This is one of the few oldest models of business used to put value into
products or services. The philosophy behind this business model is very
simple, first lure in customers for something at dirt cheap or free
price and once they are hooked then start charging for that product or
its accessories. There are many industries which are excellently using
this business model to attract customers and once they are attracted
then the company keeps on charging them for the product or service
provided.
One of the best examples of bait and hook model has been the printer
selling companies. When we buy a printer, we usually get the whole
package of a printer at a very low cost. This is an excellent way to
pull in customers. Once the customers are locked for that product and
have started using it, the company starts making profit out of the later
use of accessories from that product. The idea developed has been
excellent. History of this idea has been related to the Gillette
Company. Gillette for the first time introduced this model in its
products. When you buy a Gillette razor you get some blades with it as
well. When you have used these blades you have to pay nearly equal to
the cost of the razor plus the blades already packaged in to buy new
blades. This business model is also known as razor and blades business
model because of this historically established relation with Gillette.
Freebie marketing has also been associated with this business model. As
free products are given to the customers and afterwards they have to
purchase the accessories related to these products to keep them in
regular use. Bait and hook business model has also gathered a lot of
criticism, because it seems unjust to attract someone for something at a
cheaper cost which wouldn’t be available to him after he starts using
it. This will hook the customer with that product and the companies will
be able to charge unnecessarily high price for that product. There have
been many deals made for using this business model. Complementary goods
are being amongst the top of the list for this kind of business model.
One other term associated with the bait and hook model is tying. Tying
has been thought to be anti-competitive in nature and has been
criticized by many consumer rights organizations.
