Victoria Perez

February 15, 2016

AAD 610

Lexicon Essay and Marketing Strategy

Identification of Marketing Strategy

I will be looking into the ever-popular marketing of Freemiums and PriceBundling. Freemium and Price Bundling are two very popular online marketing strategies, but they are also seen in the physical world at places like gyms and cafés. In this essay, I will explore the world of Freemiums and Price Bundling, singling out the cases of Pandora and Starbucks, in an effort to understand the marking strategies, tie in lexicon as a means of evaluation, and to help discern how this marketing strategy can aid my art organization, The Verona Studio.

Freemiums and Price Bundling

Freemiums is the convergence of the words ‘Free’ and ‘Premium’. “It describes a business model where in you give away a core product for free and then generate revenue by selling premium products to a small percentage of free users.”(Freemium.org)Price Bundling is the combination of “…several products or services into a single comprehensive package for an all-inclusive reduced price. Despite the fact that the items are sold for discounted prices, it can increase profits because it promotes the purchase of more than one item.”(Priceintelligently.com, 2016)

Have you ever opened a link from Facebook and had to fill out a free membership in order to access the content, but after filling out your free membership, you get offers to upgrade for a price in order to watch the video in High Definition and/or without commercials? What about when you download a gaming app on your phone, but can only play for a little while before having to buy tokens? These are just some examples of Freemiums and Price Bundling.

The main goal of these strategies is to get consumers to buy more product, whether the marketing is disguised as a freemium or a discounted bundle of goods. Either way, the consumer response is typically “Yay, I’m getting a good deal”. And in reality, the consumer is getting a type of deal. Either they are saving money buy purchasing extra goods, or they are getting to test merchandise without having to pay for it.

Lexicon’s Terms

As I explored the case studies of Freemiums and Price Bundling, I looked for the words and synonyms of the lexicons we had discussed in class. In doing so, five lexicons stood out from the crowd. They are: Third Place/Space, Virtual Environments, Convergence, Accessibility, and Play. In an order to further evaluate the marketing strategy of Freemiums and Price Bundling, I have included my personal reflections on each lexicon as well as the official definitions according to the Merriam-Webster Dictionary or Dictionary.com.

Third Place- Third Place refers to the place other than home/work/school that one spends a major amount of time. According to Dictionary.com, “The coffee shop considered as an alternative to a bar or restaurant as a place to socialize outside the home”. This is the common idea of Third Place, however it is not the only type. Consider a venue or communal maker space as Third Place. Not only are these areas that are convened at by multiple people at a time, but they also offer a social atmosphere one looks for in a Third Place. Now consider the Third Place in not in the physical world, but rather online, in a game or social media site. These places are also a Third Place and are becoming far more popular than the traditional coffee house.

Virtual Environments- Virtual environments refer to artificial places, many times found online, that are created and are visited and or inhabited by those of the physical world. These places can be areas online, such as social media sites and gaming sites. The official definition is “acomputer-generated,three-dimensionalrepresentationofasettinginwhichtheuserofthetechnologyperceivesthemselvestobeandwithinwhichinteractiontakesplace;alsocalledvirtual landscape, virtual space, virtual world” – (dictionary.com) These virtual environments create a experience for the user, whether that is sensory, through sights and sounds, or emotional, through feelings. In many cases, the experience is both emotional and sensory. For instance, gamers tend to emotionally bond with their online teammates and the game then becomes both sensory and emotionally stimulating.

Convergence- Convergence almost literally means to come together or to bring two or more components of something together to create something new. The official definition according to Merriam-Webster is:

1: the act of converging and especially moving toward union or uniformity; especially: coordinated movement of the two eyes so that the image of a single point is formed on corresponding retinal areas

  1. 2: the state or property of being convergent
  2. 3: independent development of similar characters (as of bodily structure of unrelated organisms or cultural traits) often associated with similarity of habits or environment
  3. 4: the merging of distinct technologies, industries, or devices into a unified whole

Accessibility- Accessibility refers to the multiple ways people have access to things. This could be handicap accessible, within walking distance, within driving distance, purchasable, and having product access. According to Merriam-Webster, accessibility is:

  1. 1: providing access
  2. 2a: capable of being reached <accessible by rail>; also: being within reach <fashions at accessible prices>b: easy to communicate or deal with <accessible people>
  3. 3: capable of being influenced :open<accessible to new ideas>
  4. 4: capable of being used or seen :available<the collection is not currently accessible>
  5. 5: capable of being understood or appreciated <the author's most accessible stories<an accessible film>

Play- Play can refer to so many different things. A play on words, a game to play, a play to get attention, to play a video or song, the list can go on. The most commonly used definition of play would likely refer to playing a game or sport. During my research, play came up when talking about gaming and when talking about playing media. The definition given by Merriam-Webster is as followes:

  1. play- gaming worlda :swordplaybarchaic :game, sportc : the conduct, course, or action of a game d : a particular act or maneuver in a game: as (1) : the action during an attempt to advance the ball in football (2) : the action in which a player is put out in baseball e : the action in which cards are played after bidding in a card game f : the moving of a piece in a board game (as chess) g : one's turn in a game <it's your play>
  2. 2aobsolete :sexual intercourseb : amorous flirtation :dalliance
  3. 3a : recreational activity; especially : the spontaneous activity of children b : absence of serious or harmful intent :jest<said it in play>c : the act or an instance of playing on words or speech sounds d :gaming, gambling
  4. 4a(1) : an act, way, or manner of proceeding :maneuver<that was a play to get your fingerprints — Erle Stanley Gardner>(2) :deal, ventureb(1) : the state of being active, operative, or relevant <other motives surely come into play — M. R. Cohen<several issues are at play>(2) : brisk, fitful, or light movement <the gem presented a dazzling play of colors>(3) : free or unimpeded motion (as of a part of a machine); also : the length or measure of such motion (4) : scope or opportunity for action (5) : a function of an electronic device that causes a recording to play
  5. 5 : emphasis or publicity especially in the news media <wished the country received a better play in the American press — Hugh MacLennan>
  6. 6 : a move or series of moves calculated to arouse friendly feelings —usually used with make<made a big play for the girl — Will Herman>
  7. 7a : the stage representation of an action or story b : a dramatic composition :drama

Evaluation of Cases

The case studies I chose to evaluate are two Freemium market plans and one Price Bundling market plan. The Freemium case studies are Pandora and Starbuck and the Price Bundling plan is Physiq Fitness.

