What's this business model/marketing style called?


2

What is the name of a business model where you offer a product for free to entice people to use your service? I'm not referring to freemium. I am more talking about how Google works. They offer gmail, youtube, etc for free to encourage more people to use the Internet, and in return they get more people clicking on their AdWord ads.

So that actual product you give away is not for sale, even for a premium. It is just a means to encourage people to use your other offerings.

For example: If Apple made an accounting application for the iPad which was free. Their business is not accounting but instead trying to get more accountants to buy iPads.

Where can I find more information about this?

Marketing Definitions Business Model

asked Feb 2 '12 at 17:53
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Daveo
113 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll

1 Answer


3

Depending on the specific case I think it could be Loss Leader (in the case of Apple accounting app) or Advertising supported. Gmail is an interesting point though as it could probably be considered both.

Loss leader - http://en.wikipedia.org/wiki/Loss_leader

A loss leader, or simply a leader, is a product sold at a low price
(at cost or below cost) to stimulate other profitable sales

Business Models On The Web - Advertising Model
The broadcaster, in this case, a web site, provides content (usually,
but not necessarily, for free) and services (like email, IM, blogs)
mixed with advertising messages in the form of banner ads. The banner
ads may be the major or sole source of revenue for the broadcaster.
The broadcaster may be a content creator or a distributor of content
created elsewhere. The advertising model works best when the volume of
viewer traffic is large or highly specialized.

answered Feb 2 '12 at 19:10
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Ryan
1,365 points
  • Loss leader is the one I am after. Are there any good real life examples / case studies that show benefits of this ? – Daveo 8 years ago
  • Found the definition and example I was looking for http://www.investopedia.com/terms/l/lossleader.aspDaveo 8 years ago

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Marketing Definitions Business Model