“If you are good at something never do it for free”. The Dark Knight
The basic question, why do it for free?
Free has a cost and yet so many brands not only use but abuse the classic ‘buy one get one free’. For some it’s just inertia, they did last year and the year before, so it’s become a must in the new plan as well.
Go back to the origin, ask why give a product free, make sure there are clear objectives, that overall ROI is positive and that the brand wants to do rather than needs to do it.
Make sure that what was once a good tactical option has not been so widespread that it became a need for companies and a must have for consumers, not delivering for either of them the initial objectives.
Unfortunately, for some Commercial or Marketing VPs free is like a drug, it speeds their heart, gives a rush of adrenaline but they tend to forget that like drugs it comes with a cost for health, the brand health.
‘Free always has a cost’
The cost on image and the devaluation of the brand equity is one of the biggest risks but not the only one. Free lacks aspiration, with the risk of making a product being perceived as generic, cheap or lower quality.
Free is sometimes used to (1) ‘buy’ market share, (2) incentivize sales thru an extra gift or give away & (3) drive consumers to events that take them through a brand experience.
However, once the free offer increased the sales how can that commodifying impact lead to sustained demand… unfortunately, through another Free Promotion. The free gift is rarely used on the proper occasion, usually those branded free T-shirts don’t hit the street, instead get worn as pajamas, if at all.
‘Charge for free’
What if instead of giving away products, events or gifts, which quality perception is put under doubt, a company could charge for them and still attract consumers attention. Not only would the company be adding aspirational cues into its promotion but also reducing costs or increasing its promotional budget – every dollar paid by the consumer on the once free would be an extra.
The once free events created by brands could be change and now consumers would pay for, maybe subsidized, discounted, but not free! Better gifts, good enough that the consumer is willing to pay and use or wear. Brand Experiences that are the area of expertise of a Company and that can be either charge back to consumer at discount or cost…
Making money out of the free and increasing the power and attractiveness of a brand is the right path.
Examples of old habits turned from free to paid by consumers: home events, an area of expertise of Spirit Companies, were free in the past whilst now is common to find proposals where consumers pay full or part of the event.
- Beefeater home parties
- Pepe Jeans Custom studio (pay to get customization)
https://www.pepejeans.com/es_es/customstudio
Dr. Erwin Maldonado Domingo, profesor del Departamento de Economía.
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