[NetBehaviour] The Market Function of Piracy.

[marc]

The Market Function of Piracy.

In marketing the most effective way to introduce new products is the 
free sample. In 1978 Lever Brothers spent $15 million ($47.55 million in 
today's currency) delivering a free sample of Signal Mouthwash to 
two-thirds of all US households. The strategy was a success and the 
product remained on the market well into the 1990s.

The significance of the free sample is product trial; it gets the 
product into consumers' hands. If consumers use the sample and like it, 
they may go on to buy the product and buy it again and again, that is, 
become repeat purchasers; they may even spread the good word to others. 
When repeat purchasing and favorable word of mouth kick in, the 
product's sales will experience a shift from slow to rapid growth and 
management will consider the product a success.

Free sampling is the best method of introducing new products, but it is 
also the most expensive. Not surprisingly, then, Forbes ASAP magazine[1] 
reports this alternative way to practice free sampling:

One security manager for a major manufacturer, who asked not to be 
identified, says she is sure some companies actually view being 
counterfeited as a boon to their efforts to build brand awareness. After 
all, she says, if some companies give away merchandise to expand market 
share, what's not to like about having someone else take on the expense 
of manufacturing and distributing the goods, as long as they're 
high-quality copies?

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http://mises.org/story/2590