MARKET STRATEGY TWO SIDES (2)

Mohammad Suyanto

Abstract

According to Eisenmann, Parker and Alstyne Harvard Business Review, October 2006 edition there are three things to do to use the two-sided market strategy, which is designing the platform business model, led victory in the battle and face the threat of another platform that surrounds the company platform. In a competitive industry, prices are determined widely by the marginal cost of producing an extra unit with a thin margin. In the industrial high entry barriers, high prices set according to the willingness of consumers to pay higher margins. For two-sided market, pricing is more complex. Platform providers should choose for each side, based on the elements that affect the growth and the willingness to pay. Especially for two-sided market, a "subsidy side" which is a group relying on sales volume, and "the money" that relies on high-value sales of other groups.

To master the platform competition can be done by two processes. First, managers must determine whether the targeted network markets to be served is a single platform. Thus, the second step, managers must decide whether to fight or cooperate in the platform is the company's decision is at stake. To fight successfully, managers need a cost advantage or differentiation.

Companies must recognize hidden opportunities and mobilize resources to exploit these opportunities. Two-sided markets, particularly in the technology field is growing very fast and rich in hidden opportunities that make a market boundaries blur. For example, mobile phones now combine the functionality of music and video player, PC and sometimes credit cards. Like, eBay has acquired PayPal and VoIP start-up Skype, which is part of colliding with Google, which also provides payment services (Google Checkout), VoIP (Google Talk) and listing services (Google Base). Sony has endured a coordinated strategy across the consumer electronics, video games, movies, and music business. Sony's Walkman products began seized by Apple with the iPod. Mistakes like this from an established company is the cause why companies like Google, eBay and Yahoo to be a giant. Real-Network is a pioneer of streaming media software as a good example of two-sided market.

Although, the network industry and appeal of a platform that was reasonably successful everywhere, the strategic implications of two-sided market is widely unexplored. In the past, the managers do not understand the problem because managers typically use a strategic formulation of fancy for two-sided markets through trial and error.