Analysis of New-Emerging Free Products and Services
Autor: cjs1993 • March 22, 2016 • Case Study • 1,869 Words (8 Pages) • 1,050 Views
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ANALYSIS OF NEW-EMERGING FREE PRODUCTS AND SERVICES
Name：Eric Chen（陈劲松） Student ID：2015211853
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- Introduction
Pricing is always tricky for companies because while it means income for the corporation, it also means cost for the customer. But if products and services are free, what will happen? Actually, free products and services are provided in every aspect of our life currently. My own experience, a typical one as a modern citizen, can serve as an evident example to demonstrate the wide spread of free commodities. Every weekday, when I commute between school and home or company and home, I listen to free music or read free novels. During the work or study, I utilize free software and applications such as TeamLab or AtTeam to manage my projects and Skype to communicate with my customers or team members. Also, I enjoy my free lunch by ele.me or meituan.com. In addition, on weekend, I enjoy watching free movies on Youku.com, tv.Sohu.com or playing free online games and I can even connect to free Wi-Fi to enjoy free movies or games in a Café.
Thus, free products and services penetrate in almost all fields of our daily life. But why are free products and services prevailing recently especially in China? How can companies make profits through free products and services? This paper strives to solve these two problems and gives marketing implications.
- Reasons for free products and services being popular recently
- The consumer perspective
For consumers, free products and services reduce mental barriers to make purchase decision and contribute to irrational decision making because free products and services makes them think that they have “nothing to lose”[1] and consumers will not consider the value of the commodity or weight the cost and benefit of the commodity.
And in China, free products and services are even more prevailing. This is probably due to China’s special income structure, characteristics of customers, and culture. Specially, the income structure of Chinese citizen resembles pyramid or even inverted-T shape and the average of per capita disposable income in 2014 is 20167 RMB, which indicates the majority of Chinese consumers do not have much purchase power and thus are price sensitive. “The poor majority” lay a solid foundation for the popularity of free products and services in China. In addition, due to collective culture, Chinese is willing to share the information and experience of free products and services with their relatives, friends and communities so that word of mouth effects are truly intense in China. Therefore, free commodities are extremely welcomed by Chinese consumers.
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