smartphone travel app business plan mba thesis
DESCRIPTION
A summary of the findings of my MBA thesis for the Corvinus University of Budapest. The purpose of the thesis was to evaluate the need for a smartphone tour guide app, and then create a feasible business plan to create and introduce the product. The official title is "A Business Plan for a Mobile Travel Application that provides Guided Walking Experiences on Smartphones."TRANSCRIPT
MBA Programs ©Alexander HoskinsonApril 10, 2023
By Alexander Hoskinson
Corvinus Full-Time MBA Thesis
July 2014
MBA Programs Alexander HoskinsonApril 10, 2023
A Business Plan for a Mobile Travel Application that provides Guided Walking
Experiences on Smartphones
MBA Programs Alexander HoskinsonApril 10, 2023
OUTLINE
Strategy Overview
Industry Background
Product Description
Revenue Information
STP Model
Market Research Pricing Advertisin
g
Distribution
Competition
Company Structure
Financial Information
Future Goals
MBA Programs Alexander HoskinsonApril 10, 2023
STRATEGIC BACKGROUND
The primary strategy and framework for this study came from the following two sources
Blue Ocean Strategy
By W. Chan Kim and Renee Mauborgne, 2004
Business Model Generation
By Alexander Osterwalder and Yves Pigneur, 2010
MBA Programs Alexander HoskinsonApril 10, 2023
BLUE OCEAN STRATEGY
This is the overall framework that acts as a map for my study
The Blue Ocean Strategy (BOS) has many tools, and they will appear at various points throughout the presentation
For example, these are three of the tools I will use: Value Innovation
● Helped decide how to increase value while decreasing cost
Strategy Canvas● Helped determine competition and make sure this business model isn’t going head to head with them
6 Paths Framework● 6 paths to keep on track with the BOS (Kim & Mauborgne, 2004)
MBA Programs April 10, 2023
BUSINESS MODEL GENERATION
This is a canvas designed to make sure a business model includes all necessary parts and doesn’t have any weak points
(Osterwalder & Pigneur, 2010)
Source: http://www.businessmodelgeneration.com/canvas
Alexander Hoskinson
MBA Programs Alexander HoskinsonApril 10, 2023
INDUSTRY BACKGROUND
Why is it a good idea to enter this industry?
It can be broken into two segments: Technology Travel Technology
Both of these are growing segments with ample opportunities (IDC, 2014; Eurostat, 2014)
MBA Programs Alexander HoskinsonApril 10, 2023
TECHNOLOGY (SMARTPHONE) INDUSTRY IN 2014
Smartphone shipments increased significantly last year, and are predicted to increase again this year
Samsung and Apple have largest market share, but there are an increasing number of competitors entering the market to give more options to more people
(IDC, 2014)
MBA Programs Alexander HoskinsonApril 10, 2023
TRAVEL TECHNOLOGY INDUSTRY
People are turning to technology to plan trips, and for resources while traveling
It isn’t used just for travel booking, but for many other aspects while on the go (cite all)
Social media allows much more feedback from customers about all things related to travel (Offutt, 2013)
Laptops are becoming less popular than smartphones, and the same could happen with hands free devices and other options
MBA Programs Alexander HoskinsonApril 10, 2023
PRODUCT DESCRIPTION
App Name:
ExploreGuide
Virtual tour EXPERIEN
CE
Uses an app on
smartphones
Users follow pre-designed
“tours”
Multiple choices of
tours based on various factors
BasicIdea
MBA Programs Alexander HoskinsonApril 10, 2023
PRODUCT DESCRIPTION
Asks users about location, interests, and time limit before suggesting tours
Gives a starting point (a local restaurant), and then gives clues to each location
Doesn’t give too many details of tour before in order to make it an adventure
MBA Programs Alexander HoskinsonApril 10, 2023
BOS VALUE INNOVATION
• This product gives the customers a new value by providing a user-created experience, not just following a tour guide
• Also, it guarantees that exploring independently will still result in finding interesting places
• Cost is reduced to customer by not having to pay
• Cost is reduced to the company by not having to pay tour guides for every tour
Source: http://www.blueoceanstrategy.com/concepts/
MBA Programs Alexander HoskinsonApril 10, 2023
BOS STRATEGY CANVAS
The Strategy Canvas is one of the fundamental tools of the Blue Ocean Strategy.
