Author Topic: "competitive upgrade" - is it ethical? (Read 28584 times)

Darwin · « **Reply #25 on:** January 13, 2011, 11:58 AM »

vlastimil - I wouldn't bother with that kind of offer. On the surface, it shows confidence in your product. In reality it is a move that will simply be abused. If you're detemrined to "do something" (Do-ism isn't necessarily a good route to follow, but I digress), offer an extended money-back guarantee. Some developers offer 90 day no questions asked returns, for example. You might want to avoid "no questions asked" if you are offering the kind of product that could be purchased used extensively for a week and then won't be needed again for months or years as you leave yourself open to abuse... I'm rambling.

Bottom line: my gut tells me that you should NOT follow through with your idea to offer rebates to customers who purchase your product but then decide that someone else offers a similar product with a more attractive feature set/better price, etc.

40hz · « **Reply #26 on:** January 13, 2011, 11:59 AM »

Funny thing about competitive discounts...they don't prevent you from using the original application. They only make the competing application cheaper.

If I already am a user of Product A and take advantage of the discount on Product B, then I will have both A and B and be able to use both for whatever they are best suited for.
-app103 (January 13, 2011, 11:11 AM)

Bingo!

In my case, that is exactly what a competitive "upgrade" would accomplish - put an application I might not be inclined to try (or otherwise be able to afford) onto my machine.

It will not get the old product off my machine unless it can demonstrate it is so clearly and obviously superior to what I am currently using, that it becomes a no-brainer.

And since I was already very picky when I selected what I currently use, that won't be an easy thing for a new product to do.

Best case scenario: price incentives may get you into the party. But it won't guarantee you an exclusive audience once you get there.

April absolutely nailed it when she said:

work on making your application the best it can be and service to your customers the best it can be, because in the end, that's what really counts.

40hz · « **Reply #27 on:** January 13, 2011, 12:09 PM »

Ethical? Not in my view but then who said business is ethical - the definition and obligations of a US corporation is to be as unethical as it can get away with.

-Carol Haynes (January 13, 2011, 11:31 AM)

Interesting...

I've been operating a US corporation since the mid-80s.

I wasn't aware that "unethical as it can get away with" was both its definition and obligation.

vlastimil · « **Reply #28 on:** January 13, 2011, 12:12 PM »

Trouble is where the big boys go the tiddlers follow (just look at activation methods for software).
-Carol Haynes (January 13, 2011, 11:31 AM)

Online activation sucks, I'll never follow that way. Sure, I am happy when a customer registers an account, but it is optional and only serves the customer if they forget the registration code and need to retrieve it (less support for me).

Loads of big companies use/have used this as an incentive to steal customer eg. Corel Word Perfect Suite X can be bought at upgrade price if you have owned Microsoft Office XP or later.

There are similar deals from leading graphics companies etc.

It isn't really surprising it happens as the dollar/euro/pound/yen or whatever is king in business. It shouldn't be but it is.
-Carol Haynes (January 13, 2011, 11:31 AM)

Direct money may not be the main motivation for these actions. Hell, I would give the license away for free to an active user of a competing product, but it is impossible to put an offer like this on the web, because it would annoy the "normal" customers. Each user brings value, he/she dedicates piece of their brain to learn to work with the software and would probably recommend it to their peers if they needed a software of that kind. Even pirates bring value.

The ethics should not be ignored, it is the part of how the customer perceives the product...

40hz · « **Reply #29 on:** January 13, 2011, 12:24 PM »

@vlastimil - Maybe I'm a little (or very) dense, but what exactly is it about your competitor that has you the most annoyed right now?

Is it that they're offering what you feel is an 'unfair' cash incentive to try their product? Or that they're making arguably false claims about the capabilities of their product. Or that they're directly (or by strong inference) maligning your product?

Because right now, I'm getting a bit confused about what it is you feel the need to be doing something about.

I can't really suggest effectively until I know what you feel the real problem is.

vlastimil · « **Reply #30 on:** January 13, 2011, 12:35 PM »

40hz

, I guess, I am mostly annoyed about him calling it an "upgrade". Also, no one in this niche has ever offered something like this. While I doubt the effectiveness of such offer, I feel threatened by it. It is a clear move against the competitors. In the past, it was about product features and such, but in the later months, I saw more aggressive marketing.

