It’s the hook that gets customers in – so they’ll stick around and spend more. Sure, there’s always a few that will order the bare minimum and leave. But most will stay for awhile and order more. Why do so many restaurants offer “Kids Eat Free” days? Because kids don’t dine alone. Their parents have to bring them and eat, too. The cost of a child’s plate is minimal in comparison. It gets the entire family in the door, so they spend money at your place instead of a competitor down the street. I’ve seen a number of local restaurants promoting free appetizers for Tax Day – another way to get people in the door.
Yes, companies should be able to give away free merchandise. If you are running a company and you want to advertise your products or just get the word out, you should be able to give away free stuff to help you do that. After all, it is your company, so you can choose to do what you want with it.
Slurpee made headlines when, in celebration of their 50th anniversary, they announced that they were giving away free Slurpees. This is an excellent marketing tool because once the free Slurpees can no longer be obtained through a promotional event, people will want to go out and buy them for their own enjoyment.
Companies should be able to give away free merchandise. The premise of the question is that giving away merchandise is not a good idea. Why? Let the company decide what is good or not good for its business. The consumer is more apt to make the better choice as compared to being regulated by the government.