The Value of Free: How Companies Benefit from Giving Away Free Stuff

FreebiesEveryone loves freebies. When companies give out free stuff such as pens and mugs, you feel happy because you never had to pay a single cent to obtain them.

Companies know that there is more to giving away free customised business merchandise than meets the eye. Although logic dictates that companies lose money when they give away free stuff, the opposite actually happens.

Here are some benefits that companies enjoy when they give free stuff to consumers:

Great Brand Recall

Whenever you look at the logo printed on a free item, you will be reminded of the company that gave these items away. Marketers know that their strategy was successful when more than half of the consumers are able to recall the name of the company (an extra bonus if they keep the item with them!).

Promotional items have a higher brand recall than TV advertisements. Once the commercial has aired, not all consumers will retain the name of the company into memory the next day. On the other hand, consumers will remember the company name the moment that they see and/or use the free item.

Increases Profits through Reciprocity Principle

This principle states that people are urged to return the favour when they receive something free.

Here is a good example. When a convenience store gives out a freebie (orange juice, for example), the typical consumer behaviour is to walk in, get a freebie and then walk out. Some consumers, however, walk in, taste the sample and then decide to purchase the actual product. The latter behaviour is a clear example of the reciprocity principle. Thanks to this principle, businesses boost their sales because people feel obligated to purchase more.

Business owners know that giving away free stuff is only painful at the start. The free items given to consumers are worth the price if it translates to successful brand recall and an increase in sales.