Tag Archives: product management

Product Strategy Determines a Company’s Fate: ‘Apple’ Does It Very Well & Other Companies Do It Less Well.

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“More than any other factor marketing/product management’s ability to formulate and execute a clear product strategy will be the most critical determinant of a company’s fate.”

Product strategy is perhaps the most important function of a company. In a highly-competitive market characterized by emerging product categories and innovative offerings, the ability to effectively develop and rollout a market-driven product strategy is not enough. Companies that have developed an integrated approach to product strategy and innovation are more successful because they understand how new market drivers will affect long-term performance. As a result, they are able to quickly adapt to changing business dynamics so that they can continue to deliver value to their customers. When an organization introduces a product into a market they must ask themselves a number of questions:

  • Who are the target customers?
  • What benefits will customers expect?
  • How is it positioned within the market?
  • What differential advantage are their over competitors?

According to P. Tailor; “Marketing is not about providing products or services, it is essentially about providing changing benefits to the changing needs and demands of the customer”.  Philip Kotler in the book “Principles of Marketing” devised a very interesting concept of benefit building with a product where he suggests that a product should be viewed in three levels:

  • Level 1: Core product:  Core benefits.
  • Level 2: Actual product: Branding and differentiators.
  • Level 3: Augmented product: Additional non-tangible benefits.

In the article “Product Life Cycles – Developing Your Product Strategy” by Ian Traynor writes: Understanding how markets change and how they react to your own products and services is a vital part of management and marketing strategy. If you understand the ‘product life cycle’, you will be ahead of many of your competitors! The ‘product life cycle’ is a description of what happens to anything that we produce and sell, and it applies to all businesses, large and small. Understanding it and taking appropriate action is essential if you are to maximize the sales and profits of your business. Products go through a cycle which can be described in 4 stages: Introduction, Growth, Maturity, Decline. Although, it’s possible to defer the decline of a product by a number of strategies:

  • Increased promotion.
  • Enhancing the product.
  • Introducing add-ons and variations.
  • Finding new markets.

Inevitably, however, the life of the product ends, and unless new products are introduced, the life of the business is at risk. If your business has a number of products, it is likely that they will each be at different stages of their product life cycle. If you are to avoid a decline in overall sales and profits, the timing of introduction of new products is crucial.  A product life cycle is not fixed for all products – it can vary considerably. For example, computer items tend to have relatively short life cycles, whilst some services, such as the sale of property and real estate, can remain relatively unchanged for many years. But they will change!  The key to an effective product strategy and product development is planning ahead…

In the article “New Product Strategy” by Rick Braddy writes:  One way to think about “strategy” is it’s the hammer used to drive a tactical advantage you possess into a marketplace, a concept from the book “Bottom Up Marketing” by Jack Trout and Al Ries. The strategy hammer hits those tactical nails so hard, they just get driven into the market much easier and faster than they would otherwise. Bad strategies often seem good on the surface, until you try to put them into action… Excellent strategies take proven tactical advantages and make them more powerful product strategy consisting of six areas:

  • Enable Non-Consumption: Enabling non-consumers to become customers typically involves bridging one or more “gaps” that are preventing consumption, including: Wealth, Skills, Time, Access.
  • Nail the Job to be Done: To attract buyers, the product absolutely must get the job done the buyer wants to accomplish. Nailing the job begins with a clear understanding of the buyer’s existing alternatives.  For each alternative, we need to understand the intended “outcomes” that occur as a result of taking this approach, and importantly, the “unintended consequences” of taking this approach.
  • Delight, but don’t Overshoot: It’s important to delight customers with a few “wow” features (sometimes called “Purple Cows“) and a solid product; however, it’s even more important not to over-engineer a product, which costs more money and time and then makes consumption more difficult on a broad scale.
  • Master an Emergent Strategy: Anytime you are entering a market with something new, there are risks and unknowns that cannot be foreseen or planned for in advance.  An “emergent strategy” is one in which your strategy and possibly certain key tactics can only be discovered once you are immersed into the marketplace, where the learning process can begin.
  • Pricing/Segments: The days of attacking a broad, horizontal marketplace are gone for all but the largest corporations. Entrepreneurs and small-to-medium businesses must choose which segments or niches of a market to target and how best to price the product to compete effectively.
  • Place/Promotion: Choosing the places where you will intersect with buyers is another critical aspect of your go-to-market strategy for the product.  How best to position and promote the product is equally important to ensure your advertising, landing pages and sales copy resonates with your target buyers.  

