Everyone loves the word “free”. However, realistically, nothing is really free, and with the evaluation of the business world, the word is merely an illusion used as a mask to suggest that a cooperation has the consumers best interest instead of solely being after the goal of making profit. It has been said that the most powerful words are “free” and “new” (Michael, 2011). The offering of free complimentary products is a business strategy that many businesses follow. It helps them strengthen customer relationships as well as improve customer growth. The word free sparks the confusion of whether or not the company is able to maximize profits if they are offering products and services for free. The impact of free services on customer relationships and trust is made evident by looking into how Ambani’s telecom company Reliance Jio was able to grasp such a large consumer database due to their offering of free services. Reliance Jio was openly offering free services to the public until they announced that they were officially going to start charging current subscribers for their services. As a result of this announcement, people began to question how profitable Reliance Jio really is. Morgan Stanley suggests that by 2020, Reliance Jio would be able to about $7.58 billion in revenue, with profits of $1.08 billion (Sen, 2017). This emphasizes the success of establishing and strengthening customer relationships with free services and goods and how an efficient customer segment can significantly impact total business profit.
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The use of the word “free” in the business world is usually masked by a set of conditions that range from required subscriptions to the requirement of purchasing more of a certain good (buy 2 get 1 free). People are usually skeptical of the word free, unless it come complimentary with a price they previously paid. Free complimentary good can also be a way of manipulating the consumer towards a business’ high prices (Micheal, 2017). With the offering of free complimentary services, the consumer is painted a picture that the business doesn’t care about profit, but rather customer satisfaction, which pushes the consumer to be convinced to pay the premium price for their “care”.
In conclusion, “free” always comes with a price for the consumer and it doesn’t necessarily mean loss for the supplier. It achieves the goal of maximizing profits for the busniess by building and enhancing customer relationships that eventually guide the customer to the path of paying the higher prices for products of services as shown Reliance Jio that was able to shift from free services to charging different amounts based on memberships all while maintaining their clients.
References:
Article: Sunny Sen New Delhi, Hindustan Times. (2017, April 05). Free services for customers, how profitable is Mukesh Ambani’s Reliance Jio. Retrieved October 25, 2017, from http://www.hindustantimes.com/business-news/free-services-for-customers-how-profitable-is-mukesh-ambani-s-reliance-jio/story-IK1two6yQOTiSwMQu4RORK.htm
The Psychology of Free, and Its Power Over You. (n.d.). Retrieved October 25, 2017, from http://www.wisebread.com/the-psychology-of-free-and-its-power-over-you
Figure 1: Sunny Sen New Delhi, Hindustan Times. (2017, April 05). Free services for customers, how profitable is Mukesh Ambani’s Reliance Jio. Retrieved October 25, 2017, from http://www.hindustantimes.com/business-news/free-services-for-customers-how-profitable-is-mukesh-ambani-s-reliance-jio/story-IK1two6yQOTiSwMQu4RORK.htm