{"id":463786,"date":"2011-07-19T07:44:08","date_gmt":"2011-07-19T07:44:08","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/07\/19\/if-you-cant-beat-free-offers-join-in\/"},"modified":"2011-07-19T07:44:08","modified_gmt":"2011-07-19T07:44:08","slug":"if-you-cant-beat-free-offers-join-in","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/07\/19\/if-you-cant-beat-free-offers-join-in\/","title":{"rendered":"If You Can’t Beat Free Offers, Join in"},"content":{"rendered":"
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Business Daily<\/a> (Nairobi)<\/p>\n

Boniface Ngahu<\/p>\n

19 July 2011<\/p>\n

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analysis<\/p>\n

Some marketing experts have argued that the word ‘free’ is the most powerful word in the world. Others have asked me to explain how you can make money by charging nothing. There is also a common saying that the best things in life are free, think about the air that we breath, the free primary education in Kenya and a mother’s milk to mention but a few. While a lunch is never free, thankfully everything else can be.<\/p>\n

Many years ago this statement would have been laughable, but in today’s environment there is a strong argument to do business for free. Top businesses are realising the value of ‘free’ and it’s fast becoming a central strategy behind many success stories. This challenges the traditional way of thinking as even in the Law of contract there is no provision for a contract without consideration or does a quote of Sh 0\/= amount to consideration?<\/p>\n

Two or so years ago, this situation came to the limelight in Kenya after an investment bank won the tender for providing some financial services in a major IPO while quoting zero for the service. Professor Saitoti’s PHD Thesis on the function of zero might shed some light on this.<\/p>\n

A certain comedian quoted the thesis referring to 8-4-4 education system (8 minus 4 minus 4), the comedian called it the zero system while linking it to a period when Prof Saitoti was the Education Minister.<\/p>\n

The global business climate has fundamentally changed and this was discussed in detail in a paper entitled “The Authentic Enterprise Report Summary” by the Arthur W. Page Society.<\/p>\n

The report highlights included the fact that geographic location is no longer a limiting factor and the cost of ‘new age’ business resources (bandwidth, storage and processing power) are decreasing dramatically – and with it the volume of potential consumers is growing at an unprecedented rate.<\/p>\n

The ability to be truly global is now a realistic (and simple) option. As such, successful companies are realising that they no longer need to make large profits from a few clients and are exchanging this for smaller margins across higher volumes of clients.<\/p>\n

Chris Anderson the Editor of Wired Magazine presented a fascinating idea of offering services for free and has explored mechanisms for making money off this seemingly pointless business strategy.<\/p>\n

Consider the following three simple models as described by Chris:<\/p>\n

Model 1: Provide something for free once and then charge for the next supply. This functions on the same model as the popular drug-dealers’ “the first hit’s free” philosophy. Any company which allows for a free trial is employing this strategy. Mobile phone companies have offered free calls at night or during the day.<\/p>\n

Model 2: The user’s attention is sold to a third party in the form of advertising and other ways. Many magazines employ this model. In this model the number of customers you have becomes a captive audience for new revenue streams.<\/p>\n

Model 3: The few subsidise the many. The best example of this is Wikipedia where donations from ‘the few’ are enough to keep the content free for the many. This is inspired by the following Chinese Proverb passed oon by Industrialist Chris Kirubi, If you want happiness for an hour- take a nap<\/p>\n

If you want happiness for a day – go fishing or maybe go play golfIf you want happiness for a month- get marriedIf you want happiness for a year- inherit a fortuneIf you want happiness for a lifetime-help others.<\/p>\n

Mr Kirubi stated that while you are helping others you will actually be helping yourself.<\/p>\n

A hybrid between these three models has been found to be a very successful business model and many of the top companies apply it as their central strategy – Google is a prime example. Others include: WordPress.org and Facebook.<\/p>\n

Successful businesses based on the free model are re-writing business rules. Instead of premium they talk of freemium. The economy of free is the creative capitalism Bill Gates has been talking about.<\/p>\n

The writer is the Marketing Director of SBO Research.<\/em><\/p>\n

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\nIf You Can’t Beat Free Offers, Join in<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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There is also a common saying that the best things in life are free, think about the air that we breath, the free primary education in Kenya and a mother’s milk to mention but a few. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-463786","post","type-post","status-publish","format-standard"],"yoast_head":"\nIf You Can't Beat Free Offers, Join in - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2011\/07\/19\/if-you-cant-beat-free-offers-join-in\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"If You Can't Beat Free Offers, Join in - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Business Daily (Nairobi) Boniface Ngahu 19 July 2011 analysis Some marketing experts have argued that the word 'free' is the most powerful word in the world. 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