brand management group-10 (sec b) (1)

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