Post on 17-Aug-2015
transcript
Weapons they needed to win a head-to-head battle
An established customer base
superior product features
A strong reputation
– Brand Value
In two-thirds of those cases, the incumbents made the wrong choice
They introduced their own free offering too quickly
Responded too slowly
Did nothing at all
The ubiquity of the profit-center structure and mind-set
Assessing the Threat
Factors affecting Threat
The entrant’s ability to cover its
costs quickly enough
The speed with which your paying
customers are defecting
The rate at which the number of users of the free offering is
growing
Reasons for Entrant’s Self Destruction
Fish Bone Diagram
Can’t convert nonpaying customers into paying ones
Can’t cover costs
Can’t find a third party that will pay for access
Examples of Self Destruction
Upsell
• Introduce a free basic offering to gain widespread use and then charge for a premium version
• Requirements• Large enough user base to ensure
profits with low conversion rate• A high percentage of users willing
to pay for the premium version
Gaana.com
Premium Account
• 6 months- Rs720
• Unlimited HD Download on iPad, iPhone, Android & Windows Phone
• Stream in High Definition on web & mobile
• Listen songs in offline mode
• No Ads on web & mobile
• Download on 5 devices.
Shaadi.com3 amazing features that make Shaadi.com even better!
• Promote yourself to matches• Drive responses via email, chat, phone
& SMS
• Get featured, get noticed!• Standout even more with Bold Listing &
Spotlight
• View additional Profile details• View additional details and select better
Matches
Airtel TalkFree Charge
• App-to-app calls across the world but within the airtel talk community,
• Chat Instant Messaging • Video calling & file sharing
Nominal Rates• Call back number service
from India • Calls to any landline &
mobile using airtel out calling feature
• SMS out service
Cross-Sell
Sell other products that are not directly related to the free product
• Requirements• 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
• Cross subsidization: is the practice of charging higher prices to one group of consumers in order to subsidize lower prices for another group.
Ryan Air• Offers roughly 25% of its
airline seats free but cross-sells a variety of add-on-services such as seat reservations and priority boarding
• Onboard• Food• Scratch-card games• Perfumes• Digital Gadgets
SpiceJet
Here’s how you can book your Re 1 ticket on Spicejet mobile app:
Step 1: Download the Spicejet’s mobile app on your smartphoneStep 2: Book one leg of a round trip for Rupee 1 only.Step 3: Book the return ticket of the round trip at regular faresStep 4: Confirm the booking and make payment
INDIAN EXAMPLE: FREECHARGE.IN
Offering attracts many users Third parties are willing to reach
these users
• The average payment gateway charges are typically in the 1.8-2% rangeA recharge site makes a little less around 0.5-1%.
• Another revenue stream is the commission from brands on redemption of their free coupons offered by the recharge site.
REVENUE MODEL