156:
effectiveness of this as an investing strategy is open to debate, but it involves many transactions, creating brokerage commissions for the brokerage firm. Frequent trading in fee-based accounts is not an example of churning, since no commissions are generated in those transactions. However, the practice of putting clients who trade infrequently into a fee-based brokerage account is known as "reverse churning", since clients are charged fees in accounts with few if any transactions.
22:
189:), but receiving very high profit margins on associated products that are necessary for the basic product's continued usage. Examples of this strategy include razors (and their blades), computer printers (and their ink cartridge refills), cell phones (and their usage time), and cameras (and film).
177:
publishers are often accused of product churning for their practice of frequently publishing new editions of their texts (thus rendering previous editions obsolete, forcing students to purchase the new editions as required texts and minimizing or eliminating the prices paid for the old editions by
155:
is advised to repeatedly buy or sell small lots of a security as the price changes. Each transaction carries a commission fee. In this way the overall cost is averaged down as prices fall, and the investor is protected from market fluctuations which can be very difficult to accurately predict. The
170:
Another example is refreshments and snacks sold in theaters, fairs, and other venues. Small servings are proportionally more expensive than large servings. Customers choose the bigger size even if it is more than they would like to eat or drink because it seems like a better deal.
159:
Another form of product churning is sometimes practiced by maintenance service providers. By replacing worn-out parts with inferior quality parts, they are assured of a greater frequency of service requests.
163:
Companies sometimes intentionally deliver products which are not durable or reliable, so that the customer will have to replace them, in what is known as
167:. Similarly, new models might be made incompatible with accessories used with old models to force consumers to purchase replacements.
105:
39:
182:
86:
58:
43:
65:
222:
245:
72:
250:
240:
142:
178:
bookstore buyback programs), often while making insignificant changes to the information presented in the text.
54:
255:
32:
148:
203:
164:
138:
134:
122:
79:
198:
234:
186:
130:
21:
152:
151:
is a form of product churn under certain conditions. In this strategy, an
174:
126:
15:
185:. This involves selling a basic product at a loss (or low
141:
more frequently than is necessary, in order to generate
46:. Unsourced material may be challenged and removed.
223:FINRA Fines Brokerage Firm For Reverse Churning
121:is the business practice whereby more of the
8:
106:Learn how and when to remove this message
215:
7:
44:adding citations to reliable sources
181:Product churning is similar to the
125:is sold than is beneficial to the
14:
20:
183:razor and blades business model
31:needs additional citations for
1:
272:
149:Dollar cost averaging
204:Planned obsolescence
165:planned obsolescence
40:improve this article
133:who buys and sells
246:Product management
129:. An example is a
55:"Product churning"
116:
115:
108:
90:
263:
251:Personal selling
241:Brand management
225:
220:
119:Product churning
111:
104:
100:
97:
91:
89:
48:
24:
16:
271:
270:
266:
265:
264:
262:
261:
260:
231:
230:
229:
228:
221:
217:
212:
199:Low cost broker
195:
112:
101:
95:
92:
49:
47:
37:
25:
12:
11:
5:
269:
267:
259:
258:
256:Business terms
253:
248:
243:
233:
232:
227:
226:
214:
213:
211:
208:
207:
206:
201:
194:
191:
114:
113:
28:
26:
19:
13:
10:
9:
6:
4:
3:
2:
268:
257:
254:
252:
249:
247:
244:
242:
239:
238:
236:
224:
219:
216:
209:
205:
202:
200:
197:
196:
192:
190:
188:
187:profit margin
184:
179:
176:
172:
168:
166:
161:
157:
154:
150:
146:
144:
140:
136:
132:
128:
124:
120:
110:
107:
99:
88:
85:
81:
78:
74:
71:
67:
64:
60:
57: –
56:
52:
51:Find sources:
45:
41:
35:
34:
29:This article
27:
23:
18:
17:
218:
180:
173:
169:
162:
158:
147:
118:
117:
102:
93:
83:
76:
69:
62:
50:
38:Please help
33:verification
30:
131:stockbroker
96:August 2013
235:Categories
210:References
143:commission
135:securities
66:newspapers
139:portfolio
193:See also
175:Textbook
153:investor
127:consumer
123:product
80:scholar
145:fees.
82:
75:
68:
61:
53:
137:in a
87:JSTOR
73:books
59:news
42:by
237::
109:)
103:(
98:)
94:(
84:·
77:·
70:·
63:·
36:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
