I always wonder why stores give away items. I wonder how is it benefiting them. For instance, CVS has Stride gum on sale this week. It's 3 for $3 and you get $3 in Extra Care Bucks back. I wonder how does a store profit if they are giving away so much. I know sometimes it's about marketing and getting the customer's attention on new products, but what about items that's been awhile a long time?
These big companies like CVS have huge buying power. I know from a lady who runs a newspaper kiosk that she earns the most on selling chewing gum. She has a fairly small kiosk but out of everything (newspapers, magazines, candy and chips) she makes the most out of the gum. Now imagine the buying power that CVS have, I imagine they are able to buy things like gum for next to nothing. Another reason they give things away is to create interest in a product, especially if the product is new. Here's an example; at schools here in Spain you will quite regularly see companies giving away large quantities of the latest toys, collectable stickers and tradeable cards. After this the kids then bug their parents to go out and buy them more of this new product. When one parent gives in then the kids starts saying "But Mum, X, Y and Z have them why can't I have them." I hope you understood where I was going with that anecdote.
I can't imagine it having a negative impact considering they get their products for next to nothing. I was small time compared and even I could afford to give away free products to generate interest and more sales. Worked very well.
Yes I do understand what you said, quite well. I also believe that these big companies have a lot of money can can afford to give away products. It helps to bring people in their store to buy more non-free items.
It's direct marketing and works both ways. People come into the store and buy more and the product has free advertising which would have cost them more money. I worked in the promotions industry for decades and they have targets to promote to the right demographic and at a certain time of year.
Most companies do this to bring genuine customers onto their mailing lists. You see a lot of marketing companies can't be trusted - how do you know that the clicks that you're getting are genuine. With samples and giveaways (at least the online ones) what you get is an email address as well as a genuine mailing address for a real customer. That's really valuable considering that then you can actually market directly to consumers, send them discount coupons, and what not.
They're often loss leaders - they bring you in to buy that product and get something free, but you'll probably get something else too while you're there and they can get their money back through other products that are purchased at the same time. Often people will enjoy a product they sampled for free too and will then buy more of that product when they put it back at full price too.
Often the cost of the item they are giving away is so small compared to the increased sales the new customer will provide is nothing to the store. Also they have it written into their budget to lose money on a few items.
Those free products are called sample which is a marketing tool. First consideration is to show proof of the quality or efficacy of the product. This is a standard in medicines where the medical representative would be going the rounds of hospital to give the doctors medicine samples. Second consideration is for the product to be known. A medical representative friend said that giving away samples is much cheaper than advertising on tv. That's why over here, we prefer the sample product not because it's free but for sure it has high grade quality.
Right, they are a marketing tool. You give them your mailing address to recieve free stuff and they get another person on their marketing list.
I use to work in a doctor’s office and I would love to get the free samples. I didn’t realize it was cheaper to give away products but now that I think about it, I agree. It really works too because the doctors were more willing to give away the free samples and if it worked, they would write a prescription for the product.
Yeah. But, I know that a lot of Docs just like to push some med even though they are not sure how well it might work. I think John Oliver did a piece on that:
They do this to bring people into their stores and know that they will buy more merchandise and will make profit off of them. Plus, giving them the extra care bucks back will bring them into the store again where they will purchase more from them and they will once again profit. This also gives people the impression that they get good deals there which makes them more inclined to frequent that store. CVS is building rapport with the customer by giving them deals on items and making them seem better than other stores like them.
Part of the reason of stores giving away products for free is what I refer to as customer channelling. A customer may be in need of a particular product and learns that its being offered as a freebie in a certain store. If the customer is proximal to its location, he will check in. In the process, they end up doing their shopping there for their own convenience and end up taking other discounted offers. It also cultivates loyalty in customers thereby generating repeat sales. It is also a sneaky form of corporate social responsibility.
They do it because they hope that by giving out items for free, the customer will be happy and think highly of the store/brand and then decide to shop in the future over there. Free samples are also given out because they hope that if the customer enjoys and is happy with the free sample that they then decide to buy the proper product. These companies think of the long term success as most of the time these free products/free samples are costly for them in the short term.
