Did Predatory Marketing Tactics Contribute to the Global Financial Crisis?

This article examines the relationship between predatory marketing tactics and the global financial crisis. It discusses the concept of predatory marketing, the causes of the global financial crisis, and the contribution of predatory marketing to the crisis. The article concludes that predatory marketing tactics have a negative impact on the economy and contribute to financial instability.

Did Predatory Marketing Tactics
Contribute to the Global Financial
Crisis?

Contents
Did Predatory Marketing Tactics Contribute to the Global Financial Crisis?.................................1
INTRODUCTION...........................................................................................................................3
Explanation regarding the predatory marketing tactics...............................................................3
Explanation regarding the global financial crisis........................................................................4
Contribution of predatory marketing in global financial crisis...................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Predatory marketing is the illegal act of setting prices low within an attempt to remove the
competition. It disrupts antitrust law, as it creates markets more vulnerable to a monopoly (Akers
and Seymour, 2018). In this strategy company lower their product price when new opponents
enter that marketplace as well as increases it when the competitors exist. Along with this, global
financial crisis introduces to the time of extreme stress within banking systems and global
financial market between mid-2007 and early 2009. This report includes the information
regarding the contribution of predatory marketing tactics in global financial crisis.
Explanation regarding the predatory marketing tactics
Marketing is important part of the business growth and development. This will help an
organisation in promoting of their products or services in national as well as international
marketplace. There are different examples of marketing tactics such as exhibition in trade show,
sending email to targeted and existing customers, reaching clients and prospects via social media
website including Twitter, Instagram, Facebook etc. These are useful platforms for an
organisation in promoting of their services and products to the customers. This will help
company in increment of its sales and profitability (Alqaisi, 2018).
Predatory marketing is a type of marketing that is used for promoting the products at lower
price. Predatory prices are an investment within the future monopoly. In simple word, predatory
marketing or pricing also known as undercutting or aggressive pricing, which proposed to drive
out opponents from a marketplace. Price are purposely set very low by a main competitor within
the marketplace to prevent or restrict competition (Zanoni, 2019). The value set may function be
free, or lead to misfortunes by the indicator. Indicator evaluating is illicit under rivalry law.
Consequently, rivalry among the market players became intense. This come about into a
value war. To concrete their place in market and eliminate contenders they began offering
administrations/items at much lower cost than the first expense price (of course they make
losses). This technique is known as 'Ruthless pricing’. In an offer to endure different players are
compelled to bring down the cost and endure misfortunes too (Balleisen and Jacoby, 2018). As
an outcome market overall causes misfortunes and clients to get benefitted (get merchandise
economically).

Explanation regarding the global financial crisis
Global financial crisis, aspect prices or value see a level decline in worth, consumers and
business are not able to pay their debts, as well as financial institutions practise liquidity
shortages. A monetary emergency or financial crisis is frequently connected with a frenzy or a
bank run during which speculators auction resources or pull out cash from investment accounts
since they dread that the estimation of those resources will drop in the event that they stay in a
budgetary organization. Different circumstances that might be named a monetary emergency
incorporate the blasting of a theoretical money related air pocket, a securities exchange crash, a
sovereign default, or a cash emergency (Griffin, 2019). A budgetary emergency might be
restricted to banks or spread all through a solitary economy, the economy of a district, or
economies around the world. There are different causes of financial crisis. For the most part, an
emergency can happen if foundations or resources are exaggerated, and can be exacerbated by
nonsensical or group like financial specialist conduct. For instance, a quick series of selloffs can
bring about lower resource costs, provoking people to dump resources or make gigantic reserve
funds withdrawals when a bank disappointment is supposed.
Figure1.Global Financial crisis
(Source: Global Financial crisis, 2007)
Interpretation: From the above mentioned chart, it has been interpreted the information
about the global financial crisis. This crisis is increase year to year that impact on the growth and
development of country.

This money related emergency or financial crisis was the most noticeably awful monetary
calamity since the Stock Market Crash of 1929. It began with a subprime contract loaning
emergency in 2007 and ventured into a worldwide financial emergency with the disappointment
of speculation bank Lehman Brothers in September 2008. Gigantic bailouts and different
measures intended to restrict the spread of the harm fizzled and the worldwide economy fell into
downturn (Taskinsoy, 2019).
By the late spring of 2007, worldwide budgetary business sectors had started to give
indications that the bill for a very long time long gorge on modest credit was coming due. Two
Bear Stearns multifaceted investments had fallen, BNP Paribas was cautioning financial
specialists that they probably won't have the option to pull out cash from two of its assets, and
the British Bank Northern Rock would before long look for crisis subsidizing from the Bank of
England (Hossain and Kryzanowski, 2019).
As the most current and most harmful financial crisis incident, the Global Financial Crisis,
merits superior courtesy, as its origins, response, lessons and effects are most appropriate to the
present financial system. Along with this, global financial crisis is a main crisis that impact on
the growth of economy in negative manner. This impact on the economy of the country in
negative manner. A global financial crisis refers to the financial crisis that impacts many nations
at the same period. It is a time of severe problems which banks, financial institutions, markets,
consumers and companies experience concurrently. Throughout a global financial crisis, banks
or other financial institutions mislay faith as well as stop loaning to each other and also traders
stop purchasing financial instruments (Jacoby, 2019). Finally, most loaning stops and firms
suffer expressively.
Contribution of predatory marketing in global financial crisis
Ten years after the disappointment of Lehman Brothers – the function regularly saw as
ground zero of the money related emergency – there is still discussion about the reasons for the
emergency and the viability of strategy reactions. Nonetheless, there is little discussion about the
focal job subprime home credits began by contract merchants and banks played in the
emergency. Abusive as well as predatory conduct within the home loan marketplace was a
substance of apprehension for policymakers well earlier the crisis, but then again the Federal
Reserve did not entirely develop powers to legalise the mortgage or loan market deliberated on it
by Legislature. Many state as well as local governments did indorse legislation within answer to

