How Does Giveaway Marketing Work?
People love the idea of getting something for nothing. Marketers are using this love of anything free to spread the word about products, find new customers and increase sales. From free books on Amazon to free samples in the grocery store, giveaway marketing makes products free for a time to increase sales even more in the future.
Giveaway Before You Sell
When companies introduce a new product to the market, whether it’s a perfume or a pizza, they often give away free samples. They hand out the product to consumers and send free coupons in the mail. They offer free tokens to people who “like” the product on Facebook.
While people may be hesitant to try something new if they have to pay for it, if they’re disappointed, they’ll have wasted their money. Many people will try anything once if it’s free. If the product is right, they’ll want another pizza or more perfume. Even when the product is no longer free, they’ll come back to buy it. With this kind of giveaway, companies target likely purchasers.
They give away free product to people who are already in grocery stores shopping or the restaurant eating, or to people who page through Sunday coupon circulars. They already know these people buy similar products, making them likely candidates to like the new product.
Free products can play the role of a loss leader in stores. Offer something free to get customers in the door, and chances are they’ll buy something else while they’re there. Penzey’s Spice Company periodically sends customers coupons for a free bottle of spice if they bring the voucher to the store. Once there, the array of spices with their enticing aromas tempts people to purchase more. The makeup counter at a department store may offer a free sample of a new lotion, but while you’re picking it up, the counter clerk will also show you the new lipstick and eye makeup. Enough people buy these other products that the giveaway is worthwhile.
Sometimes a freebie gains company attention it couldn’t afford to buy. When Oprah Winfrey gave everyone in her studio audience a new car in 2000, GM received tons of press for donating almost 300 of its new Pontiac G6s.
Every paper in the country had news about the giveaway, along with television, radio and website coverage. An ad campaign with similar coverage would have cost more than the giveaway. GM not only got everyone talking about its new car; it got to be the good guy, enhancing its public reputation.