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Giveaway Promotions and Their Role in Effective Marketing

What are giveaway promotions?
What are the different types of giveaway promotions?
Psychology Behind Giveaways
The Shopping Momentum Effect
The Penny Gap
Final Thoughts

G iveaway promotions for a business or institution are often defined as things that are given for free to clients, customers, or anyone, in general, to promote their own brand or encourage people to buy or endorse their brand/product. These could be in the form of coupons, gift cards, and even everyday items with branding on them such as mugs and pens. They are mainly used as a gateway and platform to grab the attention of new customers and encourage them to keep coming back, effectively benefiting the giveaway business.

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What are the different types of giveaway promotions?

Coupons and discounts are some of the many types of giveaway promotions that are given to new customers in hopes to have them try the products the brand offers. Things such as 20% off deals are hard for people to resist when casually presented, especially when it is a product they may be interested in already. These work as a great incentive to get customers looking out for more deals in the future or just look through your catalogue. Gift cards are another very popular form of a promotional giveaway as they're simple and accessible to everyone. This means as a customer you aren't limited on a product to get and this makes them more sought out by customers in hopes to get free things they specifically want. For the business itself, this means you can potentially create a new client. Lastly, giveaways could be as simple as giving customers branded merchandise that they are likely to repeatedly use. Things such as pens, books, shirts or even bags are simple to practice items that are easily accessible and can be used daily to spread the name of the brand. These are also shown to have a higher reservation with customers.

Psychology Behind Giveaways

The foot in the door technique introduced by Freedman and Fraser which consists in “ preparing the participant with a small initial request before submitting a second one, later on, was called the “Foot-in-the-Door” (Freedman&Fraser,1966). This is very applicable to the marketing world where giveaway promotions play a part we see this at several stores and supermarkets that offer free samples these work as they provide a small experience with your products. Thus, hopefully driving the client to actually buy something with this opening the door to more products. When it comes to for example purchasing something online on your website, the fact they have already been committed even if it was for free pushes them to further this commitment and keep buying more things. Things such as signup forms and offers that allow new customers to get special deals such as Uber Eats offering no delivery fee for those who buy an uber eats pass. For a one time purchase, this may be a waste of money since you have bought the pass making it relatively the same amount of money spent if you just paid for the delivery fees. Although, long term when these fees are removed in order to fully benefit from the pass they must keep using the app for delivery and in turn this drives up sales for Uber Eats as a whole.

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The Shopping Momentum Effect

The shopping momentum effect is based on the notion that consumers who make a purchase are subsequently much more likely to make another, unrelated purchase. Ravi Dhar and Joel Huber conducted a study where they explained this phenomenon with an example: participants first chose whether or not to buy a light bulb, and then chose whether or not to buy a keychain. If they did not buy the light bulb, there was a 31% chance that they would choose to buy the keychain, but if they bought the light bulb, the likelihood of buying the keychain doubled to 67%. This principle is crucial in the giveaway business, as promotional products and coupons could be used to urge people to make an initial purchase without perceiving a loss. This tactic gets them through the door, making an initial purchase and potentially leading to additional purchases. This strategy can also be applied on a different level, where the focus is on the steps involved in buying a product, rather than the decision of whether or not to buy it. The second approach capitalizes on the underlying cause of shopping momentum – the implementation mindset. Customers become more inclined to think about how they can buy your product rather than if they should. Many retail companies leverage this on their online platforms by adding features such as 'Quick add to basket' and '1-click Checkout'. These features effectively nudge the customer towards making an impulse purchase, bypassing extensive deliberation about the product itself.

giveaway-promotions-photo

The Penny Gap

The psychology behind the penny gap illustrates that a consumer will find the barrier between a penny and free greater than the same value of a product they deem more valuable. An experiment from Chris Anderson's book Free: The Future of a Radical Price involved a chocolate kiss and a chocolate truffle. Within this experiment, the kiss was offered for a penny and the truffle for 18 cents. The majority chose the truffle over the kiss. However, when the price of the truffle was changed to a penny and the kiss became free, the opposite happened. The truffle was valued more because chocolate kisses are widely available, while chocolate truffles are not. Thus, the price of the truffle was better for its value. This principle is highly relevant in the giveaway business, as a company can use giveaways to similar effect. When goods are offered in return for actions such as signing up for a service or subscribing, the subscription is seen at a higher value because customers are receiving a free product in return. The word free works effectively to trigger responses in people, urging them to participate when they perceive no loss.

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Final Thoughts

In conclusion, we can see that giveaway promotions are so popular and successful because they serve as a humanization of advertising. They create a link between the joy of human experience and the advertising of products. Giveaway promotions can work as a way to show gratitude for a customer's loyalty and provide a new client or employee with the start of a new relationship with the company, enhancing the effectiveness of the giveaway business.

Jesse Siambi
Psychology Blogger,
The Shared Secrets Lab,
GiftAFeeling Inc.

Read The Official Research Paper On - Giveaway Promotions and Their Role in Effective Marketing

Frequently Asked Questions (FAQs)

1. Is giveaway a good marketing strategy?

Yes, giveaways are a good marketing strategy. They effectively attract attention and engage potential customers, increasing brand awareness and recall. Giveaways create a positive association with the brand, fostering customer loyalty. They also encourage social sharing and word-of-mouth promotion, broadening reach and potentially increasing customer base and sales.

2. How do giveaways attract customers?

Giveaways attract customers by offering the allure of receiving something free, creating excitement and interest. They encourage people to engage with the brand, either through social media contests or in-person events. This engagement increases brand visibility and can lead to a wider customer base, as people love sharing and talking about freebies.

3. What are the benefits of giveaways?

Giveaways offer numerous benefits: they boost brand visibility, create positive associations, and enhance customer engagement. They're a cost-effective way to reach a wide audience, often leading to increased social media interaction and brand recall. Plus, they build goodwill, fostering a stronger connection between the brand and its audience.

4. What is a giveaway in business?

A giveaway in business is a marketing tactic where companies offer products or services for free to attract attention and engage potential customers. It's used to increase brand awareness, build customer loyalty, and generate leads. Giveaways often involve contests or social media promotions, creating excitement and interaction around the brand.

5. How to do a giveaway for new business?

To do a giveaway for a new business, first choose a desirable and relevant prize. Then, set clear participation rules and a timeframe. Promote the giveaway on your website and social media platforms to reach a broad audience. Finally, engage with participants throughout the campaign and announce the winner transparently.

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