True Value of "Free"

Last week I bought a Horlicks. Part of my regimen to be fit and healthy. The bottle came with a free AddGel pen. The comment on the packaging said boldly "Free gel pen worth Rs. 30". During checkout, the lady at the counter packed the free pen alongwith the other items.

I had completely forgotten this episode. It was just one of those routine, boring grocery purchase chores that had to be done and was done with.

It was when my daughter walked to me and said "Dadu, They lie to us. I bought same pen for Rs. 27 and on the bottle it says it is Rs. 30." It was just an observation from her and she passed me onto more important things like drawing her 1029th shoeflower.

This comment set me thinking. How right was the manufacturers of Horlicks to print the value of "Rs. 30" on the pack? Are they to blame if market forces or AddGel makers decide to change the purchase price. The value printed on the pack... from whose perspective was it. It definitely was not from GlaxoSmithKline. They would have bought it at bulk... costing them probably less than 50% of the amount mentioned. It was surely not from the consumer perspective, when alternate channels of procurement sold the pen for Rs. 27.

The word "Value" is so misleading. Everyone of us who have bought a car has fallen into this trap. The dealer always puts a "list price" value to each accessory he throws in free. I remember a friend who bought a Swift a few years back. He sat down with the dealer to negotiate on a better deal. The dealer as usual starting listing the accessory he is throwing in free and stated the list price against it. He worked up a total of Rs. 35,000. After the entire discussion, my friend coolly told him that he will buy the accessory separately and the dealer just deduct the "value" of Rs. 35,000 from the price of the car. This had the dealer fuming. But eventually he gave in and gave him the discount of Rs. 35,000. My friend also got a couple of accessories free at the time of delivery. He got the same set of accessory fitted onto his Swift for Rs. 17,000 from alternate sources.

I enjoy watching the bundling of items by electronics retailers. A couple of years back I bought a gas stove from Snehanjali. Once I selected the model of stove and asked for a discounted final price, the sales person informed me that I get a free steam iron with it. For someone who already had three steam iron at home, what was the value of an additional steam iron. It was probably negative. I told him that I dont need the steam iron and would rather get a discount. He started the discount with the value of the cost of the iron to him. Whereas, I started the negotiation with value of the iron as advertised. Finally, we decided to settle mid-way. I came away with a gas stove, a discount and minus the steam iron. Today, when I see adverts showing free steam irons with washing machines, and other such items, I chuckle trying to think of what the customer might be thinking holding on to his third or fourth steam iron.

Back to Horlicks and GSK, it probably would have been better for them to just mention a free gel pen rather than state the value of it. Especially when they do not control the value.

Empowering customers

Enough talk. Now its time to walk the talk. Time to apply all my principles of CRM.

I have the power to choose the government when I vote. Sadly the students of Maharashtra do not have the power to choose their favourite college.

But soon, I am bringing you another area of empowerment.

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