The Indian Perspective

COMPETING AGAINST

FREE

Understanding Marketing Management

This Presentation will reflect the different aspects of Marketing Management that were covered in the Internship under able guidance by Prof. Sameer Mathur

Analysing Article byHarvard Business School

New Product has been launched

in the Market

This Product is Similar

as yours

But with a KEY DIFFERENCE

Its FREE !!

How do you Respond ??

About Two Third of incumbents get it

WRONG

Some Statistics

They

Ignore itLaunch Early

Launch Late

Plan of ActionTo Fend offFree-Product competitors

Step 1Analysing the Threat

Immediate Threat

Launch FREE Product

Immediately

Business Model Threat

Change Business Model

Delayed Threat

Coexist or Delay Launch of

Free Product

Minor Threat

Monitor Situation

DEFECTION RATE

HIGHMore than5% a Year

Less than5% a YearLOW

LOWLess than40% a Year

HIGHMore than40% a Year

GROWTH RATE

THREAT Assessment Model

Step 2Choosing how to Respond

Companies that PREVAILED

Intuit responded by PURCHASING the rival Yahoo responded by

EXCEEDING the

free storage offer

Companies that IGNORED THREAT

All European Airlines IGNORED

providing DEEP DISCOUNTEDTickets

Sirius XM IGNORED

providing FREEOver the internet Radio

Companies that DELAYED THREAT

DELAYEDReaction to

Step 3Offer the BETTER FREE

FourTried and TestedStrategies

To provide BETTER FREE

UP SELLCROSS

SELL

CHARGE THIRDPARTIES

BUNDLE

UP SELL

First provide FREE ServiceThen introduce PREMIUM Service

CROSS SELL

Sell OTHER product not DIRECTLY tied to MAIN product

CHARGE THIRD PARTY

Provide FREE product to the USERthen CHARGE THIRD PARTY

BUNDLE

INDIA has large number of companies adopting this strategy

Offering FREE service or product withPAID service

Some CONCEPTS fromMARKETING MANAGEMENT

Responding to Competitor’s Price ChangesPRICING STRATEGIES

5 Situations to consider

Product’s Stage in Life Cycle

Company’s Portfolio

Competitor’s intentions and Resources

Behaviour of COST with VOLUME

Company’s Alternate Opportunities

ISSUES to Review

POSSIBLE ANSWERS

Why did Competitor Change Price ?

To Steal Market Utilize access to capacity Meet changing costs To lead Industry-wide pricing

Other ISSUES to Review

Is Change TEMPORARY or PERMANENT ??

If NOT RESPONDEDWhat will happen to Market Share ??

What will be competitor’s action to our reaction ??

Possible Responses

Differentiate Product

Low Cost Venture

Reinvent Low cost Player

Case Study The Indian Perspective

Major Market in India is

Over the internetMESSAGING AND CALLS

But we willFOCUS

mainly on INTERNET CALLS

One of the LEADING PLATFORM providing this service is

According to BLOG

SKYPE usersSpend2 BILLIONSecondson skype

Why has

Became so POPULAR ??

features

Instant Messaging

Skype video calling

Calling mobiles and landlines

Participating in group calls.

Besides all its features

What is that makes it Successful ??

It has CROSS PLATFORM compatibility1)

2) It allows MULTIMEDIA sharing

3) But MOST IMPORTANTLY

ItsFREE

Which Companies are MOST AFFECTED

by this ??

Telecom Companies

Airtel lost around 2573 Crore Rupees in 2014 due to the over the internet services

What should

Do ??

Step 1 Analysing the Threat

Immediate Threat

Launch FREE Product

Immediately

Business Model Threat

Change Business Model

Delayed Threat

Coexist or Delay Launch of

Free Product

Minor Threat

Monitor Situation

DEFECTION RATE

HIGHMore than5% a Year

Less than5% a YearLOW

LOWLess than40% a Year

HIGHMore than40% a Year

GROWTH RATE

THREAT Assessment Model

This situation lies in this category

Step 2Choosing how to Respond

Airtel should respond to the threat

Step 3 Offering the better

Lets Propose some SOLUTIONS to

CHARGE THIRD PARTY

Can Charge Advertising Companies And In Exchange provide the customers with DISCOUNTED CALL RATES

Solution 1

Solution 2

UP SELL

Can start Premium Services that will Provide better services like FAST CALLINGSPEEDY MESSAGING WITHOUT INTERNETSERVICES RELEVANT TO THE CUSTOMER

Solution 3

BUNDLE

Provide Other FREE services With PAID services

Provide FESTIVE OFFERS

Solution 4

In INDIA Internet Speed is NOT THAT GOOD

Can start the video calling service at less cost

which isBUFFER FREE

Solution 5Most IMPORTANTLY

Provide a TRENDY SERVICEWhich will attract YOUTH MARKET

Conclusion

We can say that

FREE Services are a Threat

But by ProperPLAN OF ACTION It can be dealt SUCCESSFULLY

Analysed by

Nihar ShambharkarStudentNational Institute of TechnologyTrichy

Based ona Article by

HARWARD BUSINESS SCHOOL

during Internship by

Prof. Sameer MathurProfessorIndian Institute of ManagementLucknow(www.IIMinternship.com)