Harvard Business Review
TelZip, a small mobile-network operator, has decided to shake up the European telecommunications market by offering “free forever” broadband service to customers who sign a long-term contract with the company. Meridicom, the dominant industry player, must decide how to respond. Joe Ulan, the incumbent’s new chief marketing officer, gets conflicting advice: The product division heads don’t like the idea of discounting their products or even of working together; the sales director wants to kill the competition with a price war. How can Joe turn this attack into an opportunity? Marco Bertini and Nirmalya Kumar, of London Business School, present this fictional case to explore the question, “What do you do when one of your small competitors pulls out its big gun?” Two experts comment on the case in R1007R and R1007Z. Georg Tacke, of Simon-Kucher & Partners, argues that simply matching a small competitor’s prices is the worst reaction. Anne Gro Gulla, of Telenor Group, suggests creating offshoots of the main firm that might cannibalize the mother brand but avoid the greater evil of allowing it to be eaten alive by outsiders. HBR’s online readers also offer their two cents. You can, too.