Martin Lindstrom on the high cost & extreme stickiness of free stuff

“$2 billion dollar revenue generated for Apple from free stuff” – “This is neuro-marketing at its best,” says Martin Lindstrom.

SAB get this. Just last week they created a new love affair with an obsessive fan of their competitor. They applied Martin Lindstrom’s evidence that scientifically proves what happens when free stuff triggers an unconscious response in the lateral prefrontal cortex – the area that generates emotion.

Just last week, I got to see how SAB  use free stuff.  Picture this,“ a-can’t- wait- for- Friday- beer-o-clock”,  guy in the queue buying his regular “Friday-beer- o-clock”-non-SAB brand six  pack. A SAB rep happened upon him by giving him a Castle Draught six pack, “Here, why don’t you try this? It’s on the house”, he said.  And it was contagious – lateral prefrontal cortex smiles all round, including the other people in the queue.

Apple took the legendary free Gillette strategy to a whole new level – the razor and the blades are free –  Free app, free game … you only pay when you want to be recognised as a gamer that has liberated the cute creatures. Not convinced – It is estimated that 65% of the revenue generated in the iTunes store comes from free games = $ 2 billion per year.

Some more food for thought – how 2 cents impacts sales by 222%

And free stuff is not all – Martin has studied the psychology behind the sweet spots of pricing.  A Chicago grocery store dropped the price of margarine from 89 cents to 71 cents – sales improved by 65%. When they dropped the price by just 2 more cents to 69 cents, sales jumped by 222%.

Take away the $ sign and your customers will spend more

So couple this with his other research which shows that stores who mark their goods with a $ or R or £ sign are creating a very unpleasant emotional response – one linked to our consumers purses/ wallets leading us to believe that the item in question is more expensive than it actually is.