Organizations and Markets

The Myth of the Razors-and-Blades Strategy

15 September 2010 at 9:25 am Peter G. Klein 2 comments

| Peter Klein |

Not quite as exciting as the GM-Fisher contretemps, but in the same revisionist vein: Randy Picker’s new paper, “The Razors-and-Blades Myth(s).”

From 1904-1921, Gillette could have played razors-and-blades — low-price or free handles and expensive blades — but it did not do so. Gillette set a high price for its handle — high as measured by the price of competing razors and the prices of other contemporaneous goods — and fought to maintain those high prices during the life of the patents. For whatever it is worth, the firm understood to have invented razors-and-blades as a business strategy did not play that strategy at the point that it was best situated to do so.

Here’s a PPT version.

Well, as Bogey might have said to Bergman: “We’ll always have printer ink.”

Entry filed under: - Klein -, Business/Economic History, Innovation, Law and Economics, Myths and Realities, Strategic Management.