Brand Management

Competing against

Geetanjali(PGP30136) | Kiran(PGP30029) | Navya(PGP30152) | Shrey(PGP30281) | Siddhesh (PGP30141) | Yogesh(PGP30385)

Consider…

You are an incumbent player

And a new entrant offers a similar product ….

And sells it for FREE !!

What would you do?

How to competeagainst F R E E ?

How & When to respond ?

Assessing The Threats

1. Ability of new entrant to cover up cost quickly

2. Speed at which your paying customers defect

3. Growth Rate of customers using the Free Offering

Choosing Whether & When To Respond

Companies must quickly respond with a free Offering by revisiting their Business Model

Bottom Line:

A radical Rethinking of Business Model is needed

Business Model Threat

Indian Context

Delayed Threat:Entrants User’s Growth Rate> Established Firms Defection Rate

Immediate Threat:If your firm’s revenue take a major hit with the free offering

Indian ContextYour first Free Ride

When both Defection Rate and Threat is Low, the incumbent should continue to monitor the situation.

Common

Mistakes

Companies

Commit

Too slow to respond

or didn’t respond at all

Company DID NOT correctly identify

threats

They mistook

Immediate &

Business model

threats as

Delayed &

Minor threats

Leading to

Domino’s Free home delivery

Pizza Hut emphasis on fine dining

The advent of the free voice calls

Traditional telecom operators

And there were those that responded too fast

Entry of Vistara

Price Wars

Incumbent’s Arsenal of Weapons : In case of Threat

Large User Base Advanced technical know-how Substantial Brand Equity Financial Resources Market knowledge Access to important marketing

and distribution channels

Introduce Better Free

Product

Tried & Tested Sales and Pricing Strategies

Up-sell Down-SellCharge Third

PartiesBundle

Free offering

+premium Version

Free offering

+ Sell other products

Free offering

+Access fee

for 3rd party

Free offering

+Paid

offering

4 Tried-and-tested

Strategies

1. UPSELL

UPSELLING

Seller induces the customer to purchase more expensive items, upgrades or other add-ons in an

attempt to make a more profitable sale.

FREE 14 DAYS

2. CROSS-SELL

Want fries with that? Something to Drink? An ice cream after the lunch?

3. CHARGE THIRD PARTIES

CHARGE THIRD PARTIES

Provide a free product to the users and charge the third party for

access to them

4. BUNDLE

Big Basket Combo

Obstacles in adopting Free Strategies

1) Belief : Product must generate own revenue & profit

2) Profit Center Structure and accounting system

3) Cost accounting system not tuned to measure Actual Cost

Summary

1) The free concept

2)Assessing the threats - > Choosing whether and when to respond

3)Common mistakes companies make

4)4 tried and tested strategies

5)What’s holding them back ?

References

• Competing Against Free, published in Harvard Business Review by David J. Bryce, Jeffrey H. Dyer and Nile W. Hatch in June 2011 Volume.• http://www.tatasky.com• http://www.airtel.in/personal/digital-tv• http://www.mcdonaldsindia.com• www.flipkart.com• http://www.dominos.co.in

THANK YOU