Defining the business strategy
Defining the platform's business strategy is different from that of linear businesses because of the multi-sided nature of platforms. The business strategy depends on the type of platform, the current availability of producers and consumers, and potential growth in their numbers. The following are the types of business strategies that will be applicable in different scenarios:
- Draw new consumers: When there is an existing network of producers, but consumers are either non-existent or fulfill their requirements by other means, then this strategy of drawing new consumers is the most appropriate one. For example, before Yelp, people were trying to get reviews of restaurants by several different means, such as their social circle or expert advice.
Some people did not even realize they needed to find out about the restaurant before they dined there. But Yelp generated that demand and created a consumer base that wanted to read the reviews...
