Giving your product away may appear crazy - but in some cases it's the only way to establish it in a brand new marketplace. When a product is revolutionary, couple of individuals wish to be the first to attempt it, so asking them for money up front often merely creates a barrier.
In some cases, this is just something we need to reside with, but if owning the product indicates that the consumer will have to purchase repeatedly, giving away something that creates a dependency is good business.
You will find many examples in practice of products that are sold inexpensive, with the business making its money on the peripherals. Spare components for cars are an instance - the cars are sold relatively cheaply, but genuine spares are costly, because that is how the manufacturer makes money.
There's no reason in any way to be wedded towards the idea that every product that leaves the factory gates has to have a price tag on it, and numerous companies have succeeded admirably by giving products away.
When King C. Gillette invented the safety razor he was working as a salesperson for a bottle-cap manufacturer. He conceived the idea for a disposable razor when his cut-throat razor got too old to be resharpened: he pretty effortlessly developed a way of making the blades and the razors to hold them but economies of scale meant that the blades could only be profitable if he could manufacture them in their millions. He needed a fast way of getting males to switch more than from cut-throat to disposable razors, so he decided to give the product away.
Gillette gave away thousands of razors, complete with blades, knowing that few males would go back to using a cut-throat razor once they had experienced the safety razor. Within a few days they would need to purchase new blades, so Gillette had produced an instant marketplace, restricted only by his capacity to give away more razors.
In time, once the product was established in the marketplace and also the first users (the innovators) had started telling their friends about the product, Gillette was in a position to begin charging for the razors themselves. Nevertheless, the razors were always sold at close to, or even below, the manufacturing cost - the business makes its money on selling the blades, which price almost nothing to create and which can be sold for a premium price.
In time, other shaving systems came along that superseded Gillette's idea, but the fundamental marketing concept remains and is nonetheless utilized to this day.
Identify products that carry a long-term commitment to buying peripherals, spares, or other consumables. Determine your target marketplace - there's no point giving out freebies to all and sundry if they are not going to follow through and buy your product later. Make certain you've good intellectual property rights (patents, and so on.) so that nobody can enter the marketplace with knock-off consumables that work with your giveaway product.
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Note: This article was sent to us by: Alan G. Nicholson at 01202011
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