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Group6 b competing against free_bm
1. The document discusses strategies for companies facing threats from free offerings by competitors. It analyzes examples like Nintendo facing competition from Rovio's free games. 2. It recommends that Nintendo launch its own games like Mario and Pokemon for free on app stores to gain more users. Nintendo can then charge third parties for in-game or in-app advertising. 3. The document concludes that when facing a free competitor, companies should identify the level of threat, respond accordingly, and compete by focusing on creating a better customer experience rather than solely focusing on price competition. Competing on quality and service allows companies to beat free alternatives.
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Group6 b competing against free_bm
- 2.
- 5. Submitted by: SectionB | Group 6 Ayush Gutgutia | Mehak Jindal | Pragna S.P | Shristy Agarwal Submitted To: Prof. Sameer Mathur IIM Lucknow “Good companies will meet needs; great companies will create markets.” - Philip Kotler
- 6.
- 8. KEEP CALM AND HOPE NO-ONE NOTICES WHAT COMESFREE WON’T LAST!!! WHAT LASTS WON’T COME EAST!!!
- 10. Incumbents’ wrong CHOICES NewFREE FREE Offering • They shouldn’t have taken any action Didn’t take take ACTION • Should have taken an action ACTION
- 11. THREAT Speed with which paying customers are defecting Therate at which the number of users of free offering are increasing Entrants ability to cover its costs quickly 40% or more a year 5% or more a year
- 12. IMMEDIATE THREAT Launch free product immediately Business Model Threat Changebusiness model Delayed Threat Coexist or Delay launching of free product Minor Threat Monitor situation DEFECTIONRATE HIGH 5% a year or more Less than 5% a year LOW LOW Less than 40% a year HIGH More than 40% a yearGROWTH RATE How BIG is the THREAT ???
- 13. 1. Minor Threat IMMEDIATE THREAT Launchfree product immediately Business Model Threat Change business model Delayed Threat Coexist or Delay launching of free product Minor Threat Monitor situation DEFECTION RATE HIGH 5% a year or more Less than 5% a year LOW LOW Less than 40% a year HIGH More than 40% a year DEFECTIONRATE GROWTH RATE
- 14. Minor Threat: Established foodchains vs Fasttrax • Started in 2006 • Snacks and Deserts ranging from Rs 29 – 90 • To cater local needs and tastes • First outlet in DPS Mathura Road VS “ Your customers are judging every aspect of every transaction and rating everything, from friendliness of people to ease of doing business to quality of product to service after the sale. .” - Jeffrey Gitomer
- 15. 2. Delayed Threat IMMEDIATE THREAT Launchfree product immediately Business Model Threat Change business model Delayed Threat Coexist or Delay launching of free product Minor Threat Monitor situation DEFECTION RATE HIGH 5% a year or more Less than 5% a year LOW LOW Less than 40% a year HIGH More than 40% a year DEFECTIONRATE GROWTH RATE
- 16. Delayed Threat: Dropbox vsGoogle Drive VS “When a company identifies the process needed to give the consume a sense of job completion, it can blow away the competition. A product is easy to copy, but experiences are vey hard to replicate.” - Clayton M. Christensen Google Drive
- 17. 3. Intermediate Threat IMMEDIATE THREAT Launchfree product immediately Business Model Threat Change business model Delayed Threat Coexist or Delay launching of free product Minor Threat Monitor situation DEFECTION RATE HIGH 5% a year or more Less than 5% a year LOW LOW Less than 40% a year HIGH More than 40% a year DEFECTIONRATE GROWTH RATE
- 18. Intermediate Threat: Embibe vsToppr VS embibe toppr “Basically, you're selling a world as an actor, right? I mean it's like any sales person: if you believe in your product, you know your product, you sell it a lot better.” - Paul Walker
- 19. 4. Business ModelThreat IMMEDIATE THREAT Launch free product immediately Business Model Threat Change business model Delayed Threat Coexist or Delay launching of free product Minor Threat Monitor situation DEFECTION RATE HIGH 5% a year or more Less than 5% a year LOW LOW Less than 40% a year HIGH More than 40% a year DEFECTIONRATE GROWTH RATE
- 20. Business Model Threat: Flipkartvs Traditional Stores (Brick and Motor stores) VS “The e-commerce industry is a force that no investor can afford to ignore.” - Cushla Sherlock
- 21. OFFER A BETTERFREE !!!
