Powering The Subscription Economy: The Application of Subscription-based Business Models in a Business Setting with Increased Customer-centric Focus

Abstract

This master thesis examines the Subscription Economy. The subscription-based business model has grown globally by more than 100 percent a year over the past five years, which makes it as a relevant topic to investigate, since limited literature exists. In fact, no literature or framework exists regarding, how to actually apply a subscription-based business model in practice. Thus, this thesis is investigating the following research question: How can a subscription-based business model be applied in a business setting with increased customer-centric focus and can this application be used in an international context? Based on a thematic analysis eight drivers and barriers were identified, which characterize today’s consumers’ preferences and needs within shopping. The four main drivers are: Convenience, value for money, personifying, and experience. The four main barriers were identified to be: Consumption, surprise, experience, and expensive. From the MEC analysis, it was possible to develop a persona, the Conventional, which represent the majority of today’s consumers. Moreover, preferences and needs for subscription models were identified based on the Conventional. A framework is developed as a guidance for subscription services and has the purpose of identifying the most important parameters within the different types of subscriptions: Developing services, developing products, regular services, and regular products. In addition, cultural differences between Danes and German were also examined. Danish and German consumers share some similarities, but they also share dissimilarities. In conclusion, it is argued that the developed framework is applicable across geographical markets, but only within regular products and services.