BM Group Presentation at IIM Lucknow

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

2. IMAGINE!!!
“You are the Market Leader”

3. IMAGINE!!!
“enters a competitor”
But with a difference…

4. IMAGINE!!!
It’s free
“free”
“free”
“free”
“free”

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

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

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

8. ASSESSING THE THREAT
Speed of defection
for your customers

9. MISTAKES COMMITTED BY
COMPANIES
TOO SLOW TO
RESPOND

10. MISTAKES COMMITTED BY
COMPANIES
DIDN’T
RESPOND

11. MISTAKES COMMITTED BY
COMPANIES
RESPONDED
TOO QUICKLY

12. Rapid erosion of your revenues
BOGO

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

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

15. Monitor the situation

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

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
“UP-SELL”
Introduce a free basic
offering to gain
widespread use and
then charge for a
premium version

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

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
“CROSS-SELL”
Sell other products
that are not directly
tied to the free
product

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

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

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

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

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

28. OBSTACLES IN ADOPTING FREE
STRATEGIES
Deep Rooted Belief
“Product must generate a respectable level of
revenues and profits on their own”

29. The profit center structure and
accounting systems reinforcing the
above mindset
OBSTACLES IN ADOPTING FREE
STRATEGIES

30. Cost Accounting system not
identifying the actual cost of
the product
OBSTACLES IN ADOPTING FREE
STRATEGIES

31. 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

32. THANK YOU