- 22. 4 Tried andTrue STRATEGIES CHARGE E THIRD CROSS- SELL UP-SELL BUNDLE
- 23. 1. UP-SELL •Introduce afree basic offering to gain widespread use and then charge for a premium version •Requirements: A Free product that appeals to a very large user base A high % of users willing to pay for the premium versions
- 26. Related BRANDING Concept PositiveBrand Associations Richer Brand Image More Favorable Brand Higher Premium
- 27. •Sell other productsthat are not directly tied to the free product •Requirements: A broad product line – preferably one that complements the free product The ability through partnerships to sell a broad line of products to users of the free product 2. CROSS-SELL
- 29. Child Movie TicketFree with Happy meal - McD Free Bookmarks inside – Flipkart
- 30. •Builds customer equity •Promotesdiversification and innovation – Brand Extension Related BRANDING Concept “First come the innovators, then come the imitators, then come the idiots.” - Warren Buffett
- 31. •Provide a freeproduct to users and then charge a third party for access to them •Requirements: A free offering that attracts either many users who can be segmented for advertisers or a targeted group that makes up a customer segment Third parties willing to pay to reach these users 3. CHARGE THIRD PARTIES
- 32. CHARGES companies toADVERTISE to its millions of users
- 34. •Making a productor service better •Facilitating targeted marketing or advertising Related MARKETING Concept “Know what your customers want most and what your company does best. Focus on where those two meet.” - Kevin Stirtz
- 35. •Offer a freeproduct or service with a paid offering •Recommendations: Products or services that can be bundled with the free offering A free product that needs regular maintenance or a complementary offering 4. BUNDLE GOODS
- 37. PACKAGE TIE-IN SALE RelatedMARKETING Concept INDUCING TRIAL Bundling a pair of goods pays if their demands are negatively correlated
- 38. BELIEF: Products must generate a respectable level of revenueand profit Profit- center structure and accounting system it employs Rethink on offering free products
- 39.
- 40.
- 41. NINTENDO in aDilemma!!! Nintendo is a big player in the Indian market…. But was taken aback by Rovio’s free products!!
- 42.
- 43. Ignore the THREAT??? Or Introduceits own FREE product???
- 44. NINTENDO is facinga BUSINESS MODEL THREAT… So it SHOULD NOT ignore it!!!
- 45.
- 46. Nintendo can launchits games like MARIO and POKEMON at PLAY STORE and APP STORE Of course FREE OF COST!!!
- 47. Tie up withcompanies like SAMSUNG and APPLE for installing their games by default on their phones to increase their customer base
- 49.
- 50. Nintendo can chargethird parties like ad companies for advertising their products in between games
- 51. Have the customersmake in-game purchases, like MARIO has LIMITED LIVES, so you can buy it by SPENDIND a few BUCKS
- 52. You can modifyyour POKEMON AVTAR by spending some money
- 53.
- 54. If a newcompany enters the market and offers a product for free, then the incumbent company should Identify the THREAT level RESPONDa ccordingly
- 55. How can youCOMPETE with FREE ??? (1/2) •Think hard about what you offer that’s unique •Compete with free by being priceless - The common strand is personal experience “Companies that solely focus on competition will ultimately die. Those that focus on value creation will thrive.” - Edward de Bono
- 56. •Napster offered consumersto download free music •Apple : iTunes, charged a fee per download •In the end, the BEST PRODUCT wins •Focus on: • Building a truly great product • Great service to back it up People have proven time and time again that they'll choose (and pay for) a better product over a free one! How can you COMPETE with FREE ??? (2/2)
- 58. Thanks for yourtime
Editor's Notes
- #11 Hurting their revenue and profitability. Should have actually waited and allowed that attacker to self-destruct or recognized that the 2 could peacefully co exist. These are cases when incumbents reacognized the treat, had all weapons to react to win the battle like established customer base. Superior product feature, strong reputation and abundant financial resources