Archive for February, 2012
Free – The Best Value Proposition?
In p.271, the marketing textbook shows a handy diagram showing the possible value propositions for a company. I think it should include another column of popular winning positions – “Free for more”, “the same for free” and “free for less”. There seems to be a profound difference between paying for less and paying nothing and many businesses (especially tech companies) have positioned their product to provide services for “free” like Evernote and Dropbox. As Vincent has mentioned, the gaming industry was able to capture millions of reluctant casual gamers who are not willing to pay money for games. Although these games are free up front, many are either supported by advertising, or “micro transactions” that give gamers benefits such as additional levels, new set of virtual clothing or faster farming/construction time for real money. The proposition of “free” seems to have resonated extremely well with consumers, as revenues from premium games have exceeded pay-to-play games. Other software industries have similar business models – Dropbox provides 2GB free storage (or 2.25GB if you sign up by invitation), but charges $9.99/month if you want 50GB of storage. These freemium services are becoming increasingly popular as it positions a brand into a outstanding value proposition. However, as the market becomes saturated with such propositions , how will consumer perceive brands that require payment before consumption? I hope there will be still a place for pay-to-use products – I find games that aren’t free more fun to play!