In the article “Product Strategy Examples” by Christopher Carol writes: Two major product strategies are price-based product strategy and product differentiation. When developing a strategy, strive to answer the following questions: ‘who is the product aimed at; what benefit the product brings; what your position is in the marketplace; and what advantage the strategy will have over those of your competitors’.  When using a price-based product strategy, the product is planned according to such things as cost-plus pricing; value-based pricing; and target-return pricing. Essentially, your strategic angle in a price-based strategy is to set the price in such a way that you get a competitive advantage over other similar products. Use a product-differentiation strategy when there are competing products that fulfills the same need. In a product-differentiation strategy, your goal is to put distance between your product and your competitor’s product. There two forms of product differentiation: vertical differentiation and horizontal differentiation. Vertical product-differentiation strategy focuses on improved features that the customers perceive a difference in quality due to your improvements. Horizontal differentiation focuses on your customers’ preferences when the features of your product cannot differ substantially from the features of your competitors.

In the article “4 Way to Create a Remarkable Product Strategy” by Brian Halligan writes: I think of Inbound Marketing as a step-by-step process by which you; (1) create content, (2) optimize that content for Google and social media sites, (3) promote that content through the social media-sphere, (4) you measure the results to make investment decisions, and then you rinse/repeat.  It turns out that this step-by-step Inbound Marketing process works best when you have a remarkable product to sell, so it makes sense to make step (0) be the process of creating a remarkable product or service offering.  Here are a few ideas on how you might want to think it through:

  • Go Narrow:  The internet opens-up tons of potential customers, but it also opens-up tons of potential competitors.
  • Boundary Buster:  Think outside the box and include not just competitors, but also “alternatives” and innovate across boundaries.
  • “Skate To Where The Puck Is Going”:  Great marketers think about being ahead of the game. 
  • Business Model Innovation Is Better:  Many companies focus too much on technology innovation and don’t think enough about business model innovation. 

“A flawed product strategy is like a bad haircut:  you just can’t hide it Before you design your product, ‘design your customer’. At the root of many flawed products is a simple problem: there is no customer.”

In reality, developing the product strategy is one of the toughest challenges that companies face. Without a successful product strategy process, most businesses will ultimately fail. In its simplest form, this process is a repeatable, measurable methodology for defining and managing the company’s product strategy and product portfolio. Although, firms will often have a ‘product roadmap’ which undergoes annual reviews among a few key executives during which time resources are allocated and priorities are set. However, having a roadmap does not constitute a product strategy process. A product strategy process must have mechanisms for incorporating the external factors (competitor strategies, new product announcements, market trends, and market forecasts-the “marketing intelligence” function) and internal factors (funding, human/development resources, access to technology, and paths to market) which will impact the success of the product strategy. It’s very important to recognize that “one size doesn’t fit all” when it comes to product strategy. Depending on the competitive intensity within your industry, the intellectual property landscape, and your internal resources, your product strategy process may be very simple or it may be very complex. The product strategy process must be crafted to suit the needs and abilities of your specific organization. When developing a product strategy process, it’s important to avoid falling into the trap of believing common myths regarding the product strategy process, including:

Myth 1: Product strategy is only for large multi-national companies with massive budgets and “armies” of internal resources! Wrong! you need a product strategy process-regardless of the size of your company. You must be constantly adapting your portfolio to achieve or sustain a competitive advantage.

Myth 2: I have a product roadmap–therefore, I have a product strategy process. Wrong! While a product roadmap is a valuable deliverable from the product strategy process, much of the value of the product strategy process comes from assessing the market on a regular basis, collaborating with the different functions to develop the “best” strategy, and rigorously validating and revalidating your assumptions about the market. You can have a roadmap without having an effective product strategy process.

”Product strategy begins with a strategic vision that states where a company wants to go, how it will get there, and why it will be successful.”

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Effectual Pricing Strategy: Walking a Balance Beam between–Customer, Sales, Competition, and Profit.

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“Pricing is a tricky business. You’re certainly entitled to make a fair profit on your product, and even a substantial one if you create value for your customers. But remember, something is ultimately worth only what someone is willing to pay for it.”

