Skip navigation
Title: Strategies to Fight Ad-sponsored Rivals
Authors: Casadesus-Masanell, Ramon - Harvard Business School
Zhu, Feng - University of Southern California
Issue Date: 2009
Series/Report no.: Net Institute Working Paper;09-09
Abstract: We analyze the optimal strategy of a high-quality incumbent that faces a low-quality ad-sponsored competitor. In addition to competing through adjustments of tactical variables such as price or advertising intensity, we allow the incumbent to consider changes in its business model. We consider four alternative business models, two pure models (subscription-based and ad-sponsored) and two mixed models that are hybrids of the two pure models. We show that the optimal response to an ad-sponsored rival often entails business model reconfigurations, a phenomenon that we dub 'competing through business models.' We also find that when there is an ad-sponsored entrant, the incumbent is more likely to prefer to compete through a pure, rather than a mixed, business model because of cannibalization and endogenous vertical differentiation concerns. We discuss how our study helps improve our understanding of notions of strategy, business model, and tactics in the field of strategy.
URI: http://hdl.handle.net/2451/29498
Appears in Collections:NET Institute Working Papers Series

Files in This Item:
File Description SizeFormat 
Casadesus-Masanell_Zhu_09-09.pdf2.43 MBAdobe PDFView/Open


Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.