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Source link: http://archive.mises.org/5166/selling-coupons-buying-loyalty/

Selling coupons, buying loyalty

June 10, 2006 by

Some months ago I was talking to a friend who told me that when he used to work booths (he’s quite a freedom activist), he would sometimes sell brochures and handouts instead of giving them for free. People passing by could read them there free or charge, but if they wanted to take it home, they would have to pay. It would be a small fee, like 25 cents or some other small amount. But the idea here was not to make a profit, but to create interest. The claim my friend made was that by selling them for a small fee, they would perhaps have a higher tendency to read them before throwing them away. Thus, if you’re at a show and pick up 100 pamphlets, chances are that you’ll get rid of most, and the one you pay for would be thrown away last, or not at all.

Yesterday I went to a local outlet mall and saw that, in the restroom/mall office area, there was a vending machine that exclusively sold a book of coupons for the mall for $3. Selling coupons, then, is like the example above. When you buy a coupon, you are making yourself more likely to return to the outlet mall and shop again.

It would be interesting to somehow compare the efficiency (how many make it back to the stores) of those $3 coupon booklets against those that are delivered to one’s homes free of charge.

{ 5 comments }

Jim June 10, 2006 at 9:15 pm

This is another example of the effect of marginal valuations. When something is free, it has no value yet is over-consumed. Add a nominal fee – 25 cents in this instance – and a large number of takers drop out of the market. This is why free government medical services will crash the system. Over-consumption yet no value in the exchange.

Alan Dunn June 11, 2006 at 5:23 am

I’m not so sure anything the government offers to the public is ever free – there is always a hidden cost behind any governments “generosity”.

Not sure either that any free market for medical services exists – certainly not where I live anyway (Neptune).

Private health insurance is often subsidised by governments which in turn increases the actual costs.

Given that many of the medicines people crave / use today really don’t have any benefit other than to jack up pharmaceutical companies profit line does this mean that overconsumtion is more than just a consequence of the price being too low?

As an example: Painkillers / paracetamol (oops typos) are not free but probably used beyond the point where their of any benefit.

If it is true that life expectancy is decreasing for the first time in centuries , I’d be interested in an explanation of this interms of price adjustments.

For me marketing is as dire for the price mechanism as government intervention – neither of the two I am a supporter of.

Joshua Katz June 14, 2006 at 2:46 pm

Then how are folks supposed to learn about products, other than word-of-mouth, without marketing? Why is it preferable that I not know that there is a good or service available which I would like?

Alan Dunn June 23, 2006 at 6:07 am

Hi Joshua,

You make a very good point there.

I think it is very important that we know if “there is a good or service avilable” which we would like. If marketing were concerned with useful information like “this is our product” “which can do this” , “this is what it costs”, and “this is where you can get it” – I’d be happy.

What concerns me is the magnitude and scope of marketing. It inflates the price and provides little valuable information (or truthful indformation in many cases – “Coke adds Life”?) to the potential buyer.

Probably better left to psychology than economics but I’ll try anyway.

How much marketing effects the price I can’t really say – nobody can. What we can assume though is that there is no measurable relationship between the technical quality of a product and its price.

An example. Many people think Rolex make the worlds best watches. The truth is that Rolex make the best “marketed watch”… many other examples exist I’m sure.

Thus, I still think marketing is a barrier to technological advancement more often than not.

Cheers

korting log December 2, 2010 at 11:53 pm

Some of the a good number of theme parks and amusement parks offering internet vacation destination coupons include, but usually are not restricted to, Six Flags, Disneyland, Disney World, and Sea World. In addition to amusement parks, numerous sizeable city zoos provide useful saving for the entire loved ones. Oftentimes, specialty or nationally known hotels and restaurants will also offer web based coupons for net users.

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