Building an effective pricing strategy for products or services is the key to a successful business. Selecting the pricing strategy for your price setting methodology means that you need to have a good understanding of a number of different strategies, for example: loss leader pricing, market penetration pricing, value pricing, price skimming, product line pricing, promotional pricing, psychological pricing, and other alternative strategies and pricing methods, such as captive or companion pricing, premium pricing, generic or economy pricing, differential pricing… Many businesses take a very traditional pricing approach: add up their costs and up-charge by the profit margin they wish to achieve. Other businesses take the approach that the market sets the price and that they need to meet that mark.  From the marketer’s point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus to the producer. A good pricing strategy is balance between the price floor (the price below which the organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no demand situation). The basic elements of a pricing strategy are:

  • achieve financial goals of the company (e.g., profitability).
  • fit the realities of the marketplace (will customers buy at that price?).
  • support product’s positioning consistent with the marketing plan.

Pricing is the most effective profit lever, and it can be approached at three levels.The industry, market, and transaction level:

  • Pricing at the industry level focuses on the overall economics of the industry, including supplier price changes and customer demand changes.
  • Pricing at the market level focuses on the competitive position in comparison to the value differential of the product to that of comparative competing products.
  • Pricing at the transaction level focuses on managing the implementation of discounts away from the list price, both on and off the invoice or receipt.

According to Bernstein’s article “Supplier Pricing Mistakes”, many companies make common pricing mistakes and he outlines several which include:

  • Weak controls on discounting.
  • Inadequate systems for tracking competitor selling prices and market share.
  • Cost-up pricing.
  • Price increases poorly executed.
  • Worldwide price inconsistencies.

In the article How Much Should You Charge for Your Product or Service?” by Scott Allen writes: While there is no one single right way to determine your pricing strategy, fortunately there are some guidelines that will help you with your decision.  Here are some of the factors that you need to consider:

  • Positioning:  How are you positioning your product in the market? Is pricing going to be a key part of that positioning? The pricing has to be consistent with the positioning. People really do hold strongly to the idea that you get what you pay for.
  • Demand Curve:  How will your pricing affect demand? You’re going to have to do some basic market research to find this out, even if it’s informal. But however you do it, chart a basic curve that says that at X price, X’ percentage will buy, at Y price, Y’ will buy, and at Z price Z’ will buy.
  • Cost: Calculate the fixed and variable costs associated with your product or service. How much is the “cost of goods” and how much is “fixed overhead”? Remember that your gross margin (price minus cost of goods) has to amply cover your fixed overhead in order for you to turn a profit.
  • Environmental Factors: Are there any legal or other constraints on pricing? Also, what possible actions might your competitors take? Will too low a price from you trigger a price war? Find out what external factors may affect your pricing.

In the article “The ABCs of Pricing” by Charlie Gilkey writes: Buyers are irrational, and  predictably so. If you product or service provides legitimate value to your customers, then make your prices match their perceptions an economic reality. If those are grounded in a bit of irrationality, so be itour business is about our customers, which means we need to meet them where they are, not where we think they should be. A framework that will help you with setting prices is knowing about: Anchors, bumps, and charms…

  • Anchors: Every established industry already has anchors in play. The art of pricing, though, is determining how you’ll use those anchors. Significant value-adds allow you to use those anchors as baselines rather than straight jackets. But you still need to recognize that established anchors have a very, very strong effect on your prospects’ first reactions to the pricing of your product.
  • Bumps: If anchors set the baseline, bumps let people know what grade of product they’re getting. When you’re setting your prices, you have to make sure you haven’t unintentionally set a bump that either blurs or mistakenly mismatches the grade of product or services. For instance, a $19.99 and $22.99 pricing methodology isn’t nearly as clear as a $19.99 and $29.99 framework. In the latter example, it’s pretty clear that there’s a bump in grade rather than something relatively minor. At the same time, if your competitors have anchored the price at $19.99 and yours costs $29.99 then, you must re-position at another level.
  • Charms: A price that’s a little less than the round number is called a charm price; for example, $19.99 rather than $20. As annoying as we might find charm pricing, it’s a market dynamic that affects buying decisions. Many people think that using charm pricing is somehow demeaning or tricky to prospectsor that playing such games diminishes the seller’s credibility. Still others think that charm pricing doesn’t work on savvy, smart buyers.