I did not know what would be the proper reaction, so I started this topic to learn what people think about similar marketing techniques.

Eóin · « **Reply #31 on:** January 13, 2011, 12:43 PM »

Ethical? Not in my view but then who said business is ethical - the definition and obligations of a US corporation is to be as unethical as it can get away with.
-Carol Haynes (January 13, 2011, 11:31 AM)

Interesting...

I've been operating a US corporation since the mid-80s.

I wasn't aware that "unethical as it can get away with" was both its definition and obligation.

-40hz (January 13, 2011, 12:09 PM)

It's a common misinterpretation of the law regarding public companies stemming from this case: Dodge v. Ford Motor Company.

40hz · « **Reply #32 on:** January 13, 2011, 12:48 PM »

Oh, I think your reaction is quite understandable. That's the easy part. The big question is what you're going to do about it.

FWIW I've long since stopped trying control how I feel about things. The most I'm able to do is control how I behave in response to them. That and accepting the fact there are benefits to be gained from exercising both 'careful consideration' and restraint.

Carol Haynes · « **Reply #33 on:** January 13, 2011, 01:25 PM »

The obligation of a US Corporation is to maximize profit for the shareholder.

Most companies interpret this obligation as do anything you can get away with to make money and WTF are ethics anyway (or the law come to that).

You only have to look at the way the oil companies behave around the world to see how much influence law and ethics have on their behaviour.

40hz · « **Reply #34 on:** January 13, 2011, 01:42 PM »

It's a common misinterpretation of the law regarding public companies stemming from this case: Dodge v. Ford Motor Company.
-Eóin (January 13, 2011, 12:43 PM)

Commonly misinterpreted by whom, if I may?

I haven't heard anybody ever seriously try to make that arguments since it's been a considered a non-precedent setting case with US courts almost immediately after the ruling got handed down. It's right up there with the Dred Scott decision as a glaring example of bad jurisprudence.

It does crop up from time to time with politicians of the yahoo stripe. But few in business or the community ever take it seriously.

----------
Note: I'm actually very familiar with that particular case. My management school's required corporate law course spent two class periods on it. And its required ethics course spent the better part of a week examining the arguments and decision from every conceivable angle.

What came out of the law course was: regardless of the ruling, the decision is neither respected by the US courts, nor has it set any precedent for subsequent legal cases. So don't even try it.

What came out of the ethics course was: the decision was both immoral and ethically in error.

-----

I see the Wikipedia article says this case is widely mistaught. I wonder who is supposedly misteaching it?

Darwin · « **Reply #35 on:** January 13, 2011, 01:46 PM »

The obligation of a US Corporation is to maximize profit for the shareholder.

Most companies interpret this obligation as do anything you can get away with to make money and WTF are ethics anyway (or the law come to that).

You only have to look at the way the oil companies behave around the world to see how much influence law and ethics have on their behaviour.
-Carol Haynes (January 13, 2011, 01:25 PM)

The ultimate extension of this mind-set is the example of the Ford Pinto debacle in the early 70's. The damned things blew up when they were in a rear-end collision (ie they got rear-ended). Ford knew about the design flaw but the bean counters felt it would be more cost effective to deal with the law suits than it would be to re-call, re-tool, and repair.

Darwin · « **Reply #36 on:** January 13, 2011, 01:48 PM »

Anyway, vvlastimil, curiosity kills the cat and I'm a terminal case: what is your product, or at least the category of product?

Inquiring minds want to know. I want to know!

vlastimil · « **Reply #37 on:** January 13, 2011, 02:00 PM »

Eh, OK, I think it would not hurt anything at this point - it is RealWorld Icon Editor - as the name suggest, tool to primarily make .ico files or other application or web graphics.

Eóin · « **Reply #38 on:** January 13, 2011, 02:10 PM »

Commonly misinterpreted by whom, if I may?
-40hz (January 13, 2011, 01:42 PM)

Non-experts who have brought it up in a casual setting. I often heard reference to the case mentioned in passing, and always with the misinterpretation that maximizing shareholders wealth is not just a good idea, it's the law.

