Competing against Free

1. COMPETING AGAINST
FREE
Hemant Verma(PGP31377)| Karthik P (PGP31394) | Shanu (PGP30342)

2. WHAT SHOULD AN INCUMBENT
PLAYER DO?
When similar product is offered as FREE by other company
Brick & Mortar
Travel Agent
Vs
Online
Agent

3. WHAT SHOULD AN INCUMBENT
PLAYER DO?
When similar product is offered as FREE by other company
Newspaper Classified
Vs
Online Advertising

4. ASSESSING THE THREAT
Entrant’s ability to
cover the cost
quickly

5. ASSESSING THE THREAT
Rate of customer
growth for free
offerings

6. ASSESSING THE THREAT
Speed of defection
for your customers

7. MISTAKES COMMITTED BY
COMPANIES
TOO SLOW TO
RESPOND

8. MISTAKES COMMITTED BY
COMPANIES
DIDN’T
RESPOND

9. MISTAKES COMMITTED BY
COMPANIES
RESPONDED
TOO QUICKLY

10. Rapid erosion of your revenues
BOGO

11. Respond quickly by free offering and business model change to survive

12. Entrant’s User growth > Customer defection rate
=>New user base or customers from competition

13. Monitor the situation

14. FOUR TRIED AND TRUE STRATEGIES
UP-SELL CROSS-SELL
CHARGE
THIRD
PARTIES
BUNDLE

15. FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”
Introduce a free basic
offering to gain
widespread use and
then charge for a
premium version

16. FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”
Introduce a free basic
offering to gain
widespread use and
then charge for a
premium version

17. FOUR TRIED AND TRUE STRATEGIES
“UP-SELL”
Introduce a free basic
offering to gain
widespread use and
then charge for a
premium version

18. FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”
Sell other products
that are not directly
tied to the free
product

19. FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”
Sell other products
that are not directly
tied to the free
product

20. FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”
Sell other products
that are not directly
tied to the free
product

21. FOUR TRIED AND TRUE STRATEGIES
“CROSS-SELL”
Sell other products
that are not directly
tied to the free
product

22. FOUR TRIED AND TRUE STRATEGIES
“CHARGE
THIRD
PARTIES”
Provide free product
to users and then
charge a third party
for access to them

23. FOUR TRIED AND TRUE STRATEGIES
“CHARGE
THIRD
PARTIES”
Provide free product
to users and then
charge a third party
for access to them

24. FOUR TRIED AND TRUE STRATEGIES
“BUNDLE”
Offer a free product
or service with a
paid offering

25. FOUR TRIED AND TRUE STRATEGIES
“BUNDLE”
Offer a free product
or service with a
paid offering

26. 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

27. THANK YOU