Final answer:
In a market with significant barriers to entry, a new web browser can be differentiated by pricing it competitively and adding unique features to establish product differentiation. Factors such as competitive actions by existing players and value-added features should be considered to ensure successful market entry.
Step-by-step explanation:
To successfully differentiate a new product, like a web browser, in a market with high barriers to entry, one could adopt a competitive pricing strategy and focus on creating differentiated products. When making up a price, you would not want to raise it above that of the competitors, especially if your product offers similar features.
Instead, offering your product at a slightly lower price or with unique value-added features could incentivize users to switch from existing options to your product. The introduction of unique features or improvements that enhance user experience and cannot be found in current offerings, thus establishing a strong product differentiation.
Implementing a strategic pricing model, such as penetration pricing, to attract early adopters and build market share swiftly, which could lead to word-of-mouth promotion and organic growth. Additionally, analyzing potential reactions from monopolists or existing competitors is crucial before entering the market.
Competitive tactics, such as price cuts or improved services by the incumbent, should be anticipated and prepared for.