Pattern description

Barter is a method of exchange in which goods are given away to customers without the transaction of actual money. In return, they provide something of value to the sponsoring organisation. The exchange does not have to show any direct connection and is valued differently by each party.

Inventive problems

Application examples

Fast-moving consumer goods giant Procter & Gamble (P&G), based in Ohio, is probably one of the most well-known innovators of the Barter business model. This multinational corporation and producer of consumer goods, which include personal care products, cleaning agents and pet foods, works together with entertainment outlets (radio and TV) to promote its brand and products in a form of bartering. P&G has sponsored and produced radio and TV shows (hence their designation as ‘soap operas’ on account of the company’s involvement with soap manufacture), which enabled P&G to gain exposure and marketing benefits, while the broadcasters obtained entertainment material with little or no production costs.

PepsiCo is an American food and beverage company based in New York. The company is best known for its soft drink brands such as Pepsi, 7UP, Gatorade and Mountain Dew, although 63 per cent of its revenue is in fact made up of food brands such as Doritos and Walkers. PepsiCo became the first foreign product to be sold in the USSR. In 1972, under a Barter agreement, PepsiCo offered its PepsiCola drink to the Soviet Union in return for exportation rights of Stolichnaya vodka to America, for which they were granted exclusive sales rights on the American market. This strategy also increased exposure of the Pepsi-Cola brand and availability of the product, especially in the USSR.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business