unmannerly and predatory conduct within the low- and moderate-income bazaar by bankers and
mortgage brokers. Predatory marketing is contributing in increasing the global financial crisis.
Sub-prime home loans in the United States seem to have set off the current worldwide monetary
emergency (Mesly and Racicot, 2018). The emergency gives off an impression of being the
joined aftereffect of unfriendly full scale financial conditions, awful corporate administration and
free administrative oversight. Thus, current perspectives on the emergency contrast essentially
on the accentuation they connect to every one of these points of view, and will in general
incorporate different bits of knowledge as contributing causes. This article, in any case, bolsters
the view that defective administration rehearses in both people in general and private area are to
a great extent liable for the money related fiasco. It likewise contends that the current propensity
to accuse the United States is exaggerated and that awful administration rehearses are a
worldwide wonder. The article depends on auxiliary information examination and perceptions of
applicable financial practices to help this dispute (Sussman, 2019).
Predatory marketing loaning is a sort of extortion wherein advance originators take part in
unreasonable and beguiling works on during the advance start measure. While savage loaning
has no agreement legitimate definition, the Federal Deposit Insurance Corporation describes the
conduct as "forcing uncalled for and harsh advance terms on borrowers, frequently through
forceful deals strategies; exploiting borrowers' absence of comprehension of convoluted
exchanges; and inside and out duplicity" (Federal Deposit Insurance Corporation 2006:1). An
assortment of laws manages ruthless loaning. At the government level, tricky loaning rehearses
are culpable under the Truth in Lending Act of 1968 and the Home Ownership and Equity
Protection Act of 1994. Prejudicial loaning rehearses are covered under the Fair Housing Act of
1968 and the Equal Credit Opportunity Act of 1974 (Rikap, 2020). Besides, at any rate 25 states
have some type of hostile to ruthless loaning laws. Guidelines need to zero in on ruthless
loaning, as this emergency has appeared. Governments need to ensure people with a low limit
with respect to surveying the danger related with certain speculations against budgetary
foundations that might be enticed to profit by such people.
Predatory marketing has negative contribution in global financial crisis. As business set the
low price of the product that reduce the competition in market place. If competition is low in
market that increase the global financial crisis (Sesay, 2019). For this organisations take loan or
monetary finance for starting the business as it also decreases the finance that turn to increase

global financial crisis. Predatory marketing is not legal for business because it reduces their
market image in marketplace that results in decreased market share, decreased brand image,
decreased customer trust etc. Thus, it is important for business organisation to set their product
price according to the government declaration as it helps in reducing the financial crime and
helps in improvement of economic growth and development.
Since the core exercises of banks (for example to hold people's stores and offer credits to
organizations) are of foundational significance, guideline of these establishments should be more
complete than that of non-money related firms. In any case, during the development to the
emergency, these core exercises turned out to be less significant because of the rise of a "shadow
banking framework (Schweiger, 2018). This framework was spearheaded by certain banks as
shaky sheet elements, which, despite the fact that performing fundamentally the same as
exercises to those of manages an account with significant foundational impacts, were not
dependent upon similar sorts of guidelines as store taking banks. The reason for the emergency
was unequivocally identified with the disappointments of such shadow foundations.
Therefore, Predatory marketing or pricing is not a good way for attracting customers and
increasing their sales. This marketing or pricing reduce the competition that effects economic
growth and also monopoly market.
CONCLUSION
From the above mentioned information, it has been concluded that predatory marketing
tactics contributes towards global financial crisis. Financial crisis effects on the global market
that turn to impact on the growth of economy in negative manner. Is has been concluded that
Predatory pricing is not essential because it increase financial crisis.

REFERENCES
Books and journals
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Alqaisi, F., 2018. The Impact of the 2008 Global Financial Crisis on the Jordanian Banking
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Crisis. Geo. LJ, 107, p.813.
Griffin, J. M., 2019. Ten Years of Evidence: Was Fraud a Force in the Financial
Crisis?. Available at SSRN 3320979.
Hossain, A. T. and Kryzanowski, L., 2019. Global financial crisis after ten years: a review of the
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Necessary to Resolve the Issues and Lasting Impact of the 2007–9 Financial
Crisis?. Available at SSRN 3329615.
Sussman, S., 2019. Prime Predator: Amazon and the Rationale of Below Average Variable Cost
Pricing Strategies Among Negative-Cash Flow Firms. Journal of Antitrust
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Taskinsoy, J., 2019. Higher Capital and Liquidity Regulations of Basel Standards Have Made
Banks and Banking Systems Become More Prone to Financial and Economic
Crises. Available at SSRN 3401378.
Zanoni, P., 2019. Labor Market Inclusion Through Predatory Capitalism? The “Sharing
Economy,” Diversity, and the Crisis of Social Reproduction in the Belgian
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