A firm with an established market position can employ various tactics to make it harder for new firms to obtain a trial for their product. It may employ tying and exclusive dealing contracts which we discuss in chapter 15. It may also offer products only for lease, rather than sale, especially if the leases are for a long term a marketing technique commonly employed in the photocopying industry. A new firm can also offer products on a rental basis, but this involves a substantial investment in inventory.

By offering a variety of brands as in the breakfast cereal industry, a dominant firm can preempt opportunities for a new firm to come in on a small scale and serve a narrowly focused segment of the market. If learning by doing is important, small – scale entry may be the only practical way a firm can enter a market.

Discounts for volume purchases can encourage customers to patronize only a single supplier. By tying volume discounts to purchases of many different products, a multiproduct firm can disadvantage rivals that compete against it in a single market. To offer similar discount, entrants or fringe firms would have to market an equally wide range of products, with the corresponding increase in entry / expansion costs. By raising rivals ‘distribution costs, the dominant firm may be able to raise the price of the products to which the discount are applied, so that costumers and up paying more even with the discounts.

A similar effect can be achieved by offering the product and post sale service at a single price. Rivals would then the have to set up their own service department to come into the market increasing the cost of entry / expansion.

A dominant firm can invest in training customers’ purchasing agents to use specially designed software to order from it by computer. Anyone who has ever learned to use one word processing system and then had to switch to another will believe that this practice tends to lock in purchases with the firm that designed the software.