Beware of FREE !!!

Home 2011 January Beware of FREE !!!
“FREE” is perhaps the most popular word any consumer looks forward to with eagerness. In pure terms of definition, it can be described as a service or product of perceived value is given without the value transaction to the consumer. Then isn’t it a consumer’s paradise? Why should one be beware?
 
Well it is not the consumer who should be beware, it is the marketeer- For it can easily spell his doom !!!
For any market segment in any sector, there are well defined strategies which are followed by the market leaders and laggards.”FREE” acts as the game changer! As now customers not only have an alternate substitute, they also have it without any charge. Would you miss out such an opportunity?
Generally no.
 
“Free” has the power to redefine the entire dynamics in the market segment. Take for example the case of Skype– a little known company since even half a decade back and is today a market leader in VOIP and Internet calling. It redefined market rules, offered an essential service for communication free of charge and as a result adversely affected the margins of the then leaders like AT&T. In fact it boasted of over 10 billion minutes of international talktime with 4 years of starting operations(What a product!).
 
Marketeers generally tend to ignore “Free” as lacking in some aspects, while it is generally true- the more important question for them to ask is something else-
– What is the relevance of that particular aspect for a customer while making decisions ?
It is essentially this question which should decide a marketeer’s approach of tackling the new “Free” player on the block- whether to ignore it or tackle it- but essentially beware of it for it can change the way business is done!!!
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Abhirup
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 MBA, Author of 4 books, Finance guy who loves brands

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