

Stop Giving it Away For Free and Start Creating Brand Value - rmah
http://www.readwriteweb.com/start/2011/05/stop-giving-it-away-for-free-and-start-creating-brand-value.php

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jeffdavis
Interesting points. As far as I can tell, offering promotions has three
possible benefits:

1\. Introducing people to your product that might not have otherwise tried it,
or might have forgotten about it. Some of these people may become loyal
customers in the future paying full price.

2\. Price discrimination: those with lower price sensitivity won't bother with
the coupon and will pay full price, while those with higher price sensitivity
will still be your customers. This only makes sense if you are making money
even at the reduced price.

3\. Creating a customer perception that they are getting a better value.

None of these things really works if everyone has ultra-easy access to coupons
all of the time.

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JeffL
Price discrimination is an excellent point. I guess the trick is to enable
price discrimination without lowering the value of your brand, so the coupons
or whatever would have to be sufficiently annoying to use so not everyone
would use them.

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rmah
The article leads me to think that if creative and alternative
online/mobile/geo/gamification/social promotions aimed that uses means other
than coupons and discounts could be created, that consumer brands would love
you (and pay you).

For example, perhaps "happenings" of some sort, tie-ins to grass-roots events.
Or perhaps your standard purchase contest but for groups. Or maybe "social
loyalty points" (as opposed to individual loyalty programs).

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lurker19
Here is a great way to create brand value in the digital world, that generates
both financial and non-financial value: give away your mass-produced stuff as
free and/or open source and/or libre, and charge for custom work or advanced
support or vanity branding.

This model tends not to work for entertainment products that people, in their
heart of hearts, realize they do not really need in their lives. Hmm.

Good for you, and good for the world. Do well by doing good.

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hxa7241
> If I can get millions of people to pay $5.99 for Kellogg's Corn Flakes
> versus $2.99 for generic corn flakes, that's a strong brand.

Is the product actually better? If not, that sounds like a dysfunctional
market. Brand seems adjacent to deception. Is that what we want more of?

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pchristensen
A brand is not deception, it's having people trust what you say. Anyone can
say that their software is easy to use, but most people won't believe you.
Apple, Google, 37signals, etc have brands that people _trust_ and people
believe that their message will match reality. I trust Dropbox to work, but no
other sync product has built a brand strong enough that I would even bother
looking at them.

Said another way, brands are an ecosystem of response to a company's product
and marketing. Despite kajillions of dollars spent on advertising, a lot of
Microsoft's brand is BSOD, Vista, Clippy and constant restarts. Despite
objective safety numbers and no evidence of failure, people trusted Toyota
less, billions of dollars less, when the brake/accelerator "story" was
happening last year.

A brand is what people expect to get. The $2.99 corn flakes, even if they are
as good as Kellogg's, are dragged down by every other crappy generic cereal a
customer has ever eaten.

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ww520
Brand takes a long time and lots of money to build. Think Apple, Coke, or
McDonald. Free or discounted products are short term marketing mechanism to
build awareness of the products and companies. It is one way to build the
brand.

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sabat
Some valid points in here, for sure.

 _Look at Groupon's month-over-month decreasing revenue for evidence._

Is there actual evidence of this? Groupon is private, so how would we know?
(Real question, not rhetorical.)

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code_duck
I don't think the business idea behind Groupon is growing less popular - more
likely, they're suffering from the effects of so many people copying them.
Every local newspaper site I read now has a '50% off deal coupons' feature.

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thomasgerbe
On a sidenote, I'm getting exhausted from 'deals.'

LivingSocial, GroupOn, Yelp Deals/Coupons, Facebook Deals, Slickdeals...

