project as a business opportunity. Earlier, we had thought that our end product will be a nice little widget for people to use when choosing long-distance travelling options and, generally, to raise awareness of the competition of VR. However, we generated really great ideas about how we could monetize our end product. The business model of our product is illustrated in the following business model canvas (BMC).
The main idea of the product is that we believe that collecting all long-distance travelling information (ticket prices, journey times, environmental data etc.) into one place attracts many users so that they can compare different journey options and transportation operators with ease. The transportation operators reach a larger customer base, because users of different operators all use this product, for instance, 10 Onnibus and 10 VR users become 20 users who see offers from both Onnibus and VR. We also believe that this product would attract private car users to use the public transport more as the information and comparison is available more easily.
The monetizing of our product is based on the platform business model. We create a platform that can be accessed via internet or mobile app. The platform brings three different user groups (customer segments) together: long-distance travellers, passenger transportation companies (e.g. taxis, buses, trains, airlines) and advertisers. Our platform provides each customer segment with a customer value proposition (see the BMC above), which makes the platform attractive for all parties. Furthermore, the main strategic capabilities regarding the platforms are network effects: a large amount of passenger transportation companies (partners) attract a high number of long-distance travellers (basic users) to use the platform, and vice versa. The advertisers are attracted by the large user base of the platform, as well.
How we make money out of this?
- By charging referral fees from partners so that we direct users to transportation companies’ web shops via links on our platform. Each transaction that is made via our link yields us a pre-negotiated percentage of the cost of the ticket.
- Selling advertisement space on our platform to advertisers.
Some financial calculations for our venture can be found below. The figures are rough estimates, but they show that this would probably become a profitable business (i.e. NPV is positive). The main reasons for this are that we have no initial investments as we only use our own time and skills to create the platform, and the only costs are marketing costs and IT infrastructure (e.g. server capacity) costs. We also pay no money to ourselves until the business yields more profits.
Week 43 blog exercise
We didn’t have time to meet and show our model to our expert last week so we did it this week. Our expert was very pleased and gave us thumbs up for our work. He gave us very valuable ideas and good points regarding our project. Main things were for example: simple UI, model should show cost factors, include private cars and so on. We are not yet really in position to iterate these in our project, but we got very useful ideas and we will see if we are going to use them in our project.
On last friday we met with our assistant as it was requested and we didn’t really talk about our results and iteration but we talked about which way we should be heading with our project. Which things are important regarding our course and which things are important regarding topic we chose. It was very good meeting and we definitely needed that. After that meeting we understood that most important thing is to have something they can evaluate. We want to have result which gives answer to the topic’s problem in some way but still is validated and people feel that there is a need for this kind of product. Our topic is so different comparing to what this course wants us to do and that is why we needed to have this meeting. Next iteration is that we need to validate our product properly.