But that anecdotal evidence is hardly very convincing, I believe I overspoke

40hz · « **Reply #39 on:** January 13, 2011, 02:30 PM »

The obligation of a US Corporation is to maximize profit for the shareholder.
-Carol Haynes (January 13, 2011, 01:25 PM)

Highly debatable. Especially in actual practice (and jurisprudence) as opposed to academic discussion.

Most companies interpret this obligation as do anything you can get away with to make money and WTF are ethics anyway (or the law come to that).

You paint with a very broad brush here. I've lived and worked in the US for most of my life. And I have not found what you're saying to be the case for "most" companies. Quite the opposite actually.

It would be nice if you could spend a year or two working here and really getting to see what US life is like. I think (or at least hope) you would discover we're nowhere near as selfish, arrogant, or evil as I sometimes suspect you think we are from some of your comments.

You only have to look at the way the oil companies behave around the world to see how much influence law and ethics have on their behaviour.

The behavior of giant multinational industries and market segments such as oil has as much to do with politics, military and security issues, international and local politics, religious posturing, and miscellaneous cultural differences as it does with the ethical strengths or weaknesses of the companies themselves. So I really don't think the oil companies (US, Dutch, British, Arab, Russian, South American et al) are that strong an argument for how "most" companies do business - even if oil makes up a significant percentage of the world economy as a whole.

Make no mistake. Oil companies are a problem. For all of us. No matter who owns them. And while BP may have been the firm most identifiably responsible for the Gulf of Mexico spill, there's still plenty of blame to go round. And that blame extends to government regulators, an international slate of business contractors and consultants, university academics, and especially politicians.

So yes, by all means look at the oil companies. But don't only look there. And don't extrapolate too much about general business practices or attitudes from what you observe them doing.

Oil is its own thing. Something that frequently blurs the distinction between a business activity and a government function. And that's only when it doesn't erase the distinction altogether. Nations don't go to war over laptops or automobiles. They do over oil. Which is why "Big Oil" is such a complex beast to get a handle on. It's so much more than "just" a business.

Carol Haynes · « **Reply #40 on:** January 13, 2011, 02:49 PM »

It would be nice if you could spend a year or two working here and really getting to see what US life is like. I think (or at least hope) you would discover we're nowhere near as selfish, arrogant, or evil as I sometimes suspect you think we are from some of your comments.
-40hz (January 13, 2011, 02:30 PM)

I am not singling out the US - the UK is just as bad and getting worse by the day.

Wherever in the world if a director doesn't do all they can to maximize profits for shareholders they are in a breach of trust situation between themselves and the shareholders and will probably be voted off at the next shareholder meeting.

It seems to me that most businesses of any size have a level of paranoia that means people end up having to do things they are not proud of.

That's why they call it the greasy pole!

I don't wish to insult individuals or nations. Individuals in all nations are great - it is when people come together that some really ugly stuff can happen, and when you add competition into the mix things get ugly fast.

This is why we have a world where companies:

patent biological entities do the detriment of society as a whole
have appalling attitudes towards the sick and needy (anyone work for a drug company)
start law suits with the intention of pushing smaller rivals out of business
claim they own patents on public property
make preposterous and patently untrue claims about products (beauty industry like to chime in with a defence?)
pay directors whopping bonuses whilst claiming public funds to bail out the mess they made
buy out small competitors just to remove their product from the market (never mind the customers who lose out)
kill thousands of people daily whilst saying 'not me'
use pester power to get young children to force adults purchase rubbish

just a smalll sample of the sorts of behaviour I object to

40hz · « **Reply #41 on:** January 13, 2011, 02:55 PM »

Eh, OK, I think it would not hurt anything at this point - it is RealWorld Icon Editor - as the name suggest, tool to primarily make .ico files or other application or web graphics.
-vlastimil (January 13, 2011, 02:00 PM)

Looks to be a very nice app. Wish I had the talent and know-how to write something like that.

How about also identifying the competition's product (IcoFX by any chance?) and maybe provide a link to their advert page so we can analyze what's happening with them and maybe offer you some better suggestions for how to deal with or work around it?

Note: you're in position 9 on a Google search for icon editor. That puts you just "below the fold" on the average monitor. You'll want to do something to improve your ranking since there are 5 competing products (1 which got two separate hits) a Wikipedia page, and 2 big download sites above you.

