When a market is established and mature, it is much more difficult to get into it, but nothing is impossible, and with economic capacity can implement strategies aggressive enough to be able to get a settled market, even having come the last of all.
A clear example can be seen in the hosting industry, where the German company United Internet, which owns well-known brand 1&1, just got about half of the hosting industry Spanish stroke of a pen with the purchase of Arsys company’s La Rioja and second of the market for 140 million euros, its billing x3 or x10 of EBITDA.
But this is not just the result of this recent acquisition, the purchase has not been more than a culmination of a background strategy that began in July 2007, when 1and1 entered Spain with aggressive offers unbeatable prices, and the supply of welcome: 2 years free hosting and a domain 2Gb.’s, without requiring permanence, and other domains for less than 4.99€/year, when I at that time, paid about 15€/year per domain.
With this offer get a large majority of Spanish users try, at least, the new and recent proposal of German origin, which seemed to get attention and like. And somehow with this rule change, began to turn into comodity domains and hosting, since for many the price was already only thing I could matter. Knowing that this initial test, in many cases, it was all I needed to get, and stay as it was.
But these offers as spectacular, only a large company could do with a bulging wallet, investing in your future customers, to stop the entry for two years offering a free product positioning and competitive pricing for taking the time to loyalty customer, to get a niche as the cheapest of all by far, but not bad product, but by a temporary offer.
This they did because they were convinced that their products were of proven quality, and only had to get try them out, and you have to take into account that came with substantial support for his extensive experience in Germany, his home country, and the rest of Europe, which they added the element of trust and security that a new player could not provide.
Besides this, they have worked campaigns online and offline marketing, branding and performance, and have made every means possible to achieve their ultimate goal.
Today, with 42% of the market, already can afford to continue their gradual rise in prices, which have been doing for the last few years, because once loyal customer, and picked up by several sides to their products without exits, is more difficult to move to competition, because you go up a few cents each year.
In conclusion, we would get when we have a tried and tested product, and we want to enter a new market already taken over, unbeatable pricing strategy, accompanied by a major investment behind can be a good choice, provided you then be able to user loyalty, once the initial offer period.
Do you think it has merit this strategy and its implementation or just a matter of capital? Do you think that there are more ways to enter a market cornered? What do you think could be an appropriate strategy to apply against the competition?