“Freebie” Marketing - IELTS Reading Answers & Explanations
From IELTS Simulation Tests Academic Reading Test 04 · Part 1 · Questions 1–13
Reading Passage
You should spend about 20 minutes on Questions 1–13, which are based on Reading Passage 1 on the following pages.
"Freebie" marketing
A In the late 1890s, while travelling as an itinerant salesperson for the Crown, Cork and Seal Company, King C. Gillette observed how his corked bottle caps were discarded immediately after opening. Nevertheless, his company turned a healthy profit and there was immense business value, Gillette soon came to realise, in a product that was used only a few times. Gillette had his own personal breakthrough while struggling with a straight-bladed razor—a slow, fiddly and potentially dangerous instrument that required sharpening on a regular basis. A simple, disposable blade that could be thrown away when it dulled would meet a real need and generate strong profits, he correctly reasoned. After founding the American Safety Razor Company in 1901, his sales leapt from 168 blades in 1903 to 123,648 blades only a year later.
B What King C. Gillette pioneered is far more than a convenient and affordable way for men to shave, however; it is the business practice now known as "freebie marketing" that has inspired many more companies over the years. Gillette's approach was contrary to the received wisdom of his era, which held that a single, durable, high-quality and relatively expensive consumer item with a high profit margin was the best foundation for a business. Freebie marketing involves two sets of items: a master product that is purchased once, and a consumable product that is frequently disposed of and repurchased on an ongoing basis. In this instance, the master product is often sold with little to no profit margin and is sometimes even dispensed at a loss. As the consumables are purchased over months and years, however, this can yield a much greater overall profit.
C Freebie marketing only works if the producer of the master item is also able to maintain control over the creation and distribution of the consumables. If this does not happen, then cheaper versions of the consumable items may be produced, leaving the original company without a source of profit. The video game company Atari, for example, initially sold its Atari 2600 consoles at cost price while relying on game sales for profit. Several programmers left Atari, however, and began a new company called Activision which produced cheaper games of a similar quality. Suddenly, Atari was left with no way to make money. Lawsuits to block Activision failed, and Atari survived only by adding licensing measures to its subsequent 5200 and 7800 consoles.
D In other instances, consumers sometimes find that uses for a master product circumvent the need to purchase consumables. This phenomenon is well known to have afflicted the producers of CueCat barcode readers. These were given away free through Wired magazine with the intention that they would be used by customers to scan barcodes next to advertisements in the publication and thus generate new revenue flows. Users discovered, however, that the machines could be easily modified and used for other purposes, such as building a personal database of book and CD collections. As no licensing agreement was ever reached between Wired and its magazine subscribers, CueCat were powerless to intervene, and after company liquidation the barcode readers soon became available in quantities over 500,000 for as little as US$0.30 each.
E Not all forms of freebie marketing are legal. One notable example of this is the use of freebie marketing to "push" habit-forming goods in areas where there is otherwise no market. For illegal substances this is already restricted on the basis of the product's illegality, but the use of freebie marketing to promote legal goods such as tobacco, alcohol and pharmaceuticals is also outlawed because the short-term gain to a small number of commercial outlets is not deemed worth the social cost of widespread substance abuse.
F Another practice that is prohibited under antitrust laws is a form of freebie marketing known as "tying". This is when a seller makes the sale of one good conditional on the acquisition of a second good. In these instances the first good is typically important and highly desirable, while the second is inferior and undesirable. A music distributor who has the rights to an album that is in high demand, for example, might only allow stores to purchase copies of this album if they also buy unpopular stock that does not sell very easily. Because this typically relies on the manipulation of a natural monopoly on the part of the distributor, such practices are widely understood to constitute anti-competitive behaviour.
Questions
Questions 1–6 Matching Headings
Reading Passage 1 has six sections, A–F.
Choose the correct headings for sections A–F from the list of headings below.