Pandora is an online radio station that personalizes music based on the user’s preference. The membership and creation of up to 100 radio station’s is freemium, however there are limitations, such as ads and a limited number of skips per hour. The paid for premium membership allows for no ad listening and unlimited skips. (About,2016)

When Pandora began, the Freemium model offered 10 hours of free radio listening, “…but soon decided to switch to ad-supported model due to low conversion rates.” This allowed for an unlimited radio for audience members and a revenue for Pandora generated by ads. According to the CTO of Pandora, Tom Conrad, the company wanted to provide a “really exceptional service” for free so that the audience would subscribe for a premium membership to receive “…specialized set of features that appeals to the particular kind of market niche that they’re in.” (Froberg, 2016)

Starbucks, one of the largest coffee houses in the world, can be found in every major city in the US and in most minor ones. They seem to be the main go to for coffee for many students and professionals alike. The ambiance of a Starbucks may very well play to that, as they provide nice comfy chairs and lounges to sit and relax in while one sips on a hot coffee, chia latte and/or change bagel. The constant Freemium here is the unrestricted Wi-Fi Internet access. Patrons and non-patrons alike can log into the Wi-Fi without purchasing anything. Starbucks introduced this offer when many other coffee shops decided to limit free Internet access to prevent people from ordering one coffee and staying in the shop for hours.(Froberg, 2016)

Currently, Starbucks offers many other little Freemiums to Green and Gold Members alike. Some examples are free app of the week download and free song of the week downloads. Other times, Starbucks offers it’s patrons free drinks or pastries after a certain number of purchases and/or during a particular time frame. “This is a great example of creating a free offer in a situation when you don’t want to provide your primary product for free (Starbucks doesn’t want to give free coffee)…”(Froberg, 2016)

Physiq Fitness in Salem, OR is one of many gyms that offer Price Bundling. Most gyms will offer a basic membership price and then one or multiple levels of membership up from that. Physiq has three membership types of Price Bundling. The first is the basic membership that allows members to access the gym and used the locker room facilities as well as the smoothie bar. All other amenities offered by the gym are available at a fee during use. The next step up is the South Salem Premium membership. It offers all other gym amenities in the South Salem location for free. The last membership is the Downtown Premium Membership that offers all amenities at both the Downtown and South Salem locations for free. The models of payment are $10, $20, or $45 a month. (Join Now, 2015)

During the research for these three Freemium and Price Bundling models, the five lexicons I choose kept popping up. The lexicons that existed in all three chosen models were access and play. Access came up when reference to the Internet, the gym, the coffee house, and to the amenities. Play popped up when talking about playing Pandora music, playing free gaming apps from Starbucks and playing group sports at Physiq Fitness.

Third Place came up during initial research on Freemiums and the popularity of this marketing strategy on online gaming. It came up again, however, in the idea that all online space is Third Place and therefore this connects the online Pandora radio with the free Wi-Fi of Starbucks and the members only Wi-Fi at Physiq Fitness. Both Starbucks and Physiq Fitness also offer a physical Third Place. Patrons visit and socialize in the coffee house as opposed to a bar, and the same goes for the gym. Members of Physiq convene in the lounge area and socialize over a pre or post workout smoothie.

Virtual Environments made a heavy appearance with the initial research on Freemiums and Price Bundling along with Third Place. However, I found that Pandora, in itself is a virtual environment. It is a sensory and sometimes emotional environment based in the online world and brought into the physical world. In the same sense, both Starbucks and Physiq allow their patrons to visit and bring their Virtual Environments into the physical environment through the use of free Wi-Fi.

Convergence became relevant when thinking about how all three case studies converge people in various ways. People converge through Pandora radio stations when listening together or to the same station, even if not physically present. People converge at Starbucks for meetings of both social and business transactions for the free Wi-Fi and tasty treats. Gym members converge and share the commonality of a healthy living while at the gym.

Freemiums and Price Bundling fuel business and offer patrons an access to great products and services for free and/or low fees. The companies that profit from these marketing strategies have premium goods that are worth paying for, and therefore they are also able to comfortably offer discounts and Freemiums. I feel confident that this marketing strategy will help add to an overall radical enough, yet simple enough marketing plan for the future of The Verona Studio.

References

Third Space. (n.d.). In Dictonary.comonline. Retrieved from

Virtual Environment. (n.d.). In Dictionary.comonline. Retrieved from

Convergence. (n.d.).In Merriam-Webster online. Retrieved from

Accessability. (n.d). In Merriam-Webster online. Retrieved from

Play. (n.d.).In Merriam-Webster online. Retrieved from

Price-Bunding. (2016). In Priceintellegently.com online. Retrieved form

Froberg, Peter. (2016). Pandora. Retrieved from

Froberg, Peter. (2016.). Starbucks. Retrieved from

About. (2016).Pandora online. Retrieved from

Join Now. (2015). Physiq Fitness online. Retrieved from