How is “Free” used in marketing? (5 clever strategies)

“You get a car, she gets a car, everybody gets a car!” - Oprah Winfrey

Oprah once gifted 300 audience members of her show a new Pontiac G-6 Sedan. 

You might wonder why and how any business would give away such an expensive free gift to so many people. 

You also might wonder what the financials looked like, to pay for something like this? 

And, what kind of a return did this marketing campaign bring Oprah, if any.

Free is often used in marketing in order to gain a new customer. Giving away a free product or service provides a competitive advantage in a crowded marketplace. 

The purpose of this tutorial is to explore how and when to use “freebies” in your advertising and marketing activities. 

Of course, the use of giveaways can be tricky for many reasons.  Oftentimes the budget is the top concern, but frequently the biggest question to ask first is, “Why should I give something free in my marketing campaign?” 

Can You Use the Word Free in Advertising?

Yes, you can! 

And if you are not, you could be leaving truckloads of sales and profits on the table. You need to figure out a way to use the word free in your marketing because it can do wonders for your conversion rates.

In fact, one company that has perfected freebies in advertising is Ben & Jerry’s, the famous ice cream company that holds “free cone day” where consumers get free ice cream

But why do you think this campaign has been such a success?

The word free is one of the most powerful words in business primarily because of the emotional reaction it activates. People love free gifts because:

  • Free offers a perception of zero to low risks
  • Free implies a great bargain
  • Free removes the barrier to entry, e.g., trial
  • It creates an added value to a product/service

Four ways companies often include the word free in their advertising include:

  1. Free Gifts
  2. Free shipping
  3. Free trial
  4. Buy one get one free

What Is the Meaning of “Free” in Business?

In business, free means giving products and/or services to consumers without expecting payment in return. 

For example, if you are offering a facial treatment service, you could opt to give clients free at-home sheet masks. Or, if you just started a local sandwich shop, you could blanket the surrounding area of people in your target market with a free coupon valid for a free sandwich.

In both of these cases, the businesses are using “free” in their marketing strategies. The goal, of course, is to compel a new customer who enjoyed their free product(s) so much that they are now inclined to come back and purchase. 

This strategy is a function of the psychological principle called the Law of Reciprocity, which says that when people receive something they feel compelled to return the favor. This is another huge reason why every company should find a way to use free in their marketing strategies.

Freebies in business are not always as direct. For instance, in some cases, a customer  must pay for a service to get a free product. In this case, the free product or service acts as an incentive to make a purchase. 

Both strategies can work very well.

5 Innovative Ways to Use Freebies as a Marketing Strategy

1. In-app purchases

This commonly used strategy involves providing free basic features for service and requiring users to pay for a premium version to access add-on features. 

This is a fantastic method to quickly build a list of potential paying customers at the free level, and showing the value of becoming a paying customer. This tactic’s success is because it attracts a broad customer base. And if your product is high-quality and meets users’ desires, many will likely become paying customers. Companies that use this strategy include iPhone, Skype, and Adobe.

If your direct competitors use this strategy, consider matching the same offer to your customers. It is crucial to undertake market research to ensure that this move will increase profits in the long term. Alternatively, you could employ a Merger and Acquisition. For instance, when Intuit, a software company, realized they couldn’t match Mint.com’s services, they bought the company.

2. Complementary marketing

If you decide to offer free products, presenting different items that complement your company’s offerings would be a smart move. 

For instance, if you run an exclusive farmer’s market event, you could choose to offer free tickets and then sell complimentary products and services. Once customers are in the venue, you could have stands that sell food items from spices to meal prep, sanitation products and related travel packages. The opportunities are virtually limitless with this method.

3. Seek payment from third parties

Another tried-and-true tactic that includes freebies involves working with third parties. 

Let’s say you run a successful blog, meaning you have a large audience who take action based on your recommendations. In this case, you can decide to make your posts accessible but charge third parties who wish to advertise using your blog.

4. Buy One Get One Free (BOGO)

BOGO is perhaps the oldest trick in the marketing book. 

It involves offering a free product only after a customer purchases one. You probably have seen this in grocery stores and your favorite beauty shops. 

For instance, in 2021, Bath & Body Works ran a thanksgiving BOGO of buy 3 get 3 free, allowing users to mix and match products rather than get a replica of the purchased item. 

This tactic can help boost sales by offering customers a chance to try out new products for free but only after they’ve bought from you.

5. Decoy

Another way to use free in marketing is by using decoy pricing. 

Let’s say you run a bakery and offer juices in different sizes. The small size (250ml) could be $6, while the larger one (450ml) is $6.50. A customer getting the larger size for only fifty cents more seems like they are getting an additional 150ml practically for free. 

The decoy tactic nudges users to buy items by using asymmetry.

Test - Test - Test Using Free in your marketing and advertising

Using freebies in marketing can be a massive success or a marketing miss. 

While this tactic attracts a wider user base to your business, it may not always result in purchases. Therefore, you must evaluate this approach making sure you aren’t using it as a crutch. 

Your products and services must appear valuable to consumers to nudge them into getting your free products.

Remember, brand reputation matters, and if your business is relatively new, giving freebies may end up hurting your company image. Ultimately your goal is to increase your bottom line. So, employ free in your marketing after you crunch the numbers and it makes sense.

References

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