The Market Function of Piracy.
In marketing the most effective way to introduce new products is the
free sample. In 1978 Lever Brothers spent $15 million ($47.55 million in
today's currency) delivering a free sample of Signal Mouthwash to
two-thirds of all US households. The strategy was a success and the
product remained on the market well into the 1990s.
The significance of the free sample is product trial; it gets the
product into consumers' hands. If consumers use the sample and like it,
they may go on to buy the product and buy it again and again, that is,
become repeat purchasers; they may even spread the good word to others.
When repeat purchasing and favorable word of mouth kick in, the
product's sales will experience a shift from slow to rapid growth and
management will consider the product a success.
Free sampling is the best method of introducing new products, but it is
also the most expensive. Not surprisingly, then, Forbes ASAP magazine[1]
reports this alternative way to practice free sampling:
One security manager for a major manufacturer, who asked not to be
identified, says she is sure some companies actually view being
counterfeited as a boon to their efforts to build brand awareness. After
all, she says, if some companies give away merchandise to expand market
share, what's not to like about having someone else take on the expense
of manufacturing and distributing the goods, as long as they're
high-quality copies?
more...
http://mises.org/story/2590
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