Recent economic crises have pushed general marketing trends broadly towards a focus on value-based marketing. Tim Berry, founder of Palo Alto Software, argues on his blog that: “We break the ice by criticizing someone else because that unites us.”

He relates back to negative marketing in his book “The Plan-As-You-Go Business Plan” and claims that the average dissatisfied customer tells close to 20 people about his customer experience, whereas the common delighted customer tells only 3 people.
Why is it that people prefer criticizing over complimenting? One way of looking at this is to consider the amount of information that we are being flooded with every day.
Think about it that way, in a conventional decision process model, a need is being created in the first place. Then, information research starts, including looking for alternatives. – Well, and here is where some businesses are trying to cut competitor’s throats.

The current consumer is used to be overwhelmed by products and advertisements. In the end, all he looks for is reasons to eliminate alternatives from the decision process. Therefore, I am convinced that the over-saturated consumer market plays a major role in the effectiveness of negative marketing.

Thinking about it from a company’s point of view, the effort of a company in actively degrading competitors’ brand image  instead of promoting its own one is relatively reasonable and close.

The extent of these negative commercial can go from funny and relatively harmless to very aggressive and attacking commercials. A well-known brand, which is known for regularly having to ban commercials that address the fight for customers with its major competitor, is Pepsi.

In our case, Pepsi and Coca Cola are both really big brands and it can be argued that negative marketing feeds a “healthy” competition.

Where things start to become more questionable, is when bigger brands have the market power to hinder smaller companies from catching up to them. In some case, this may even lead to the collapse of entire companies and the image they had created in their customer’s perception.

In case, someone wants to get a little more scholarly about this topic:
http://www.allbusiness.com/marketing-advertising/advertising/260512-1.html