Problem: One long distance company controls 60% of the market. Two others divide up most of the rest, with company B having about 20%. A growing slice of the market is taken up by small no name firms offering rock bottom pricing. There are other new threats.
Give a choice should Company A compete with Company B on price or other dimensions?
Imagine company A develops some new features that enhance the value of the long distance call. This feature adds substantial fixed cost, but does not affect variable costs. Fixed costs make copying this feature infeasible for all but the 3 largest companies. The relationship between the cost and added value for the 3 big companies is favorable. How should Company A evaluate the desirability of attempting to build advantage through this feature?