This tool shows how the main competitors act and how this will be different.
(From author, framework by Kim & Mauborgne, 2004)
MBA Programs Alexander HoskinsonApril 10, 2023
BOS FOUR ACTIONS FRAMEWORK
This tool helps determine how to different from the values of the current industry.
(From author, framework by Kim & Mauborgne, 2004)
MBA Programs Alexander HoskinsonApril 10, 2023
BOS ERRC GRID
The Eliminate – Raise – Reduce – Create Grid helps tie the values to this company.
(From author, framework by Kim & Mauborgne, 2004)
MBA Programs Alexander HoskinsonApril 10, 2023
BUSINESS MODEL CANVAS FOR EXPLOREGUIDE APP
(From author, framework by Osterwalder & Pigneur, 2010)
MBA Programs Alexander HoskinsonApril 10, 2023
POTENTIAL REVENUE MODELS
Revenue Models
Type: Traits:Sell the app Sell it one time
Sell per “tour” Sell it for a certain time limit (like a license)
Advertising Integrate advertising into the interface and collect money from the advertisers
Sponsorship Businesses will pay in order to have the app bring customers to them (i.e. a tour starts/ends at a restaurant)
Freemium Offer basic services for free, but charge for better services For example:
o Basic tours could be free, but there could be subscription options for other tourso The ability to get extra features (i.e. upload/download capabilities)o Unlimited usage (only allow a certain amount of free usage)o Better profile (i.e. allow to connect with other people)
MBA Programs Alexander HoskinsonApril 10, 2023
REVENUE MODEL CHOICE
Different through product evolutionStart with one very simple method, and integrate the others when possible/necessary
1. Start free At the very beginning, generate zero revenue to gain a slight following
2. Move to sponsorship Once there is a slightly established customer base, recruit sponsors and get
them to pay
3. Charge small amount for very unique tours If possible to offer very unique tours, charge a small amount from them to
generate more revenue
MBA Programs Alexander HoskinsonApril 10, 2023
STP
Attempting to narrow down the market segment, I came to the following conclusions
Segmentati
on
Targeting
Positioning
International travelers English speakers
Users of technology (at this point, not limited to
smartphones)
Have a desire to explore (common in most, but not all, travelers)
STP
MBA Programs Alexander HoskinsonApril 10, 2023
STP
Target Market - General Traits
Facts: Personality Traits: Age: 18 – 27 Male and female Low income (causing higher price sensitivity and desire for good
deals) Tech savvy
o Comfortable using technology (and embrace it)o Have access to different platforms (especially smartphone –
this is absolutely necessary)o Quickly learn/adapt to new programs
Smartphone users Social media active
o Use many forms of social mediao Have network of friends to share with
Curious/eager to learn and experience new things Open-minded Want to contribute to/feel part of a “community” Trust their networks
o Listen to advice from friends and familyo Like to share their own opinions
Not afraid to try new things and go new placeso But, want some help in doing this
Segmentation
Targeting
Positioning
MBA Programs Alexander HoskinsonApril 10, 2023
STP
Segmentati
on
Targeting
Positioning
The product will be positioned according to the following ideas
Unique product that is uncommon and unusualFree (or so cheap that it could be compared to free)Solves a problem that the consumers didn’t even realize they hadMakes the life of the consumer flexible, easy, and carefree while remaining successful in their travels
Changes the options they have while traveling
MBA Programs Alexander HoskinsonApril 10, 2023
MARKET RESEARCH
Key lessons learned from the interviews I conducted
Interviews
Industry Reports
The product is interesting to all different age groups
The younger age groups were more interested (and able) to share on social
media
Most don’t use mobile data while traveling abroad, and generally believe the GPS
requires this (which is not true)
They would be interested in using the product while traveling, but not really in
their hometown
MBA Programs Alexander HoskinsonApril 10, 2023
MARKET RESEARCH
Key learnings from industry reports
Interviews
Industry Reports
The majority of people don’t use cellular data abroad
(European Commisson, 2014)
The Android (Google) operating system is the most common, but the iOS (Apple) operating system has
significant market share(Kantar, 2013)
Consumers are increasing turning to mobile devices for travel needs
Free apps receive significantly more downloads
(App Annie Index, 2013)
MARKET RESEARCH
MBA Programs Alexander HoskinsonApril 10, 2023
PRODUCT PRICING OPTIONS
Free•Could achieve more downloads
Paid•Could gain revenue more directly
or
MBA Programs Alexander HoskinsonApril 10, 2023
PRICE CHOICE
Low price High price value for price sensitive consumers
Free as long as possible Revenue can come from sponsorship
Following the Business Model Canvas, there are other ways this product could create value, so it isn’t necessary to offer it free.
