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1081_CDPS_G1 [CO] Chapter 4 – Players ([3] Eight Hidden Costs of Bidding,…
1081_CDPS_G1
[CO] Chapter 4 – Players
[2] Case of becoming a player
Another Coal Porter
competitor
CSX
complementor
customer
Gainesville
supplier
Norfolk southern
for CSX
threatened by competitors, so lower delivering costs
for Norfolk southern
didn’t lose any money
incur some hidden costs
It used up some political capital in lobbying to get the approved.
Answering the Call
make aggressive bid help customer to get better price, but it may be useless
Bittersweet Success
competitor
NutraSweet
complementor
customer
coke, pepsi
supplier
Holland Sweetener
Monsanto’s bargaining position
after Holland Sweetener entering
reduced NutraSweet’s added value
reduce customers' dependence on NutraSweet
improve customers' bargaining position
before Holland Sweetener entering
Monsanto is monopoly market
its added value was huge
better strategy for Holland
demand compensation for coming it
fixed payment
a guaranteed contract
pay me to play
ask coke and pepsi paying
[1] Premise
Heisenberg's Principle
players can’t interact with a system without changing it
consider entering the game
Cost for participating the game
quoting a price
pitching an advertisement
Takeover bid
build a specialized plant
from cheap to expensive
requirements before participating
Ask for a better access to information
Deal with someone who will appreciate to your attend
Ask for a guaranteed sales contract
Beside current contract, ask to bid on other pieces
Make the customer give you his willingness to accept price
Ask for the cost that will cost you entering the game
Ask for a last-look provision.
[3] Eight Hidden Costs of Bidding
a better deal
keep the secret that the price you offered to get the new account
low price as a benchmark
don set a bad precedent when enter in new business
the incumbent can retaliate
keep traded accounts with a relationship and high-margin accounts
competitors also use the lower benchmark
less competitive advantage
don't use a low price to attract the customer (No loyalty)
make sure the price that attract the customer
keep cost position
do not help competitors's customer to hurt own
don't destroy competitors' glass houses
keep your rival making money, it can prevent lost-lost situation
better uses of your time
keep your current customers happy > other people's customers
[5] Changing the Players
your added value?
without can cost you more
sitting on the sideline may be the best strategy
create right incentives
Team member
105106065 王泰然 Frank
106212022 蔡昀雯 Winnie
105212042 金純之 Sunny
105212048 謝其佑 Jason
106212004 郭儀中 Eva
105212017 賴珮綺 Christy
[4] Bringing in other ''players''
suppliers
more suppliers
customers have stronger bargaining position :star:
How
pay them to play
form buying coalitions
advantage
source of power
no individual bidder has much added value
coalition has power position
share the cost
sheer size
lower premiums
become your own supplier
complementors
Pros: your products can be more valuable
Cheap Complements
3DO, pay for the manufacture of hardware but also design the software on their own
they cannot share profits between manufacturer and game developer
too expensive games that could be hard to expand
Paying yourself a Complement
don't rely on others, better to do it yourself
3DO make themself complicated
Nintendo and Saga both delivered software and hardware
ask yourself if you are making more money
customers
create a bigger pie
sellers in stronger bargaining position
more profit
How
pay them to play
:star:especially early adopters
ex: America Online
build up customer base
ex: nightclub
subsidize some customers to attrack followers
ex: Newspaper and magazines
subsidize customers
more advertisers
problem :warning:
price too low
no evidence of real interest(customer)
advertisers may decrease
educate the market
ex: Harnischfeger
show new technology to find more buyers
become your own customer
purpose
develop market
achieve scale
ex: automakers own car rental agencies :car:
competitors
bring in
Why
Competition is motivation
Competition is comparison
What to note
Keep the technology to yourself
Create a competitor to let buyers compare
Internal competition might be safer
Reduce
Companies usually have too many competitors
Buy them out
Or let them buy you out
Last-look provision :
people have to guaranteed sales contract if you have the best price