brand management group-10 (sec b) (1)
TRANSCRIPT
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COMPETING AGAINST FREEHemant Verma(PGP31377)| P Karthik (PGP31394) Shanu Kumar (PGP30342)
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IMAGINE!!!
“You are the Market Leader”
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IMAGINE!!!“enters a competitor”
But with a difference…
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IMAGINE!!!It’s free
“free”
“free”
“free”
“free”
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WHAT SHOULD AN INCUMBENT PLAYER DO?
When similar product is offered as FREE by other company
Newspaper Classified
Vs
Online Advertising
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ASSESSING THE THREAT
Entrant’s ability to cover the cost
quickly
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ASSESSING THE THREAT
Rate of customer growth for free
offerings
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ASSESSING THE THREAT
Speed of defection for
your customers
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MISTAKES COMMITTED BY COMPANIES
TOO SLOW TO RESPOND
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MISTAKES COMMITTED BY COMPANIES
DIDN’T RESPOND
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MISTAKES COMMITTED BY COMPANIES
RESPONDED TOO QUICKLY
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Rapid erosion of your revenues
BOGO
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Respond quickly by free offering and business model change to survive
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Entrant’s User growth > Customer defection rate=>New user base or customers from competition
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Monitor the situation
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FOUR TRIED AND TRUE STRATEGIES
UP-SELL CROSS-SELL
CHARGE THIRD
PARTIESBUNDLE
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FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”Introduce a free basic
offering to gain widespread use and
then charge for a premium version
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FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”Introduce a free basic
offering to gain widespread use and
then charge for a premium version
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FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”Introduce a free basic
offering to gain widespread use and
then charge for a premium version
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FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”Sell other products that are not directly
tied to the free product
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FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”Sell other products that are not directly
tied to the free product
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FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”Sell other products that are not directly
tied to the free product
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FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”Sell other products that are not directly
tied to the free product
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FOUR TRIED AND TRUE STRATEGIES
“CHARGE THIRD
PARTIES”Provide free product
to users and then charge a third party for access to them
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FOUR TRIED AND TRUE STRATEGIES
“CHARGE THIRD
PARTIES”Provide free product
to users and then charge a third party for access to them
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FOUR TRIED AND TRUE STRATEGIES
“BUNDLE”Offer a free
product or service with a paid
offering
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FOUR TRIED AND TRUE STRATEGIES
“BUNDLE”Offer a free
product or service with a paid
offering
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OBSTACLES IN ADOPTING FREE STRATEGIES
Deep Rooted Belief
“Product must generate a respectable level of revenues and profits on their
own”
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The profit center structure and accounting systems reinforcing the
above mindset
OBSTACLES IN ADOPTING FREE STRATEGIES
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Cost Accounting system not identifying the actual cost
of the product
OBSTACLES IN ADOPTING FREE STRATEGIES
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OVERCOMING OBSTACLES
A product management
team overseeing cost and building product features,
to rapidly increase user
base
Keep a wider view
for profitability
Separating the
“Revenue” and “Cost
management” stream
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THANK YOU