Also - Wikipedia has a page with a list of notable icon editors here. I'm not sure what the criteria is for being considered "notable" but you should try to get your product listed on that page too while you're at it.

------
Note: if you do a Bing search on vlastimil and software it gives two possibly good hits. One is a guy that wrote a single free app. The second pointed to RealWorld. Figured that had to be you. Especially with the competition for software in that area.

40hz · « **Reply #42 on:** January 13, 2011, 03:09 PM »

Wherever in the world if a director doesn't do all they can to maximize profits for shareholders they are in a breach of trust situation between themselves and the shareholders and will probably be voted off at the next shareholder meeting.

-Carol Haynes (January 13, 2011, 02:49 PM)

@Carol- Agree on all your points except for the above as it relates to what goes on in the States.

Over here shareholders have virtually no real say in the composition of the board of directors. Most shareholders mindlessly proxy their votes over to the board, or vote the slate whenever it's presented. And that's assuming they even read what they receive. Part of the problem is that large chunks of voting stock are held by mutual funds and other investment companies. So while it may be possible to mount a proxy battle, in practice it's extremely difficult to assemble enough small share votes to do anything. It usually takes something just short of major civil disobedience at a shareholder's meeting to get somebody sacked. Most times, the person in the crosshair negotiates his/her "resignation" (complete with heavy bonus and buyout package) to "spare the firm" the "expense and inconvenience" of a prolonged proxy struggle.

"So it goes" -Kurt Vonnegut $:-\$

vlastimil · « **Reply #43 on:** January 13, 2011, 03:27 PM »

40hz,

Heh, IcoFX is fine. It is a decent free icon editor. The one with the "competitive upgrade" has the place right above me.
Google is not an ideal search engine and gives too much weight (indirectly) to free software. I am not complaining though - try searching for "icon maker".

Wikipedia, well, it was me, years ago, who added most of the content to the "icon editor" entry http://en.wikipedia....&oldid=112038555
Someone decided to rewrite it... There are no criteria. Whoever changes it, changes it.

Getting good organic rankings for a commercial software is not an easy thing these days. It simply is not newsworthy. Spamming or producing tons of useless content apparently still works, but I do not want to go that way. Maybe facebook will save me

.

phitsc · « **Reply #44 on:** January 14, 2011, 01:53 AM »

Never used your product, nor am I a designer, but I've tried to use the Axialis Icon Editor when a special version of it was offered for free together with Visual Studio. I've un-installed it shortly after trying, even though I could have used it for free! It seemed just too complicated for the novice / casual icon designer. I'm always using IcoFX now if I have to do anything with icons, which is mostly converting other pic formats to .ico or doing simple modifications on icons.

worstje · « **Reply #45 on:** January 14, 2011, 02:37 AM »

So. Just me thinking. But is it illegal to publicize an example order-confirmed page, or example invoice on your webpage, then post that over a place where your competitors potential customers gather?

'Hey, check out my software, but in the case you don't think it fits your needs, please have a look at these invoices and such to get the product of my competitor. They make a somewhat nice product and offer special discounts if you buy my software, and I don't mind supporting them one bit.'

They can't tell fake confirmations from the real ones which you of course could, and then they'll either end up having a lot of cheap sales or they'll end up withdrawing the offer.

Maybe it isn't a super nice tactic, but hey, might as well let their own competitive pricing bite them in their butt, yes?

Carol Haynes · « **Reply #46 on:** January 14, 2011, 04:22 AM »

Part of the problem is that large chunks of voting stock are held by mutual funds and other investment companies.
-40hz (January 13, 2011, 03:09 PM)

Which slightly confirms the point I am making - those large chunks of voting stock effectively hold corporations to ransom. They are only interested in the bottom line. That is why they exist - to screw money out of the markets. If the directors don't deliver these large blocks will either move their investment or more likely heads will roll and someone less squeamish will be moved in.

This is why some US investment companies and market traders first reaction to 9/11 wasn't what can we do to help but rather what will this do to the markets. (I can't rmember whether that interview was on a Michael Moore film or 'The Corporation").

This is why unethical sweat shop labour in the far east (esp. in the clothing and electronics) and the incredible growth of call centres in India and South Africa is so important to corporate bosses. They maximise profit whilst causing unemployment in their base countries and intolerable working conditions and poor pay for foreign worker who are too poor and desperate to say no.

