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Enterprise

Giving out free products may be counterproductive

A free government sanitiser
A free government sanitiser. FILE PHOTO | NMG 

Since the onset of Covid-19 epidemic, one thing that is remarkably visible is the number of businesses that are offering their premium products free of charge to their customers and prospects.

Well, I am not referring to businesses donating or giving free merchandise to vulnerable communities as part of their corporate social responsibility.

What is baffling and drawing the attention of business experts is the rationale of the trend of removing price tags from products or offering them for a song in the name of helping to combat Covid-19.

Whereas some business leaders feel it is a show of solidarity in times of crisis and hope the consumers will reciprocate by buying their products after the crisis, many feel it is not viable economically.

Michael Hyatt, an expert in marketing, is of the opinion that giving out your products for free in tough times and in any other time does not help anyone in any way, contrary to what some people think.

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First, it does not benefit the economy. The economy, he says, depends on producers creating value and consumers recognising that value and willingly paying for it. This is the only way that economy can thrive.

Rather than give anything for free, think of ways of increasing value to your customers so that they can solve their problems better.

Secondly, free things don’t benefit the receiver. There is overwhelming evidence that people value that which cost them. People don’t pay attention to what they don’t pay for. Your free products may end up in the hands of people who don’t deserve, appreciate or reciprocate later.

Even in the best marketing strategies, free things do not endear consumers to you; value does.

Thirdly, it does not help you in any way. As a business person, you need money to pay your bills, your employees and develop your business.

There is no logic in punishing your employees or failing to pay your bills yet your dishing out your products for free, an act that neither benefits the economy nor the recipient.

Many people have been calling for waiver on rent, electricity, water and other bills as a way of combating Covid-19. This if granted, I fear will batter the economy more!

Free things solely cannot offset the financial hardship during any crisis. For economic to thrive we need entrepreneurs who can create solutions that many people are willing to pay and create value chain.

For example, schools need to come up with innovative way of teaching pupils while at home, which parents are willing to pay school fees.

This will ensure teachers get paid for their services so that they can pay their bills to their service providers who will in turn pay their bills and the chain continues.

In a real economy there is no free lunch. Companies like Google may seem as if they give their products for free. This is not true. Someone has to pay for you to enjoy free browsing- the advertiser.

is a business trainer and the author of The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market. [email protected]

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