B2B Marketing 101 – Keep Competition Clean!

Anti-competitive practices aren’t just frowned upon by the law. They’re bad PR and bad PR could mean bad B2B marketing, regardless whatever benefits you’ll get.

 

According to ActionFraud, anti-competitive practices include any and all methods used by firms in a market to restrict the competition. A primary motive for these practices is to increase prices so the firms can benefit from higher sales revenue.

 

Anti-competitive behaviour could involve:

 

  • Fixing prices on goods and services
  • Limiting or preventing production or supply
  • Dividing markets or customers

 

RomeEconomics include several examples such as:

 

  • Restricting output – This is when several firms in a market agree to restrict their production output in order to increase the average prices of the products they are selling.

 

  • Market sharing/dividing territories – This is when firms agree to let individual firms control certain parts of the market (usually on a geographical basis) so that each firm can become a dominant supply in one part of the market.

 

  • Bid rigging – This is when the bidding of a contract for the sale of goods and services is predetermined by all the firms involved. Conspiracies like this actually take out the purpose of marketing, relying on outside politics instead in order to win sales.

 

  • Full-line forcing – This is when a supplier enforces its customers to buy their full product range, rather than just the products the customer actually wants to buy. (Might want to think twice about offering those ‘tempting’ package deals.)

 

  • Resale price maintenance – This is when a supply only sells a product to a retailer on the condition that it must be sold at a certain price. This method reduces the competition between retailers and means the supplier benefits from higher profits.

 

  • Discriminatory pricing – This is when a firm sell its products at different prices to its customers depending on irrelevant factors. That’s why every B2B marketing campaign needs to outline its qualification process transparently, both for sales reps and for prospects.

 

As you can see, at least one or two marketing practices can come across as anti-competitive (particularly bid rigging and full-line forcing).  While it’s perfectly acceptable to create ways to give your business an edge over rivals, be careful of doing so at the expense of your customers.

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