Definition of activity model

The activity model indicates the set of activities needed to turn a set of inputs (capital, raw materials and labour) into the firm’s value proposition (benefits to customers). Examples of such activities include product development, purchasing, manufacturing, marketing and sales and service delivery.

Example

For instance low-cost airlines, such as Ryan air and EasyJet, have a simple value proposition - point-to-point travel at cheaper prices when compared to traditional carriers flying on similar routes.

The activity model of these budget airlines involves removing some traditional frills to offer cheap ticket prices, for example, they only sell snacks and meals on board, instead of offering meals to all passengers as part of the ticket price.

Using secondary airports also means that they pay lower airport fees which can help lower the ticket price. The activity model of airlines also involves generating other revenue streams such as selling advertising space on the exterior and interior of the aircraft.  All this brings extra sources of revenue, which can further help in keeping prices down for customers. [1]

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