Razor Blade Marketing

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Freebie marketing

A free gift knitting row counter given away byWoman's Weekly in the 1980s-1990s.

Freebie marketing, also known as the razor and blades business model,[1] is a business model wherein one item is sold at a low price (or given away for free) in order to increase sales of a complementary good, such as supplies (inkjet printers and ink cartridges, "Swiffers" and cleaning fluid, mobile phones and service contracts) [2] or software (game consoles and games).[1] It is distinct from loss leader marketing and free sample marketing, which do not depend on complementarity of products or services.

Though the concept and its proverbial example "Give 'em the razor; sell 'em the blades" are widely credited to King Camp Gillette, the inventor of the disposable safety razor and founder of Gillette Safety Razor Company,[1] in fact Gillette did not originate this model.[3]

|Contents |
|  [hide]  |
|1 Development |
|1.1 Free gifts |
|1.2 Free lunch |
|1.3 Gillette |
|2 Applications |
|2.1 Standard Oil |
|2.2 Comcast |
|3 Issues |
|3.1 Specific examples |
|3.1.1 Printers |
|3.1.2 Video games |
|3.2 Other goods |
|3.3 Tying |
|3.4 Legal issues |
|4 See also |
|5 References |

[edit]Development

[edit]Free gifts
A free gift is one for which the giver is not trying to get something in return, or one which does not cost the giver, such as when it is discount on resulting sales.

[edit]Free lunch
The phrase free lunch, in U. S. literature from about 1870 to 1920, refers to a tradition once common in saloons in many places in the United States. These establishments included a "free" lunch, varying from rudimentary to quite elaborate, with the purchase of at least one drink. These free lunches were typically worth far more than the price of a single drink. The saloon-keeper relied on the expectation that most customers would buy more than one drink, and that the practice would build patronage for other times of day.

[edit]Gillette
Main article: King Camp Gillette

The usual story about Gillette is that he realized that a disposable razor blade would not only be convenient, but also generate a continuous revenue stream. To foster that stream, he sold razors at an artificially low price to create the market for the blades.[1][4]

But in fact Gillette razors were expensive when they were first introduced, and the price only went down after his patents expired: it was his competitors who invented the razors-and-blades model.[5]

[edit]Applications

Freebie marketing has been used in business models for many years. The Gillette company still uses this approach, often sending disposable safety razors in the mail to young men near their 18th birthday, packaging them as giveaways at public events that Gillette has sponsored, et cetera.

[edit]Standard Oil
With a monopoly in the American domestic market, Standard Oil and its owner, John D. Rockefeller, looked to China to expand their business. Representatives of Standard Oil gave away eight million kerosene lamps for free or at greatly reduced prices to increase the demand for kerosene.[6]

Among American businessmen, this gave rise to the catchphrase "Oil for the lamps of China." Alice Tisdale Hobart's novel Oil for the Lamps of China was a fictional treatment of the phenomenon.[6]

[edit]Comcast...
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