Sunday, October 26, 2008

Free does not exist in most cases

"Receive your free gift with your first order", "Get back $200 free", "Free with your paid order". These are all gimmicks by marketers to sell you something else. They work. If they did not, marketers would stop using the word free.

We all want something for free, but it does not exactly exist in commercial settings. The free is a convenient way of packaging the "free" item or service with the paid item at a price that covers both items. A second method is the "loss leader", a basic concept every business student learns in the Business 101. The marketer offers an item below cost to draw a customer in with the hope that they will buy the actual targeted item, thus making the sale and absorbing the loss on the first item. This may seem complex, but you see it regularly. Does a supermarket advertise a sale on regular Twinkies (discounted) and display it with a new "improved" version with 1/3 less fat (at the normal price)? This is a loss leader to get you to buy the new Twinkies. Some call this "bait and switch" made famous by less than car dealers who are less than honest - not a wise marketing plan overall in the long run.

Free is for me? As long as you realize you are not usually getting something for free. Once in awhile you may. More often than not free is full price. Your choice is to decide whether you wan the packaged deal.

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