Write the correct number, i–x.
i. No give-aways for addictive products
ii. Sales of razor blades increase astronomically
iii. Monopoly of consumables is vital for success
iv. Video gaming a risky business
v. A novel method of dual marketing ruled out
vi. Freebie marketing restricted to legal goods
vii. Buyer ingenuity may lead to bankruptcy
viii. A marketing innovation
ix. A product innovation
x. More money to be made from high quality products
Questions 7–9 Sentence Completion
Complete the sentences below.
Choose NO MORE THAN TWO WORDS from the text for each answer.
- The new tactic of freebie marketing ran against the 7 of Gillette's time.
- Occasionally people who buy a master product find ways of using it that get around the necessity of buying more 8.
- Wired never had a 9 with its customers about the use of the barcode readers.
Questions 10–13 Summary Completion
Complete the summary below.
Choose NO MORE THAN TWO WORDS from the text for each answer.
Freebie marketing is not permitted by law for either illegal or legal 10 products. This type of promotion of goods such as tobacco and alcohol is not considered worth the 11 and has consequently been outlawed.
"Tying" is also prohibited. This is when the sale of an attractive product is 12 on the purchase of another. It tends to occur when the seller takes advantage of a natural monopoly and is generally considered to be 13.
Answers & Explanations Summary
| # | Answer | Evidence | Explanation |
|---|---|---|---|
| Q1 | ix | Gillette had his own personal breakthrough while struggling with a straight-bladed razor—a slow, fiddly and potentially dangerous instrument that required sharpening on a regular basis. A simple, disposable blade that could be thrown away when it dulled would meet a real need and generate strong profits, he correctly reasoned | Excerpt/Passage Explanation: The passage explains that Gillette had a major new idea when using an old, hard-to-use razor: he realized that making a simple blade that people could discard after use would solve a real problem and be very successful. Answer Explanation: The answer means that Section A is best described by the heading "A product innovation," which refers to the creation of a new kind of item (the disposable razor blade). Reason For Correctness: The correct answer is ix because Paragraph A focuses on how King C. Gillette invented a new item to solve a daily problem. While struggling with an inconvenient, old-fashioned razor, he came up with the idea of a simple, disposable razor blade that users could throw away after it became dull. This breakthrough design of a new physical item directly matches the phrase "product innovation." |
| Q2 | viii | What King C. Gillette pioneered is far more than a convenient and affordable way for men to shave, however; it is the business practice now known as "freebie marketing" that has inspired many more companies over the years | Excerpt/Passage Explanation: The passage explains that Gillette started a brand-new business strategy called "freebie marketing", which gave other companies a new way to market and sell their goods. Answer Explanation: The answer "viii" means that Section B matches the heading "A marketing innovation", which refers to a new and creative method of selling goods. Reason For Correctness: The correct answer is viii because Section B introduces a new business model called "freebie marketing" created by King C. Gillette. The text explains how Gillette "pioneered" this new business practice, which went against the traditional ideas of his time by selling a main item cheaply and making ongoing profits from disposable consumable parts. Key terms like "pioneered" and "business practice now known as 'freebie marketing'" correspond directly to the concept of a "marketing innovation". |
| Q3 | iii | Freebie marketing only works if the producer of the master item is also able to maintain control over the creation and distribution of the consumables | Excerpt/Passage Explanation: The passage explains that this business method can only be successful if the maker of the main product is the only one who controls how the refill or replacement items are made and sold. Answer Explanation: The answer "iii" means that a company must have total control over the replacement parts or goods that get used up if it wants this business strategy to succeed. Reason For Correctness: The correct answer is iii because Paragraph C focuses on the rule that freebie marketing will only succeed if the company keeps full control over making and selling the consumable goods. In the text, the phrase "maintain control over the creation and distribution of the consumables" matches "Monopoly of consumables", and "only works if" matches "is vital for success". The paragraph also uses the example of Atari losing profit when another company started making compatible games without permission. |
