COMPETING AGAINST

SECTION A GROUP 10

PAWAN KUMAR XAXA PGP29174USHA SURYAVANSHI PGP29328ANUPAM KR BHATTACHARJEE PGP30011RAHUL MADADI PGP30041RAVALI MALKA PGP30317

Free Business Models in Digital and Physical domain

Risk Assessment from New Entrants

Examples from Global Markets

Examples from Indian Market

Key Areas Covered

The “free” business models are becoming increasing popular in the physical and digital worlds

Popularized by companies such as Google, Adobe and Mozilla

Spreading to markets in the physical world from pharmaceuticals to airlines to automobiles

The pressing issue is: How should existing companies respond ?

Recent studies suggest even companies with formidable assets are slow to fend off free product competitors

Rate at which

number of users of free

offering is increasing

Ability to

cover cost

quickly

Rate of Defectio

n

Assessing the threat of new entrants is of paramount importance to choosing whether & when to respond

Factors to assess the level of threat posed

IMMEDIATE THREATStrategy: Launch free product immediately

BUSINESS MODEL THREAT

Strategy: Change Business Model

MINOR THREATStrategy: Monitor

Situation

DELAYED THREATStrategy: Coexist or delay launch of free

product

GROWTH RATE

DEF

ECTI

ON

RAT

ELOWLess than 40% YoY

HIGHMore than 40% YoY

LOWLess than 5% Year

HIGH5% a Year or more

2x2 Response Matrix

Four Tried & True Strategies

Up-Sell

Cross-Sell

Charge Third Party Transfer

Bundle

Rethink Profit Centers

Profit responsibility should be given to top managersDisagreements between revenue group and product development groupGalderma rebate program for EpiduoGained market share by rebating heavily

Case 1: Synonymous Offerings by MakeMyTrip.com & Yatra.com

flight tickets, holiday packages, hotel reservations, rail and bus tickets

Combo holiday packages (Economical deals with bulk bookings)

On the go bookings through mobile apps.

Seasonal (festival) offers on bookings

Impact of Online Platform on Physical Stores

Local Travel agencies

Ticketing Counters Railway Booking Counters

Competing against each other through upselling and discount campaigns

Operates through retail stores as well

Partnered with IRCTC for rail bookings & Apollo DKV for travel insurance (in 2008)

Partnered with Airtel DTH for ticket bookings through television (in 2009)

Acquisition begin late in 2011, by acquiring Luxury tours & travels private limited.

Available only through online portal

Launched app for multiple transactions in a single go with Microsoft (in 2012)

Offer cruise bookings (expansion of services)

Tie Up with Hughes Satellite services for expansion in Tier II and Tier III cities

Travel partner of Rajasthan Royals (IPL Team) (in 2014)

Many useful free/paid coupons Recharge+ Travel booking +

Shopping+ Deals+ Bill Payment Recharge Facility through free IVRS

Limited coupons; but FREE Simple offering Recharge + Bill Payment No such facility

Case 2: Paytm and Freecharge are two rival players in the mobile recharge space diversifying into E-commerce domain

Cloud Wars

Launched in 2008 during Techcrunch50 Business Model – ‘Freemium’

Dropbox basic2 GB free,+500 MB for referrals up to 18 GB

Dropbox pro1TB Storage space$10/Month

Dropbox BusinessUnlimited storage space$15/user/Month

Google Drive was launched on April 24, 2012 Business Model – ‘Freemium’

Storage Price

Upto 30 GB Free

100 GB $1.99/Month

1 TB $10/Month

10 TB $100/Month

20 TB $200/Month

30 TB $300/Month

Case 3: Google drive competing against Dropbox in cloud storage

Cloud Wars

Highly attractive for businesses High technical quality and Features Differentiation

• Integration with Facebook• Twitter• IOS Apps• Pricing

Individuals and personal use User friendly Differentiation

• Google Umbrella services• Automatic upload from Android• Pricing (More for Free)

Competing on better free model

Launched in 1997, started video streaming services in 2006

Business Model : Monthly Subscription charges from users

Content is acquired through tie ups with original content creators

Emphasis on quality of content

Launched in November 2005 Business model : Ads Charge third parties Generic offer to attract traffic Incentivize users to generate

content based on number of views “Broadcast yourself”

Case 5: Netflix competing against free Youtube

Case 6: Free rides from Uber

• In November of 2014 Free rides to anyone from Wednesday to Sunday• 5 free rides, to the value of up to

300 INR per trip• link their account with its new

wallet payments system • absorbing more than 50 percent

losses • build their brand among

consumers

Case 7: Zoho offering free applications to Indian businesses• suite of applications for companies • a flexible website creation application• Email Hosting application in Zoho Mail • Document Management and Office suite • Microsoft – Rs3000 per year per user• Google – Rs3000 – 5000 per year

Internet.org was launched to bring affordable access to selected Internet services to less developed countries

• Partnership between Facebook and 6 companies (Samsung, Ericsson, MediaTek, Opera, Nokia and Qualcomm)

• Making Internet access affordable

• Facilitating development of new business models around provision of Internet access

• Criticized for violating principles of Net Neutrality

Thank You