Mumbai: Something for nothing is a great selling proposition, especially during an economic downturn, and marketers are bombarding consumers with offers for airline tickets, apparel, lifestyle goods, even holidays—all seemingly for free.
“Free love” is the term Amsterdam-based trends tracking firm, Trendwatching.com, has come up with to describe such big brand giveaways, a phenomenon that spans geographies, as the global economic downturn deepens.
“Free Love thrives on an all-out war for consumers’ ever-scarcer attention and the resulting new business models and marketing techniques, but also benefits from the ever-decreasing costs of producing physical goods, the post-scarcity dynamics of the online world, the many C2C (consumer to consumer) marketplaces enabling consumers to swap instead of spend, and an emerging recycling culture,” the firm, which has 8,000-plus trend spotters to scan the globe for emerging consumer trends, said in a report.
Marketers and retailers are travelling down various innovative routes to “free”dom to stimulate consumer demand. The beleaguered travel sector, for one, is going full throttle on zero pricing or promises of all the money being returned (termed a cashback).
What a deal! Experts say the upside of the ‘free’ strategy is that consumers are gleeful about the great bargains they’ve got.
An ad for travel company, Cox and Kings India Ltd, says, “World tours 2009. Up to 100% cashback. Instantly on full payment.” A recent ad for a travel portal announced “Air tickets @ Rs0 now” and pitched deals from low-cost airlines such as Indigo and GoAir that offered tickets at a base fare of Rs0. A liberating experience is sometimes also thrown in: A recent promotion for Jet Airways (India) Ltd had this tagline: “This Republic Day there’s just one thing we want you to be. Free. 59 free tickets daily.”
Westside, the lifestyle and apparel retail chain owned by Trent Ltd, put out full page ads announcing a “sale of 50% + 100% value back” , promoting a scheme that offered a gift voucher worth Rs500 on purchase of sale products worth Rs500. And a promotion for John Miller shirts said: “Buy three get three free”. Such offers imply more often than not, that consumers would have to spend nothing at all.
“Consumers are very smart and extremely value conscious. They know exactly what is on offer and when a great bargain is offered, they just lap it up,” says Smeeta Neogi, head of marketing for Westside. “In their mind, they are rationalizing their purchase, as getting value.”
Free love thrives in a milieu where deep discounts fail to impress consumers who have become immune to the word “sale”. “In a scenario where recession is happening, you have to be innovative and offer value to consumers, to draw them in,” says Gibson Vedamani, director, Retailers Association of India.
In reality, of course, there is no such thing as a free lunch, or a shirt or a plane trip. There are usually conditions that apply, or taxes that have to be paid.
The zero or free tag is, however, the preferred strategy for brands that are not into discounting. “If the retail chain or brand is not a discount business, then the positioning may be different. They would rather offer “more value for the same amount” than adopt a “buy for less” strategy that could impact their brand,” says Vedamani.
Still, according to Nabankur Gupta, founder chief executive officer (CEO) of Nobby Brand Architects and Strategic Marketing Consultants, when marketers talk about giving away stuff for free it is nothing but indirect discounting.
“The over-claim is an advertising liberty, and usually happens when you have huge inventories piled up. In sectors such as aviation, the inventory disappears as soon as the doors of the plane are closed, so a brand could predict the number of empty seats on a route and hand them out as freebies, which pay for brand visibility and brand experience.”
Gupta warns that if the freebie is not related to the main item it’s coming with or if there is no need for it, the consumer is likely to feel cheated.
Everyone wants to know the hidden clause and unlike the US where it is made clear that the goods on discount could be close to expiry date, the expiry date is never explicitly mentioned in India and (perishable) goods that are close to expiry are usually palmed off as freebies, Gupta adds.
The upside of the “free” strategy, say experts, is that consumers are gleeful about the great bargains they’ve got. The flip side is it could erode brand value. “No one minds if you over-claim the intangible. However, the minute it comes to tangible things such as money, consumers can see through a marketing ploy very quickly,” says Santosh Desai, managing director and CEO of Future Brands Ltd, the brand and marketing consulting arm of Future Group.
It makes sense to let the big giveaway ride on big events. Jet Airways’ free ticket offer tied in with the note of freedom and ran during the Republic Day week.
Trendwatching.com mentions how to celebrate the inauguration of US President Barack Obama, doughnut chain Krispy Kreme Doughnut Corp., UK, served free Americano coffees. Last year, at Dutch outdoor music festival Pinkpop, Italian fashion brand Diesel provided hot showers, including fresh towels, shower gel and fresh underwear, said its website.
However, experts say if the economic downturn continues, brands would have to go beyond freebies and discounts as a promotional strategy. “The dominant trend will eventually be to move away from handing out free stuff. If the slowdown stays, then we will see a fundamental reorientation of the business model and price points, rather than just a promotional idea to get people into stores,” says Desai.