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COMPETING AGAINST FREEHemant Verma(PGP31377)| Karthik P (PGP31394) | Shanu (PGP30342)
WHAT SHOULD AN INCUMBENT PLAYER DO?
When similar product is offered as FREE by other company
Brick & MortarTravel Agent
Vs OnlineAgent
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
Cost Accounting system not identifying the actual cost of the product
THANK YOU
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