It's also why companies such as Nestle made an unethical fortune selling powdered milk in the third world and Barclays Bank helped to prop up apartheid South Africa. Think of soft drink manufacturers who move production overseas and then effectively cause drought for the local people where they set up their bottling plants.

One of the biggest problems we have in the UK is because the richest supermarket chains continually push down the purchasing price of products so that now there are parts of the Sahara that have been turned over to potato farming with the consequent need for water causing suffering and many African countries are suffering ever worse growing conditions to feed their own populations because so much of their produce is exported together with the water content used to produce it.

All of these ethical business decisions stem from increasing profits for western companies and all of this small sample is, IMHO, thoroughly unethical.

To get back to the topic sharp trading practices like undermining someone else's products by offering cash incentives is nothing new. I don't really think it is ethical but just turn on your TV and look at the ads and you will see it in your living room hundreds of times in an evening. All the cashback schemes are pretty much the same idea to draw consumers in a particular direction (but of course to maintain profits many companies make cashback schemes so onerous that they know only a small proportion of claims will meet all the requirements). Offering a discount for users of rival products is just another step in the line of unethical practice - but as i said in my first comment once this becomes established practice in large companies is it any wonder that medium sized companies and then smaller companies are forced to adopt the same tactics to survive.

vlastimil · « **Reply #47 on:** January 14, 2011, 05:19 AM »

I'm always using IcoFX now if I have to do anything with icons, which is mostly converting other pic formats to .ico or doing simple modifications on icons.
-phitsc (January 14, 2011, 01:53 AM)

IcoFX hit the optimal spot. It can do what you mentioned and that is what most people expect. (Though, you can convert images to icons via numerous free web services just as well.) Sure, I have gamma-correct resampling, background detection, outline shadows and dozens of other features, but most people do no really care. And the mass is what counts in Google's eyes and that is probably one of the better ways.

So. Just me thinking. But is it illegal to publicize an example order-confirmed page, or example invoice on your webpage, then post that over a place where your competitors potential customers gather?

...

Maybe it isn't a super nice tactic, but hey, might as well let their own competitive pricing bite them in their butt, yes?
-worstje (January 14, 2011, 02:37 AM)

Yeah, it would not be super-nice

. I think I just let it go and consider it a desperate try to get more customers...

All of these ethical business decisions stem from increasing profits for western companies and all of this small sample is, IMHO, thoroughly unethical.
-Carol Haynes (January 14, 2011, 04:22 AM)

Today's world prefers quick profits, not creation of long term value. It's sad.

cranioscopical · « **Reply #48 on:** January 14, 2011, 09:47 AM »

@vlastimil

I understand your pain. To paraphrase what 40hz said, if you can't change the situation, change your attitude. I'm not trying to be a Smart Alec — I'm forced into this myself often enough. I find that it helps

Perhaps I'm talking out of turn here, but have you considered consulting mouser about offering a limited-time discount on your software to DC members?

The up side.
Those offers appear in the newsletter and I firmly believe there's a mutual benefit to that.

Others who have done this with their products profess to be very satisfied with the results.
DC members will like you for it (and they're an influential group by and large; many are the designated computer gurus for family, friends etc.).
Some will buy your product who might never have heard of it.
If nothing else you get some good publicity at no cost to you.
The offer is limited to members and not made known to non-members (unless you choose otherwise) so the world in general won't get you product 'on the cheap'.

I think it's a win-win situation.

The down side.

There are no guarantees about what might happen in terms of sales.
DC does not endorse your product, it simply makes members aware of your offer.
You'll probably get a review of your program by someone on DC, and that will be very frank about likes and dislikes.
Members who try, and happen not to like your product will probably say so in whatever topic you might announce the offer.

Just a thought…

(edit for typos)

Deozaan · « **Reply #49 on:** February 01, 2011, 08:01 PM »

I just saw that SpiderOak has a "competitive upgrade" offer. Apparently Mozy has dropped unlimited storage plans so SpiderOak is offering 20% off with 'mozy' coupon code.

From Twitter:

#Mozy Drops Unlimited Storage - http://t.co/5fuZuvZ Get 20% our premium storage off via code 'mozy' when you switch to Spideroak.com #backup
-http://twitter.com/spideroak/status/32616496588918784