I found a very intriguing post by Chris Anderson: The three kinds of FREE
In this Post Anderson is trying to untangling the confusion over different kinds of free,which can range from a simple marketing gimmick to a radically new economic model.
I would like to broad the following models analyzed by Anderson in order to find some models specific and peculiar to ecommerce marketing. Do you have some ideas or did you find some specific models of ecommerce strategies?
Here Anderson’s explanation of the three models.
Anderson described three models of free products, and made a visual representation.
The first "free" model: image from Chris Anderson's blog
Here’s the first, which dates back more than a century. It’s the razors-and-blades model, as well as loss leaders of all sorts, from “free gift inside” to “free toaster for opening an account”.
The second "free" model: image from Chris Anderson's blog
The second is the media business model, ranging from free-to-air broadcast radio and television to all ad-supported content online today:
the third "free" model: image from Chris Anderson's blog
The third is the new one, enabled by digital markets where the marginal cost of production and distribution is close to zero. This is the one that allows the “freemium” business model, where 90% of the users get the basic product for free and 10% chose to pay for a premium version. In economics this is called “versioning” and is a form of using price discrimination (where the main price is zero) to maximize both the consumer utility and the profit in a market. In this model, charging a small percentage of a large user base beats charging a large percentage of a small user base. Obviously best for consumer products with potentially large appeal, it’s the main Web 2.0 business model and can be found everywhere from Flickr and Flickr Pro to open source’s “support included” commercial versions of Linux.
Source: The Long Tail: The three kinds of FREE.
{ 2 comments }
Hi,
Nice to meet you online. I am an affiliate marketing specialist working for online B2B trading company in China. We use Performics a lot. Also have some knowledge of Google Adwords. I hope to share some ideas with you and establish a link with your blog. I have added your blog to my website. My blog is: weicao1984.blogspot.com
Thank you
Wei
Hello from Enrico Giubertoni
Nice to meet you, Wei. Your blog is very interesting and reflects your deep knowledge.
Did you find in your work experience, some examples of “Free Marketing Models” peculiar of Chinese marketing?
Comments on this entry are closed.