However, a free product creates value for the business partners who are potential sponsors by having a larger customer base, so that satisfies more parties. (Osterwalder & Pigneur, 2010).
MBA Programs Alexander HoskinsonApril 10, 2023
ADVERTISING
Online
These will be used minimally with a close scrutiny on success statistics
Social Media● Targeted, promoted posts
Google Ads● Targeted ads
Offline
Posters/fliers in partner businesses Stickers in window of partner business Stickers given to finishers
MBA Programs Alexander HoskinsonApril 10, 2023
SOCIAL MEDIA
Interact with other social networks as much as possible Ability to share information on maximum amount of
networks Create a Virtual Postcard that is attractive and
makes customers want to share Utilize hashtags and other popular trends
No attempt to build own social network Many apps attempt to create their own, and this
increases difficulty and frustration among customers
MBA Programs Alexander HoskinsonApril 10, 2023
DISTRIBUTION CHANNELS
App Markets Google Play App Store
Websites Owned
Website(s) we create and run
Earned Reviews and other discussions on outside
websites (i.e. blogs)
Unearned Paid reviews on other websites (used very
minimally, if at all)
MBA Programs Alexander HoskinsonApril 10, 2023
COMPETITOR ANALYSIS
Uti
lize
th
e B
OS
th
eo
ry
of
red
raw
ing
ma
rket
b
ou
nd
ari
es
Source: http://www.blueoceanstrategy.com/concepts/
MBA Programs Alexander HoskinsonApril 10, 2023
COMPETITOR ANALYSIS
Competing with two different industries: Guided and Self-Guided Tours
Land somewhere in the middle
MBA Programs Alexander HoskinsonApril 10, 2023
MAJOR COMPETITORS
There are three main types of competitors, and each one has different breakdowns
Guided
• International Tours• Organize whole trip• Just the tour
• Local Tours• Just the tour
Self-Guided
• Sources• Guide Books• Websites• Local People
• Types• Pre-planned
itineraries• Random
suggestions
Alternate Activities
• Museums• Cinemas• Theaters• Restaurants• Parks• Shopping
MBA Programs Alexander HoskinsonApril 10, 2023
NO DIRECT COMPETITION
Even throughout the massive amount of apps, there doesn’t seem to be a direct competitor.
There are travel and tour apps, but there isn’t one that offers users a gamified challenge to discover a city on their own, but also provides them with knowledge and information about their surroundings.
no direct competitor
gamified challenge
discover a city
provides knowledge and information
MBA Programs Alexander HoskinsonApril 10, 2023
EXPLAIN COMPETITIVENESS
Functional-Emotional Orientation is a significant differentiating factor
Instead of competing with quality and/or price like the majority of competitors (functional), try the emotional strategy
Sell this product as an experience where customers are responsible for their own adventure and success
Source: http://www.blueoceanstrategy.com/concepts/
MBA Programs Alexander HoskinsonApril 10, 2023
COMPANY STRUCTURE
Main organizational factors of the company:
Centralized Headquarters
• Only office till expansion is necessary
Outsource IT (cheap country abroad)
• More affordable way to develop product
1 person per city/region• Have one person to manage quality, local partners, and local knowledge in each
region
Updates/Maintenance• Regional person performs routine maintenance• Headquarters makes decision about necessity of outsourcing IT for more difficult
tasks
MBA Programs Alexander HoskinsonApril 10, 2023
TWO POSSIBLE METHODS FOR CONTENT CREATION
Internal External
Pros:• Complete control over content• Can quickly edit/update tours
Pros:• Only pay when receiving something• More perspectives and creative ideas
Cons:• Cost of constant employment
Cons:• Inconsistent work and topics• (Potentially) challenging to update
Who is actually writing the tours?
