Freebie Marketing Reading Answers: IELTS Reading Practice Test

Freebie Marketing Reading Passage

Paragraph A: While touring as a nomadic representative for the Crown.Cork and Seal Company in the late 1890s. King C. Gillette noticed that his corked bottle caps were thrown away as soon as they were opened. Whilst touring as a nomadic representative for the Crown.Cork and Seal Company in the late 1890s. King C. Gillette noticed that his corked bottle caps were thrown away as soon as they were opened. Despite this, his company made a fair profit and had a lot of potential. Gillette quickly realised that even though the product had only been used a few times. Whilst working with such a straight-bladed razor — a sluggish, fussy, and possibly hazardous tool that needed constant sharpening – Gillette made his success. He rightly reasoned that a basic, temporary blade that might be disposed of when it is blunted would meet a real demand and earn substantial revenues. In 1901, he started the American Safety Razor Company. In 1903, he sold 168 blades, but by 1905, he had sold over a thousand.

Paragraph B: What King C. Gillette pioneered is far more than a quick and economical way for men to shave; it is the business technique now known as "freebie marketing," which has influenced a slew of other businesses over the years. Gillette's strategy defied conventional wisdom at the time, which maintained that the ideal basis for a corporation was a single, long-lasting, high-quality, and high-cost luxury product with a high price tag. Freebie marketing combines two types of products: a master product that is purchased just once when a disposable item is periodically discarded and repurchased. In this case, the primary product is frequently sold at a loss and is occasionally distributed at a loss.

Paragraph C: Complimentary advertising only succeeds if the master item's creator also has control over the production and sale of the refills. If this does not occur, cheaper replicas of the consumable items may be manufactured, preserving the old business without net profits. For instance, the video game manufacturer Atari initially offered its Atari 2600 systems at cost, depending on game sales to make a profit. However, a group of programmers left Atari and founded Activision, which developed similar-quality games at a lower cost. Suddenly, Atari was left with no means of generating revenue. Activision's lawsuits were unsuccessful, and Atari only managed to survive by incorporating license restrictions into its succeeding 5200 and 7800 consoles.

Paragraph D: In other cases, consumers may discover that using a master product eliminates the requirement for discs. This is a well-known problem that has plagued the makers of the CueCat barcode scanner. These were handed away for free via Wired magazine in the hopes that users would use them to scan barcodes adjacent to adverts in the magazine, generating new revenue streams. However, users learned that the devices could be easily customised and used for various purposes, such as developing a separate library of books and CD collections. because there was never a licensing deal between Wired and its magazine customers. CueCat was powerless to stop it, and after the company was liquidated, the barcode scanners were quickly accessible in large quantities for as little as $0.30 each.

Paragraph E: Giveaway marketing is not permitted in any form. The use of gratis marketing to "push" habit-forming goods in locations where there is no market is an excellent illustration of this. This is already prohibited for illegal substances due to the illegality of the product, but it is also prohibited for legal goods such as tobacco, alcohol, and pharmaceuticals because the short-term profit for a comparatively tiny range of business branches is not presumed to be worth the monetary cost of ubiquitous drug addiction.

Paragraph F: Another tactic that is prohibited by antitrust regulations is "tying," which is a type of freebie marketing. Whenever a sale of goods is the purchase of one good contingent on the purchase of a second good, this is known as a conditional sale. The first good is usually vital and desirable, while the latter is inferior and unattractive in certain situations. For instance, a music distributor with the rights to a popular record may only allow retailers to acquire copies of the album provided they also purchase undesirable material that does not sell well. Because such techniques often rely on the distributor's exploitation of a captive market, they are widely seen as anti-competitive.

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