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