MBA Programs Alexander HoskinsonApril 10, 2023
CONTENT CREATION CHOICE
Start with internal only• Simple and cheap
With growth, consider external• Wider variety
If using external, use royalty payment method• Lower risk• Higher likelihood of quality
MBA Programs Alexander HoskinsonApril 10, 2023
DEVELOPMENT COSTS
Impossible to judge without actually paying a developer
Based on many factors including hourly wage of the software developer and the amount of features it will need (Angeles, 2012)
A survey of 96 apps found an average development cost of $6,453 (Ahlund, 2010).
This seems a reasonable estimate for this product
MBA Programs Alexander HoskinsonApril 10, 2023
STARTING INVESTMENT
These are the potential methods which the initial funding can come from (in order of preference and likelihood)
Family/friends
• Potentially easier for lower amount because they want to support you as much as the business
Incubator Funding
• Helpful for other resources (i.e. networking) as well as funding
Angel Investors
• Promising if idea is sound enough
Crowdfunding
• Usually have to find something to offer in return
Venture Capital
• Difficult without already being established
MBA Programs Alexander HoskinsonApril 10, 2023
SALES FORECAST
Potential Revenue From Sponsors
Number of Tours (2 Sponsors/Tour) 5 10 15 20 5 10 15 20
Sponsor Fee/Month $15 $15 $15 $15 $25 $25 $25 $25
Revenue Generated/Month $150 $300 $450 $600 $250 $500 $750 $1,000
Revenue Generated/Quarter $450 $900 $1,350 $1,800 $750 $1,500 $2,250 $3,000
Revenue Generated/Year $1,800 $3,600 $5,400 $7,200 $3,000 $6,000 $9,000 $12,000
Number of Tours (2 Sponsors/Tour) 5 10 15 20 5 10 15 20
Sponsor Fee/Month $35 $35 $35 $35 $50 $50 $50 $50
Revenue Generated/Month $350 $700 $1,050 $1,400 $500 $1,000 $1,500 $2,000
Revenue Generated/Quarter $1,050 $2,100 $3,150 $4,200 $1,500 $3,000 $4,500 $6,000
Revenue Generated/Year $4,200 $8,400 $12,600 $16,800 $6,000 $12,000 $18,000 $24,000
Difficult to forecast because it depends on too many factors
Number of Tours Number of
DownloadsOtherSponsors
CitySize of the Sponsor
Length of Contract
Sponsors will be the main form of revenue. Earnings will vary.
MBA Programs Alexander HoskinsonApril 10, 2023
BLUE OCEAN STRATEGY SUMMARY
Value Innovation• Helped create the core value from the beginning
Strategy Canvas
• Made Sure the product existed in a blue ocean
4 Actions Framework
• Helped create the value curve for the strategy canvas and challenge current industry thinking
ERCC Grid
• Helps turn the 4 Actions Framework into usable ideas
6 Paths
• Ensured the thinking remained in the blue ocean, and not in head-to-head competition
3 Tiers of Noncustomers
• Helped search for new customers and understand how to lose current customers
Sequence of BOS
• An overall map to show the progress
MBA Programs Alexander HoskinsonApril 10, 2023
FUTURE GOALS
Release Multiple Versions
• Start with simple, basic version, and update to newer versions with growth that have more features and functions
Strong Intent to Sell
• Develop a strong brand and customer base• Attempt to sell the product to a larger company who is searching for technology or brand name
Update for Regulatory Changes
• The EU is currently in the process of attempting to regulate mobile markets (i.e. banning roaming fees within member states)• Follow closely and update product to match
MBA Programs Alexander HoskinsonApril 10, 2023
FINAL RECOMMENDATIONS
It won’t generate revenue immediately, but could grow
exponentially with more customers, partners and tours.
The product is a feasible idea.
Many factors were decided following the Blue Ocean Strategy and the Business Model Canvas, but the most important
trait is offering an “experience” to
consumers.
MBA Programs Alexander HoskinsonApril 10, 2023
REFERENCE INFORMATION
For a detailed summary of the references cited in this presentation, please see the printed executive summary of my thesis:
A Business Plan for a Mobile Travel Application that provides Guided Walking Experiences on Smartphones