| Q4 | vii | Users discovered, however, that the machines could be easily modified and used for other purposes, such as building a personal database of book and CD collections. As no licensing agreement was ever reached between Wired and its magazine subscribers, CueCat were powerless to intervene, and after company liquidation the barcode readers soon became available in quantities over 500,000 for as little as US$0.30 each | Excerpt/Passage Explanation: The passage explains that customers found clever ways to change the free devices and use them for their own personal needs. As a result, the company could not earn money and went bankrupt (into company liquidation). Answer Explanation: The answer "vii" means "Clever ideas by customers can cause a business to go out of business (go bankrupt)." Reason For Correctness: The correct answer is vii because Section D describes how customers cleverly modified free CueCat barcode readers for their own personal uses instead of using them to buy things as planned. Because the company could not stop this clever use ("ingenuity") and made no money, the company faced liquidation ("bankruptcy"). Keywords and synonyms to notice include "modified and used for other purposes" (which matches "Buyer ingenuity") and "liquidation" (which matches "bankruptcy"). |
| Q5 | i | One notable example of this is the use of freebie marketing to "push" habit-forming goods in areas where there is otherwise no market. For illegal substances this is already restricted on the basis of the product's illegality, but the use of freebie marketing to promote legal goods such as tobacco, alcohol and pharmaceuticals is also outlawed because the short-term gain to a small number of commercial outlets is not deemed worth the social cost of widespread substance abuse | Excerpt/Passage Explanation: The passage explains that giving away free items to sell addictive things like cigarettes, alcohol, and medicine is against the law because it harms society. Answer Explanation: The answer "i" means that companies are not allowed to give away free items to promote products that can cause addiction. Reason For Correctness: The correct answer is heading "i" because Section E discusses how the law bans freebie promotions for addictive substances. In this section, the author explains that using freebie marketing to sell "habit-forming goods"—even legal ones like "tobacco, alcohol and pharmaceuticals"—is "outlawed" to prevent the problems caused by "substance abuse". Therefore, "addictive products" matches "habit-forming goods", and "No give-aways" matches the fact that this practice is illegal and prohibited. |
| Q6 | v | Another practice that is prohibited under antitrust laws is a form of freebie marketing known as "tying". This is when a seller makes the sale of one good conditional on the acquisition of a second good | Excerpt/Passage Explanation: The passage explains that tying—a selling technique where buying one item requires buying another item—is banned by competition laws. Answer Explanation: The answer "v" means a new or specific way of selling two connected products together is banned or forbidden by the law. Reason For Correctness: The correct answer is v because Section F talks about a business method called "tying", where a seller forces customers to buy a second product if they want the first product. The passage mentions that this practice is "prohibited under antitrust laws", which matches the idea of a dual marketing method being "ruled out" (banned). |
| Q7 | received wisdom | Gillette's approach was contrary to the received wisdom of his era, which held that a single, durable, high-quality and relatively expensive consumer item with a high profit margin was the best foundation for a business | Excerpt/Passage Explanation: The passage explains that Gillette's business method was the opposite of what people in his time normally believed, which was to sell expensive, long-lasting items for high profits. Answer Explanation: The answer means the traditional ideas or common beliefs that most people accepted as true during that period. Reason For Correctness: The correct answer is supported by Paragraph B, which discusses King C. Gillette's new business method. The text states that his method went against the common beliefs of his day. In the sentence, the phrase "ran against" matches the text's "was contrary to", and "Gillette's time" matches "his era". Therefore, the missing concept is "received wisdom". |
| Q8 | consumables | In other instances, consumers sometimes find that uses for a master product circumvent the need to purchase consumables | Excerpt/Passage Explanation: The passage explains that sometimes customers find ways to use a main device so that they do not have to keep buying the extra disposable items that go with it. Answer Explanation: The answer means items that are designed to be used up and bought again regularly, like replacement parts, blades, or refillable goods. Reason For Correctness: The correct answer is supported by Paragraph D, which discusses how buyers sometimes discover alternative uses for a main product. In the text, the phrase "circumvent the need to purchase" directly matches the task's prompt "get around the necessity of buying more", showing that the missing word is "consumables". |
