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The Honolulu Advertiser
Posted on: Monday, June 15, 2009

Freebies a win-win for consumers, businesses


By WAYNE PARRY
Associated Press

Hawaii news photo - The Honolulu Advertiser

The Nardini family took advantage of a baseball team's promotion where kids get to eat for free. From left: Talianna, 1, mom Kirsten, Gemi, 4, Ellianna, 8, Gianna, 6, and dad Albert.

CURT HUDSON | Associated Press

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LAKEWOOD, N.J. — Some businesses are finding that the best price they can charge is nothing at all.

From minor league baseball teams letting kids eat free to banks making a $100 deposit into new checking accounts, merchants are realizing that giving recession-battered consumers something for nothing can be a good way to get them to buy something else.

The Nardini family of Toms River, N.J. took their four children to a Lakewood BlueClaws minor league baseball game one recent night, drawn by the promise of free food for the kids.

Ellianna, 8; Gianna, 6; Gemi, 4; and Talianna, 1, each walked away from the concession stand with a hot dog, a bag of potato chips and a soda, on the house. That would have set their parents back $21.

The free food benefited the team, too. The Nardinis paid $32 for tickets and parking — in addition to whatever Albert and his wife, Kirsten, spent on food and drinks for themselves, or souvenirs for the kids.

FREE = HAPPY

That's an example of smart, effective marketing, according to Jean-Pierre Dube, a professor of marketing at the University of Chicago's Booth School of Business.

"You're essentially giving the person a deal, but not discounting the price of the main product," he said. "Very often, the extra thing is less costly than the discount the firm would have had to make in order to get you to buy the original item."

It's not a new phenomenon. But it is being used to great effect during the current recession, he said.

"People tend to have a perception of 'free' that exceeds the true value of the product," he said. "The mere fact that you're getting something for free makes you happy."

The free food is paying off. Geoff Brown, the BlueClaws' general manager, said the team had sold 20 percent more tickets through its first 17 home games this year than it had last year — something he attributes in large part to the food giveaway.

BRINGING IN BUSINESS

In Portland, Ore., Powell's Books turned to freebies to drum up more business during its normal afternoon lull in business. In May, anyone who spent $30 at the bookstore between 3 and 6 p.m. got a Powell's pint glass and a coupon for a $1.25 pint or 25 cent soda at the nearby Bridgeport Brewing Company.

"It's fun, it's something different," said Kim Sutton, corporate marketing manager at Powell's. "What bookstore do you know that has happy hour?"

Even opening up a bank account can mean, well, money in the bank. Chase, Citibank and PNC Bank recently ran promotions in which they would deposit up to $100 into a new checking account when customers sign up for direct deposit — an indication to the bank that they'll be keeping money there for awhile.

That's chump change compared with giveaways by condominium developers in Asheville, N.C., Philadelphia and Jersey City, N.J. They're offering a free Smart Car with the purchase of units ranging from $550,000 to $2.1 million.

THE KFC EFFECT

Free didn't work out so well for Kentucky Fried Chicken. Or did it?

Last month, the fast-food chain offered online coupons giving away two pieces of grilled chicken, two side orders and a biscuit.

When Oprah Winfrey promoted the offer on her show, the company was inundated with hungry people. Many stores ran out, prompting the company to suspend the promotion. It instead offered a free meal to those who traded their free chicken coupons for a rain check.

But company President Roger Eaton said the buzz created by the promotion was worth it. Overall sales are up since KFC rolled out its grilled chicken in April, though it won't say by how much. The company says it's encouraged by steady sales of the new meal since the launch, indicating customers are coming back to have it again.

"The critical thing for us was to get people to eat the chicken, whatever it took," he said.