In the article “Pricing Strategy as Part of Your Internet Marketing Plan” by Dr. Ralph F. Wilson writes: You can’t do business on the Internet without having a pricing strategy. One of the first questions you need to answer is What are your site visitors like? Are they bargain hunters? Or, shop for products based on their prestige value? What does it cost you to purchase (or produce) and market this product or service? Your price will have to be above your costs — most of the time. Here are the various pricing objectives you’ll want to consider. Two main pricing objectives stand out:

  • To maximize short-term profits: Squeeze as much money out of sales as possible, even though fewer customers may make a purchase. Your strategy may be to charge premium prices (i.e., maximize profits), even though you end up with less customers, but you can make more profit off each customer.
  • To gain marketshare: The other main strategy is to price your service lower to gain marketshare. You may want to maximize the number of customers, even though you don’t make as much on each customer. But you know that later you’ll be able to sell these customers other services.

These two objectives are the key ones to understand, but there are two others:

  • To survive: Survival is a worthy goal. Sometimes companies lower prices so they can generate enough revenue to survive short term. But this isn’t a very good long-term strategy. There’s an old joke about the businessman who said, he was losing money on every sale, but he expected to make it up in volume. Good luck. Sometimes it’s better to call it quits before you lose even more.
  • To help society: You might keep the price lower than “what the market will bear” in order to make essential products available to the consumers who would otherwise be priced out of the market. Altruism has its place. Consider, also offering an economy product/service at a lower price, but with clear limitations.

In the article “How to Think About Pricing Strategies in a Downturn” by Nick Wreden writes: When sales and profits are plummeting and customers are demanding better deals, the instinctive response is to cut prices. Pricing decisions should not be viewed as ‘band-aid’ solutions for bleeding income statements, says Reed K. Holden and co-author (with Thomas T. Nagle) of ‘The Strategy and Tactics of Pricing’. Rather, they should be part of a long-term strategy for fiscal fitness. When economic storm clouds gather, trim your production levels, postpone expansion plans that aren’t absolutely vital to your future growth, and slash nonessential costs wherever you can. Crafting the right strategies will not only strengthen your business now, it will also prime it for growth later. To bolster sales while avoiding a price cut’s dampening effect on long-term profitability, keep the following advice in mind: “Profitability is not the only prism through which you should view pricing”.

In the article “Six Powerful Rules for Pricing Excellence” by Patrick Lefler writes: Pricing is a key element of your brand. It sends a message to the market and creates expectations about value. It’s often the first impression you make, either attracting buyers or repelling them. And it can create the last, and lasting, impression, depending on perceived value for price paid. Think about it: Is your price sending the message you intended? Pricing is complex, but it doesn’t have to be overwhelming. Follow these six powerful rules for pricing excellence to find the pricing strategy that gets the most for your services.

Rule #1: Always price for value.
Rule #2: Anchors aren’t just for ships.
Rule #3: Never underestimate the power of free.
Rule #4: Innovate with price.
Rule #5: Let price drive value.
Rule #6: Price wars are a fool’s game.

In the article “Selecting an Appropriate Pricing Strategy” by Nancy Giddens, Joe Parcell, and Melvin Brees write: Selecting a pricing strategy for your product is critical, because price is the most highly visible element of all marketing efforts. To price products appropriately, you need to know the following:

  • Costs and profit objectives.
  • Customers (demand).
  • Competition.

To determine the price, given price flexibility, the producer will need to factor in the effects of competition and profit objectives. To ease subjectivity, most companies subscribe to one of five main pricing strategies:

  • Premium pricing.
  • Value pricing.
  • Cost/plus pricing.
  • Competitive pricing.
  • Penetration pricing.

Pricing strategies and methodologies are a good bit of science coupled with an equal amount art. To make sure your price is right, you have to continually balance your own cost structure and profitability with customer perceptions of value and your competitors’ tactics. The good thing when it comes to pricing is that a lot of the work is done for you if you know what to look for. When searching, however, you have to understand that the buying process isn’t as rational as our old economics professors or common sense would have us believe. It’s irrationalpredictably so. If you try to look at the market from a strictly rational point of view, you’ll end up setting prices that make sense to you but not to your customers. The far easier path is to have a pricing strategy that plays to your customers’ own irrational behaviors.

“Your price should never be lower than your costs or higher than what most customers consider “fair”: Simply put, if people won’t readily pay enough more than your cost to make you a fair profit, you need to reconsider your business model entirely.”

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Predatory Pricing: Myth or Conspiracy?

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  “The attempt to reduce or to eliminate predatory pricing is also likely to reduce or eliminate competitive pricing beneficial to consumers”.Harold Demsetz, professor   emeritus of economics at UCLA.

