The Cost of “Free”

We love freebies from marketers, don’t we? Free toothbrushes from toothpaste brands, free tattoos with potato chips, free spoons from tea brands, free mug with a pack of powdered milk, and the list goes on. The nominal (or pocket) cost to customers is zero, however, there are other non-monetary outflows.

If the brand that you are buying is really the one that you had in mind irrespective of the free gift(s), then you are the winner in two ways. First, you get something which you do not usually expect, but it is useful right now. Second, you are not paying anything extra for it. What the brand owner is getting from you? They are getting a better loyalty status since you would have bought this brand anyway, whereas you are now buying it with great enthusiasm. Your nominal cost is zero, but the marketer is getting a piece of your “heart” (expensive for you).

Alright, now think of another situation. What if you originally thought of another brand, but you are now buying a different brand because of a “free” offer with it? In this case, you are still the winner in the same two ways as you were in the first case. Repeat, first, you get something which you do not usually expect, but it is useful right now. Second, you are not paying anything extra for it.

What the brand owner is getting from you this time? Answer: just the retail price, not a piece of “heart” as it was in the first instance, because this brand is not number one in your mind. Only when the marketer believes that he/she can change customers’ mind once they use his/her brand, probably only then it would be possible that new users will stick to the brand after the initial freebies are over. Otherwise, consumers will just switch to their preferred brand when freebies are gone. The bottom line is, “free” offers are expensive to loyal customers and cheap for marketers, whereas “free” offers are cheap to switching customers and expensive for marketers. Now go figure where your brand belongs to.

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia, cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
This entry was posted in Branding and Communication, Marketing Practices and tagged , , . Bookmark the permalink.

One Response to The Cost of “Free”

  1. Fully agree. Brand loyalty or repeat purchase cannot be bought with “freebies”. The brand ultimately has to prove it’s worth in terms of consumer satisfaction and value for money perception. And, there is a third “situation” – the marketer either builds in the cost of “freebie” and makes the consumers pay for it, although the cost is distributed and diluted in a manner that a single consumer doesn’t feel the “pinch”or the economy of scale is made good use of. We all know that there is nothing called “free lunch”. Keep up the good work.

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