What is "Freebie Marketing" ? What purpose does it serve?

It is strategy of selling one product at low price with purpose of increasing the sales of complementary products. For example mobile shops try to sell mobile at very low price (almost zero profit) in order to sell accessories (usually at high profit).

also known as the razor and blades business model,[1] is a business model wherein one item is sold at a low price (or given away for free) in order to increase sales of a complementary good, such as supplies. For example, inkjet printers require ink cartridges, "Swiffers" require cleaning fluid, mobile phones require service contracts, [2] and game consoles require accessories and software.[1] It is distinct from loss leader marketing and free sample marketing, which do not depend on complementarity of products or services.

Item A is sold at a high discount, this generates traffic at the retail floor to sell item B at its regular price at the same time. This could also be bundle pricing or loss lead items.

It is a marketing strategy to sell a product at a lesser price or give it free to increase the sale of the other product. 

FREEBIE MARKETING - GIVING AWAY PRODUCTS THAT DRIVE COMPLEMENTARY PURCHASES

The term "freebie marketing" can be somewhat misleading. An item does not have to be given away for free to be considered part of a freebie marketing campaign. Another common term used to describe this kind of marketing is "loss leaders." What happens is that a company sells an item for a very low price, or gives it away, under the premise that accessories and supplies for that item will bring in repeat business. For example, a retail computer store may have a special low price on a popular laser printer in the hopes that customers will also buy toner and paper from the store as well. 

Freebie Marketing - Giving Away Products That Drive Complementary Purchases

The term "freebie marketing" can be somewhat misleading. An item does not have to be given away for free to be considered part of a freebie marketing campaign. Another common term used to describe this kind of marketing is "loss leaders." What happens is that a company sells an item for a very low price, or gives it away, under the premise that accessories and supplies for that item will bring in repeat business. For example, a retail computer store may have a special low price on a popular laser printer in the hopes that customers will also buy toner and paper from the store as well.

Using freebie marketing can be extremely effective. If you have core of loyal customers, then they can be a lucrative target for freebie marketing. As an example, if you gave all of your male customers a free shaving kit, then you would hope that those loyal customers would buy all of their replacement blades and shaving cream from you. You need to be careful when using freebie marketing as it can backfire on you. If you offer a line of computer CD burning drives for a price that is below your cost, then you are hoping for the sale of blank CDs to make it worth your investment. However, your competitor may decide to undercut you on the price of blank CDs, causing you to lose significant revenue on your freebie marketing campaign. Customers love to get things for free, and retailers love to give away free items that require expensive accessories or supplies to run. Before you get involved in a freebie marketing campaign, try to get special pricing from your supplier. In some cases, if you let your supplier know what your marketing plans are, he may decide to get involved and offer you a special price on your giveaway products and give you marketing funds as well. If you can offset the costs of a freebie marketing campaign, then you stand a much better chance of making a profit.