In the article “The Myth of Predatory Pricing” by Thomas J. DiLorenzo, he writes: Predatory pricing is one of the oldest big business conspiracy theories. It was popularized in the late 19th century by journalists such as Ida Tarbell, who in “History of the Standard Oil Company” excoriated John D. Rockefeller because Standard Oil’s low prices had driven her brother’s employer, the Pure Oil Company, from the petroleum-refining business. “Cutting to Kill” was the title of the chapter in which Tarbell condemned Standard Oil’s allegedly predatory price cutting.

The predatory pricing argument is very simple. The predatory firm first lowers its price until it is below the average cost of its competitors. The competitors must then lower their prices below average cost, thereby losing money on each unit sold. If they fail to cut their prices, they will lose virtually all their market share; if they do cut their prices, they will eventually go bankrupt. After the competition has been forced out of the market, the predatory firm raises its price, compensating itself for the money it lost while it was engaged in predatory pricing, and earns monopoly profits forever after.

The theory of predatory pricing has always seemed to have a grain of truth to it; at least to non-economists; but research over the past 35 years has shown that predatory pricing as a strategy for monopolizing an industry is irrational, that there has never been a single clear-cut example of a monopoly created by so-called predatory pricing, and that claims of predatory pricing are typically made by competitors who are either unwilling or unable to cut their own prices. Thus, legal restrictions on price cutting, in the name of combating “predation,” are inevitably protectionist and anti-consumer, according to Harold Demsetz.”

In DiLorenzo’s article he writes: “Predatory pricing is the Rodney Dangerfield of economic theory; it gets virtually no respect from economists. But it is still a popular legal and political theory for several reasons. First, huge sums of money are involved in predatory pricing litigation, which guarantees that the antitrust bar will always be fond of the theory of predatory pricing. During the 1970s AT&T estimated that it spent over $100 million a year defending itself against claims of predatory pricing. It has been estimated that the average cost to a major corporation of litigating a predation case is $30 million.

Second, because it seems plausible at first, the idea of predatory pricing lends itself to political demagoguery, especially when combined with xenophobia. The specter of a foreign conspiracy to take over American industries one by one is extremely popular in folk myth. Protectionist members of Congress frequently invoke that myth in attempts to protect businesses in their districts from foreign competition.

Third, ideological anti-business pressure groups and self-styled consumer group, also employ the predatory pricing tale in their efforts to discredit capitalism and promote greater governmental control of industry. The perennial attacks on the oil industry: When oil and gas prices go up there is the alleged price gouging. When prices go down, there is the call for a “study” claiming that the price reductions are part of a grand conspiracy to rid the market of all competitors. And when prices remain constant, price-fixing conspiracies are frequently alleged.

Fourth, predatory pricing is a convenient weapon for businesses that do not want to match their competitors’ price cutting. Filing an antitrust lawsuit is a common alternative to competing by cutting prices or improving product quality, or both. Finally, some economists still embrace the theory of predatory pricing. But their support for the notion is based entirely on highly stylized “models,” not on actual experience.”

The classic article on predatory pricing was written by economist John McGee in 1958. McGee examined the famous 1911 Standard Oil antitrust decision that required John D. Rockefeller to divest his company. Although at that time popular folklore held that Rockefeller had “monopolized” the oil refinery business by predatory pricing, McGee showed that Standard Oil did not engage in predatory pricing; it would have been irrational to have done so.

Judging from the record, Standard Oil did not use predatory price discrimination to drive out competing refiners, nor did its pricing practice have that effect. Whereas there may be a very few cases in which retail kerosene peddlers or dealers went out of business after or during price cutting, there is no real proof that Standard’s pricing policies were responsible. McGee was the first economist to think through the logic of predatory pricing, laying aside the emotional rhetoric that had always surrounded it. He concluded that not only would it have been foolish for Standard Oil to have engaged in predatory pricing; it would also be irrational for any business to attempt to monopolize a market in that way.

By 1970 more than 120 federal (and thousands of private) antitrust cases, in which predatory pricing was alleged had been brought under the 1890 Sherman Act (revised with the Clayton Antitrust Act of 1914 and the Robinson-Patman Act of 1936 amendment to the Clayton Act). Yet in a 1970 study of the so-called gunpowder trust–43 corporations in the explosives industry; Kenneth Elzinga stated, after an extensive literature search, that “to my knowledge no one has ever examined in detail, as McGee did, other alleged incidents of predatory pricing.” Elzinga found no evidence that the gunpowder trust, which had been accused of predatory pricing, actually practiced it.

