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5 shrewd business strategies that knocked out the competition

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In the world of cut-throat competition in the corporate world, there are blurred lines between fair competition and under-hand dealings. The fight for market share, bottom line and patents has forced companies to strategize and outmaneuver the competition.

Below is a collection of some of recent history’s most amusing if not inspiring stories of businesses that thought out of the box and experienced unprecedented success, in spite of the odds that were overwhelmingly stacked against them. You don’t necessarily have to go as far as some of these companies did, but the lessons learnt from them will definitely get you thinking in the right direction.

Dow Chemical

1. Dow Chemical

Herbert Dow founded Dow Chemical in 1895, and invented a way to cheaply produce the industrial chemical bromine in Midland, Michigan. He sold the chemical for 36 cents per pound throughout the United States–but couldn’t expand overseas as the international chemical market was dominated by an incumbent company from Germany. A gentleman’s agreement at the time dictated that the German company wouldn’t encroach on the U.S. market as long as Dow didn’t try to muscle in on chemical sales in Europe.

However, by 1904, Dow’s business was struggling and he needed to expand. So he began selling bromine in England and quickly cut down the German competition–which sold its product at the fixed rate of 49 cents per pound. Outraged, the Germans began flooding the U.S. market with even cheaper bromine, on the order of 15 cents per pound, in an attempt to put Dow out of business.

That’s when Dow got crafty.

He stopped selling his product in the U.S. altogether–and began buying up the German-made bromine. Then he repackaged it, sent it back to Europe, and began selling it as his own–for 22 cents less than the Germans did. The Germans couldn’t figure out why Dow wasn’t going out of business–or why there was such a high demand for German bromide in the U.S.–so they just kept lowering their prices to 12 cents, then 10 cents. By the time they caught on, Dow had broken the German monopoly in Europe and forced it to lower prices on its home turf. Ouch.

 

Lesson: Herbert Dow massively expanded his business, broke the German monopoly, and created “the textbook response to predatory price cutting.” He teaches us that the curveballs life throws at us can be turned in our favour – that there is opportunity in every setback. We only need to take a step back to recognize it and seize the moment.

 liquid soap

2. Minnetonka Soap

In the early 1970s, Robert Taylor–who owned then-small soap company Minnetonka–came up with the idea to sell liquid soap in dispensable pump containers. Unfortunately, he couldn’t patent the product–liquid soap already existed, as did the pumps that he planned to dispense it with. Taylor worried that the larger, more established soap companies would steal his idea to bottle liquid soap into a pump dispenser, replicating his product on a larger scale than he could not compete with and effectively running him out of business.

So he decided to beat them to the punch.

Taylor raised $12 million dollars–more than his company’s net worth at the time – and ordered 100 million of the pump dispensers from the only two companies that manufactured them in the U.S. This order effectively purchased every pump the two manufacturers could make in the next year or two–giving Taylor a head start on the competition. Two years after this maneuver, Taylor’s product SoftSoap dominated the market and was eventually sold to Colgate-Palmolive for $61 million

 

Lesson: There’s more than one way to skin a cat. He couldn’t patent his product so he did the next best thing – he protected it in a radical way that none of his competitors saw coming, giving him a two year head start on the competition.

 

3. Mucinex made competing against them illegal through a legal loophole.

In 2002, the over-the-counter cold medicine Mucinex burst onto the market–destroying its competition through a legal loophole. The company patented the drug’s 600 mg dose and 12-hour release period, and gained approval from the Food & Drug Administration to sell its product as a non-prescription medication–then pointed out a crucial stipulation: According to law, no drug may be simultaneously sold as a non-prescription product and a prescription product using the same dose and release period.

In other words, once Mucinex–which owned the patents for all non-prescription drugs of its kind–gained FDA approval, its competitors’ prescription products were deemed illegal. The FDA issued warning letters to 66 manufacturers, distributors, marketers, and retailers that sold the drug as a prescription product and eventually ordered them to cease production altogether

 

Lesson: Mucinex found a mid-century loophole to make their competition illegal on the prescription drug market. You may not be so lucky, or crafty, but you can always figure out ways to get the upper hand on your competition.

 

4. Puma paid Pelé $120,000 to tie his shoes at the 1970 soccer World Cup final.

Amidst a “sneaker war” between Adidas and Puma in the late 1960s, the “Pelé Pact” was informally created between the two companies, which stipulated that neither company was allowed to promote their products via soccer legend Edson Arantes do Nascimento, aka Pelé.

According to the LA Times, Hans Henningsen, a representative for Puma, approached Pelé before the 1970 World Cup.

Before the opening of the final match, Pelé asked the officials for a moment to tie his shoes before beginning play. The whole world watched Pelé tie his Puma sneakers.

 

Lesson: Many would say that this was sneaky, underhanded and bad business practice. That’s all true, but all that really matters is that it was effective. In business, what matters most is results, not how you got there. It’s a little cut throat, but business has never been for the faint hearted.

 

Oakley chile miners

5. Oakley Sunglasses got an estimated $41 million in free marketing by helping out trapped Chilean miners.

In the midst of the Chilean mining disaster of 2010, Oakley donated 35 pairs of sunglasses to the miners before their rescue, glasses which retail at $180 a pair. When the miners emerged from the capsules after 69 days, most were wearing the protective eyewear.

“They sent [the glasses] to protect their eyes from the sun after not having been exposed to it for a very extended period of time.”

CNBC reported that $41 million in equivalent advertising time — between “live coverage, the recaps and a rough estimate of the audience watching around the world” — was secured by the brand.

 

Lesson: Do the right thing. It’s always good for business. The money they could have made off of selling the shades – a mere $6300 – doesn’t even come close to putting a dent in the $41 million worth of free advertising and good faith earned through the donation. Everyone watching the telecast now identified the brand with a social conscience – the kind that people want to get behind. That long term impact is worth way more than any short term profit ever could be, so keep this in mind the next time you’re faced with a similar dilemma.

 

Unilever derailed a Procter & Gamble product launch by associating detergent with toilets.

In his book, “Defending Your Brand,” Kellogg School of Management Professor Tim Calkins highlights a particularly devious marketing tactic that Unilever used to shut down a P&G detergent brand in Argentina:

“In 1997 Procter & Gamble was preparing to introduce its Ariel brand of detergent to that market. Unilever was the category leader — with a market share of about 80 percent — and the company was logically concerned about P&G’s entry. Shortly before P&G’s launch, Unilever apparently began running advertisements for a small toilet-seat maker, Ariel del Plata. The ads featured rear ends and toilet seats, repeating again and again “Ariel, Ariel, Ariel.” The campaign effectively connected the name Ariel with toilets, wiping out any chance that Procter & Gamble would be able to make consumers associate the name with detergent.”

 

Lesson: Anticipate your competition’s next move and beat them to the punch.

To think that one can succeed in business without employing some of these techniques is to live in a fantasy. Learn from these people’s successes – and their competitors’ failures – to make sure that your own business is never caught with its pants down.

 

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