Editor's comment: Why 'free' may have its price
Marketers are facing a generation of consumers who simply will not pay, in a trend dubbed the 'free economy'. Whether it be their news, mobile phones, music, or flights, they don't expect to have to stump up the cash for it. And, more often than not, they do not have to.
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:"";
mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
mso-para-margin:0cm;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:"Times New Roman";
mso-ansi-language:#0400;
mso-fareast-language:#0400;
mso-bidi-language:#0400;}
Although I don't necessarily think it is a good thing, I admit to being part of this generation. I don't pay to upgrade my handset on my mobile-phone contract, and I keep up to date with current affairs through a range of media web-sites, none of which I pay to subscribe to.
If I am charged for delivery by an online retailer it annoys me; and I always scan the web for online dis-count codes before buying anything. As a consumer, I don't give the implications of 'free' products very much thought.
We all know that nothing is truly free, and that, ultimately, someone or something will end up footing the bill. Ryanair, for example, is not alone in swallowing the losses it makes on 'freebies' by charging for other services.
Many companies offer something for free in the belief that they will attract customers to their other paid-for services. This raises the question of whether smaller companies can compete within these margins. If not, one must also ask whether the free economy model is anti-competitive.
If a bigger competitor begins offering a service for free, other brands may well be obliged to follow suit, even if their pricing hitherto was perfectly fair.
The viability of this free economy remains uncertain. However, it is increasingly obvious that, fuelled by the internet, it is a booming trend, and one that is here to stay. Moreover, it is one that will change the traditional rules of marketing.
Comments