Shortly after Elzinga’s work appeared, Ronald H. Koller examined the “123 federal antitrust cases since the passage of the Sherman Act in 1890 in which it was alleged that behavior generally resembling predation had played a significant role.” Ninety-five of those cases resulted in convictions, even though in only 26 of the cases was there a trial that “produced a factual record adequate for the kind of analysis employed” by Koller. Apparently, many of the defendants decided it was cheaper to plead guilty than to defend themselves.

Even though no systematic analysis of predatory pricing was performed in any of the 123 cases, Koller established the following criteria for independently determining whether a monopoly was established by predatory pricing: Did the accused predator reduce its price to less than its short-run average total cost? If so, did it appear to have done so with a predatory intent? Did the reduction in price succeed in eliminating a competitor, precipitating a merger, or improving “market discipline”?

Koller’s criteria give predatory pricing theory more credit than it deserves: Below-cost pricing per se is not necessarily a sign of predatory behavior; it is a normal feature of competitive markets. Moreover, determining predatory intent is an exercise that is far beyond the capabilities of any economist and for which mystics might be better suited. And “eliminating a competitor” is the very purpose of all competition.

Employing those criteria for determining predatory behavior, Koller found that below-cost pricing “seems to have been at least attempted” in only seven cases. That, of course, proves nothing about monopolizing behavior, given the fact that below-cost pricing can be just as easily construed as competitive behavior. Koller claims that in four of the cases low prices seemed to have been motivated by the desire to eliminate a rival. One would hope so! The entire purpose of competitive behavior–whether cutting prices or improving product quality–is to eliminate one’s rivals.

Even in the cases where a competitor seemed to have been eliminated by low prices, “in no case were all of the competitors eliminated.” Thus, there was no monopoly, just lower prices. Three cases seem to have facilitated a merger, but mergers are typically an efficient alternative to bankruptcy, not a route to monopoly. In those cases, as in the others, the mergers did not result in anything remotely resembling a monopolistic industry, as defined by Koller (i.e., one with a single producer).

Despite over 100 federal antitrust cases based on predatory pricing, Koller found absolutely no evidence of any monopoly having been established by predatory pricing between 1890 and 1970. Yet at the time Koller’s study was published (1971), predatory pricing had long been part of the conventional wisdom. The work of McGee, Elzinga, and other analysts had not yet gained wide recognition.

In one of the most famous passages of “Wealth of Nations”, Adam Smith warns of the pervasiveness of business conspiracies: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.”  But in the very next sentence Smith added: “It is impossible indeed to prevent such meetings by any law which either could be executed, or would be consistent with liberty and justice.” Smith clearly recognized the potential for business conspiracies; but whether they were likely or not, he believed that any government regulation of them was improper.                                                                     

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Examples of Alleged Predatory Pricing:

Standard Oil Company – In 1909, the US Department of Justice sued Standard under federal anti-trust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce. The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus supposedly independent companies it controlled. “The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher.”

France Telecom/Wanadoo – The European Court of Justice judged that Wanadoo (Now Orange Internet France) charged less than cost in order to gain a lead in the French broadband market. They have been ordered to pay a fine of €10.35m, although this can still be contested.

Microsoft  – released their web-browser Internet Explorer for free. As a result the market leader and primary competitor, Netscape, was forced to release Netscape Navigator for free in order to stay in the market. Internet Explorer’s free inclusion in Windows led to it quickly becoming the web browser used by most computer users.

According to an AP article  –  Minnesota forced Wal-Mart to increase its price for a one month supply of the prescription birth control pill Tri-Sprintec from $9.00 to $26.88.

According to a New York Times article – German government ordered Wal-Mart to increase its prices.

According to an International Herald Tribune article – French government ordered amazon.com to stop offering free shipping to its customers, because it was in violation of French predatory pricing laws. After Amazon refused to obey the order, the government proceeded to fine them €1,000 per day. Amazon continued to pay the fines instead of ending its policy of offering free shipping.

Low oil prices during the 1990s – while being financially unsustainable, effectively stifled exploration to increase production, delayed innovation of alternative energy sources and eliminated competition from other more expensive yet productive sources of petroleum such as stripper wells.

Darlington Bus War, Stagecoach Group – offered free bus rides in order to put the rival Darlington Corporation Transport out of business.

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