| Q9 | licensing agreement / licencing agreement | As no licensing agreement was ever reached between Wired and its magazine subscribers, CueCat were powerless to intervene, and after company liquidation the barcode readers soon became available in quantities over 500,000 for as little as US$0.30 each | Excerpt/Passage Explanation: The passage explains that Wired magazine never made a formal legal agreement with its readers regarding the device, so the company could not stop people from using it in different ways. Answer Explanation: The answer "licensing agreement" means an official legal contract or rule about how someone is allowed to use a product. Reason For Correctness: The correct answer is "licensing agreement" because the sentence asks what Wired never had with its customers concerning how the barcode readers were used. Paragraph D explains that "no licensing agreement was ever reached between Wired and its magazine subscribers". Here, "no licensing agreement was ever reached" matches "never had a licensing agreement", and "subscribers" refers to the "customers". |
| Q10 | habit-forming | One notable example of this is the use of freebie marketing to "push" habit-forming goods in areas where there is otherwise no market. For illegal substances this is already restricted on the basis of the product's illegality, but the use of freebie marketing to promote legal goods such as tobacco, alcohol and pharmaceuticals is also outlawed | Excerpt/Passage Explanation: The passage explains that using freebie marketing to promote addictive items (habit-forming goods) is illegal, whether those items are already illegal drugs or legal items like cigarettes and alcohol. Answer Explanation: The answer "habit-forming" describes products or substances that are addictive and make people want to use them repeatedly. Reason For Correctness: The correct answer is "habit-forming" because the passage discusses that freebie marketing is prohibited for "habit-forming goods". It explains that this rule applies to both "illegal substances" and "legal goods" such as tobacco, alcohol, and pharmaceuticals. |
| Q11 | social cost | the use of freebie marketing to promote legal goods such as tobacco, alcohol and pharmaceuticals is also outlawed because the short-term gain to a small number of commercial outlets is not deemed worth the social cost of widespread substance abuse | Excerpt/Passage Explanation: The passage explains that giving away or promoting products like alcohol and cigarettes is banned by law because the small financial reward for sellers is not worth the serious damage it causes to society. Answer Explanation: The answer refers to the harm, negative effects, or damage suffered by society as a whole. Reason For Correctness: The correct answer is "social cost" because Paragraph E explains why using freebie marketing to promote items like tobacco, alcohol, and medicine is banned by law. The text states that giving short-term profits to a few businesses is "not deemed worth the social cost of widespread substance abuse." In the summary sentence, "is not considered worth the" matches the passage's "is not deemed worth the," making "social cost" the exact two-word phrase needed to complete the sentence. |
| Q12 | conditional | This is when a seller makes the sale of one good conditional on the acquisition of a second good | Excerpt/Passage Explanation: The passage explains that tying occurs when a seller will only allow a customer to buy one item if they also agree to buy another item. Answer Explanation: The answer "conditional" means depending on something else to happen first before an action can take place. Reason For Correctness: The correct answer is "conditional" because Paragraph F explains the concept of "tying." It states that tying occurs when a seller makes the sale of one item "conditional on the acquisition of a second good." In the summary sentence, "is conditional on the purchase of another" matches this meaning and grammatical structure perfectly. |
| Q13 | anti-competitive behaviour / anti-competitive behavior | Because this typically relies on the manipulation of a natural monopoly on the part of the distributor, such practices are widely understood to constitute anti-competitive behaviour | Excerpt/Passage Explanation: The passage explains that when sellers use their strong market position to force unwanted goods on buyers, people see this action as harmful to fair business competition. Answer Explanation: The answer means actions that unfairly stop or limit fair competition between businesses. Reason For Correctness: The correct answer is located in Paragraph F. The summary mentions that tying happens when a seller abuses a natural monopoly and is "generally considered to be" something. The passage states that because tying involves "the manipulation of a natural monopoly," it is "widely understood to constitute anti-competitive behaviour." Therefore, "anti-competitive behaviour" correctly completes the summary. |