Question

Give a brief definition and explanation of the following terms

a)Standard wars

b)Patent troll

c)‘Freemium’products or services

d)Product bundling

Answer 1

a)

Standard wars are also called Format Wars. It is a competition between two producers for achieving dominance over the market. These types of wars detrimental to technological progress and damage the other producers selling their products in the market. Customers hesitate to purchase goods as they doubt the product quality under such wars.

b)

Patent trolls refer to those companies or individuals who seek to generate revenue through the loopholes in US patents and court systems. Under this a company can file false patent infringement claims in order to earn money.

For example, Highway Robbers are called patent strollers. They can get a right to charge a toll from using the highway without providing any material benefit to the improvement of highway.

c)

These products or services are given for free up to a certain level of consumption. Freemium implies Free + Premium.

There are different types of Freemum:

- Content Limited Freemium: For example, some users are given free access to some videos on Amazon Prime while restrictions are imposed on seeing other videos.

- Time Limited Freemium: A software version can be used by a user up to a certain point of time. After than, premium has to be paid to enjoy the services.

- Pseudo Freemium: Provide full version of software only to limited groups of customers

d)

Product Bundling is a type of pricing strategy where the owners of the products offer these to their customers as one bundle. This pricing strategy is used when the owners are not able to do Price Discrimination (practice of charging different prices to different sets of customers) and the customers demand for the product is heterogeneous.