Competing against free

A Big Player in Indian Gaming Market

BUT NOW:

With one key difference….

IT ISFREE! FREE!

FREE!

The two big companies who offers Free Games.

Should NINTENDO ignore the threat? Hoping that customers won’t defect.

ORIntroduce a NINTENDO’s own free product?

Should NINTENDO ignore the threat? Hoping that customers won’t defect.

ORIntroduce a NINTENDO’s own free product?

We will get back to it.First of all let us see how David J Bryce advise us to Assess the ThreatsAnd some more INDIAN Markets where the companies are Giving it all Away?

Assessing the ThreatSeriousness hinges on three factors

The entrant’s ability to cover its costs quickly enough.

The rate at which the number of users of the free offering is growing.

The speed with which your paying customers are defecting.

Some companies SELF DESTRUCT because the can’t convert non paying customers into paying one and some don’t get third parties for paying.

Of course, some companies may have enough FUNDING to wait a year or more before they need to monetize their user base.

Some companies convert a lot customers, it means they are SUCCESSFUL

CRUCIAL!!

How Big a Threat Is ‘Free’ Competition?

This matrix helps you in“Choosing whether and when to respond?”

If you’ve established that free offerings are a threat to your business and have considered the timing of your response, the next step is to figure out how to respond?

i.e.

If you’ve established that free offerings are a threat to your business and have considered the timing of your response, the next step is to figure out how to respond?

i.e.

OFFER A BETTER FREE

Everyone likes to get it for FREE.

In India offering free is so common that even governments here are offering free:

EXCISE FREE Zones

These states exempt companies from paying taxes for a period of around 5 years or more for setting up a new industrial plant in their states.

Industrial policy

And as a RESULT of it, these states develop employment for their own states and start generating heavy revenues after a limited period of time. Few plants in H.P.

Four Tried and True strategies offering a better free:

How to offer a better free?

1

Up-sellIntroduce a free basic offering to gain widespread use and then charge for a premium version.

An INDIAN perspective of it is:

First ride free to make people try it and then from next ride they start charging. Today, Ola is doing good in INDIA.

2

Cross-sell Sell other products that are not directly tied to the free product.

An INDIAN perspective of it is:

Daily household items uses this technique the most.

Free!Soyabean chunks with Refined oil

And the most common offer which all of you might have availed sometime.

And the most common offer which all of you might have availed sometime.

Toothbrush free with toothpaste

And the gadgets industry never leavesany offer. They give us all…….

3

Charge third parties Provide a free product to users and then charge a third party for access to them.

An INDIAN perspective of it is:

Most recent initiative under this category.

EMI FREE CAR

Earlier INDIANS paid for classifiedadvertisements

ButNow:

You can ad for free:

These companies earn by Adsense.

4

Bundle Offer a free product or service with a paid offering.

An INDIAN perspective of it is:

After using the 6 GB free data you will get it recharge again and pay to AIRCEL.

These were the four true and tried strategies with their Indian perspective.

Now, let us have a look from a Marketing Insight : Giving It All Away from Philip Kotler’s book Marketing Management which was taught to us in Module 2 which is similar to the given article.

Marketing Insight : Giving It All Away Giving away products for free via sampling has been a successful marketing tactic for years.

Few companies work on “FREEMIUM” strategy:Free online services with a premium component

Chris Anderson, editor-in-chief of Wired, strongly believes that in a digital marketplace, companies can make money with “free” products.

Now, coming to OFFLINE

Founder Michael O’Leary thinks like a retailer, charging for almost everything but the seats itself

25 % seats are absolutely FREE! FREE! FREE!

Ryanair charge by third parties for advertisements.

NOW, Let’s move back to the case study

V/SAND MANY MORE….

Should NINTENDO ignore the threat? Hoping that customers won’t defect.

ORIntroduce a NINTENDO’s own free product?

NINTENDO is facing Business model threat so it should not ignore it obviously.

Let us help

To get our MARIO back in market.

NINTENDO shall launch few of it’s games at PLAY STORE and APP STORE.Especially MARIO and POKEMON.And these games should be absolutely FREE!

NINTENDO shall pay to the mobile companies such as SAMSUNG and APPLE for installing their games by default in the device to increase their users.

NINTENDO should make avatars of POKEMON so that it can attract fans of Pokemon.

Get your favorite POKEMON on PLAY STORE!!!

How will NINTENDO earn?

By CHARGING THIRD PARTIES One of the true and tried strategy we have discussed earlier.

NINTENDO shall charge ad companies for giving ads between the game.

NINTENDO shall make it’s customer to have in-game purchases. Like

MARIO has limited lives, so you can buy it by spending few bucks.

You can modify your POKEMON avatar by spending some money.

CONCLUSION:

IF A NEW COMPANY ENTERS THE MARKET AND OFFERS A PRODUCT FOR FREE THEN THE EXISTING COMPANY SHOULD ASSESS THE THREAT LEVEL AND RESPOND TO IT IN 4 WAYS1.UPSELL2.CROSS SELL3.CHARGING THIRD PARTY4.BUNDLE

Credits:

David J. Bryce’s article Competing against free.Philip Kotler’s book “Marketing Management”My elder brother Sahil Arora. I consulted with him about the present scenario.

THANK YOU!

Disclaimer:Paras Arora

H.B.T.I. Kanpurduring an internship by Prof. Sameer Mathur,

IIM Lucknowwww.iiminternship.co

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