Free Coffee, Anyone?

As free access to information online has changed the face of the publishing industry, publishers continue to search for the right balance between paid and complimentary content. Free content, like most “give-away” product offerings, can be viewed as a value add to higher demand complementary products. These offerings however; may also act to devalue something that, if properly positioned, could otherwise have been sold for a profit.

The consumer perception of free products clearly transcends industries and product types. McDonalds’ attempt to gain market share within the Canadian coffee drinking community is a great example of how “free” doesn’t always work. In the wake of Tim Hortons’ annual Roll Up the Rim to Win competition, McDonalds (for the third time in the past calendar year) is offering free coffee with no purchase necessary. As a short term initiative, McDonald’s may do well to improve traffic to their breakfast menu, but long term the promotion does little to better the outlook of their coffee sales. The majority of coffee drinking Canadians have brand loyalty to Tim Horton’s and are unlikely to switch brands without significant reason. In McDonalds’ case, free coffee is more likely to devalue their offering which may have otherwise been positioned as a premium product. Admittedly, their coffee is pretty good – made with 100 per cent Arabica beans, but who would want to pay for a product that they’ve been given for free on multiple occasions?

It’s important to recognize value adds as just that, something to provide additional value to your primary product offerings. If the goal was to compete with Tim Horton’s in the Java market, McDonald’s may have missed the boat.

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One Response

  1. […] Horton’s: Please Play Again Posted on April 3, 2010 by emarketingmix Last month I blasted McDonald’s for their free coffee giveaway and praised Tim Horton’s for the brand loyalty they’ve […]

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