Craigslist and its Business Model
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Low-Cost Business Model
Craigslist followed a low-cost business model, the main objective of which was to satisfy users and provide a service based on trust and simplicity. According to the company, its goal was not to maximize profits but to offer localized service which was free as well as convenient for users...
According to the promoters, Craigslist's business was non-commercial in nature and Newmark perceived it to be a community-based model rather than a for profit business. Newmark who had founded Craigslist as a hobby did not focus on profits as his aim was to serve the community by providing a free service...
In the era of the Internet, many people turned to online classified ads instead of to newspapers to find the information they needed. With the online classifieds market booming, Craigslist had to face some tough competition from some major Internet giants as well as smaller, local, and regional players (Refer to Exhibit V for competitors of Craigslist)...
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