COMPETING AGAINST FREERobbie SanderErik Anderson

INTRODUCTION

• What are some of the best free products you have used recently?

• Do you believe it was a better product offering than something you could have paid for?

ASSESSING THE THREAT

•o Ability to cover costs

Skypeo growth rate- 40%o rate of defection- 5%

Three factors

Choosing Whether and When to Respond

Offer a Better Free

• When?

• How?

• Failure to respond...

• The saga of Yahoo vs. Gmail

Four Tried and True Strategies

• Up-Sello Offer a free product, then charge for a premium product

Example: Phone apps

• Cross Sello Sell products that are not directly tied to the free product

Example: Ryanair

• Charge Third Partieso Provide a free product and then charge a third party for

access Example:Google

• Bundleo Offer a free product or service with a paid offering

Example:HP- Buy a PC get a Printer

Rethink Profit Centers

•• Second Obstacle: Accountability structured

to focus on products as a profit center.First Obstacle: Products are viewed as the profit center

Questions

• As a college age consumer, what characteristics are necessary for you in a product to justify spending money on it?

Article Link

http://classes.bus.oregonstate.edu/ba499/elton/Articles/Competing%20against%20Free.pdf