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Free Offer ≠ Cheap Product: A Selective Accessibility Account on the Valuation of Free Offers

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  • Mauricio M. Palmeira
  • Joydeep Srivastava

Abstract

Many consumer price promotions (including new product launches) offer a product for free or for a low, discounted price along with a required purchase. This research demonstrates that consumers' willingness to pay for the product after the promotion is retracted is higher when it was offered for free than when it was offered at a low, discounted price. The underlying reasoning is that the price of the product on promotion is used as a natural anchor for value estimation. However, when the product is offered for free (i.e., zero price), consumers are less likely to consider the value of the product and are influenced by anchors such as the price of the focal purchase. In contrast to some prior findings, a free offer does not devalue the product at all and, at a minimum, devalues the product less than if it were offered for a low, discounted price.

Suggested Citation

  • Mauricio M. Palmeira & Joydeep Srivastava, 2013. "Free Offer ≠ Cheap Product: A Selective Accessibility Account on the Valuation of Free Offers," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 40(4), pages 644-656.
    • Handle: RePEc:oup:jconrs:doi:10.1086/671565
    DOI: 10.1086/671565
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    Cited by:

    1. Minnema, Alec & Bijmolt, Tammo H.A. & Non, Mariёlle C., 2017. "The impact of instant reward programs and bonus premiums on consumer purchase behavior," International Journal of Research in Marketing, Elsevier, vol. 34(1), pages 194-211.
    2. Santana, Shelle & Thomas, Manoj & Morwitz, Vicki G., 2020. "The Role of Numbers in the Customer Journey," Journal of Retailing, Elsevier, vol. 96(1), pages 138-154.
    3. Jihwan Moon & Steven M. Shugan, 2018. "Explaining Bundle-Framing Effects with Signaling Theory," Marketing Science, INFORMS, vol. 37(4), pages 668-681, August.
    4. Ahmetoglu, Gorkan & Furnham, Adrian & Fagan, Patrick, 2014. "Pricing practices: A critical review of their effects on consumer perceptions and behaviour," Journal of Retailing and Consumer Services, Elsevier, vol. 21(5), pages 696-707.
    5. Park, Chang Hee & Park, Young-Hoon & Schweidel, David A., 2018. "The effects of mobile promotions on customer purchase dynamics," International Journal of Research in Marketing, Elsevier, vol. 35(3), pages 453-470.
    6. Koo, Jieun & Suk, Kwanho, 2020. "Is $0 Better than Free? Consumer Response to “$0” versus “Free” Framing of a Free Promotion," Journal of Retailing, Elsevier, vol. 96(3), pages 383-396.
    7. Anjulie Hähnchen & Bernhard Baumgartner, 2020. "The Impact of Price Bundling on the Evaluation of Bundled Products: Does It Matter How You Frame It?," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(1), pages 39-63, February.
    8. Joey van Angeren & Govert Vroom & Brian T. McCann & Ksenia Podoynitsyna & Fred Langerak, 2022. "Optimal distinctiveness across revenue models: Performance effects of differentiation of paid and free products in a mobile app market," Strategic Management Journal, Wiley Blackwell, vol. 43(10), pages 2066-2100, October.
    9. Urvashi Tandon & Amit Mittal & Sridhar Manohar, 2021. "Examining the impact of intangible product features and e-commerce institutional mechanics on consumer trust and repurchase intention," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 945-964, December.
    10. Yang, Bi & Mattila, Anna S., 2020. "Consumer responses to savings message framing," Annals of Tourism Research, Elsevier, vol. 84(C).
    11. Liu, Hsin-Hsien & Chou, Hsuan-Yi, 2015. "The effects of promotional frames of sales packages on perceived price increases and repurchase intentions," International Journal of Research in Marketing, Elsevier, vol. 32(1), pages 23-33.
    12. Park, Sohyeon & Yoon, Song Oh, 2022. "The effects of solicitation and target amounts on consumers’ charitable giving decisions," Journal of Business Research, Elsevier, vol. 141(C), pages 279-289.
    13. Huan Yu & Ye Shi & Yugang Yu & Jie Liu & Feng Yang & Jie Wu, 2020. "Business analytics: online promotion with gift rewards," Annals of Operations Research, Springer, vol. 291(1), pages 1061-1076, August.
    14. Xiaomeng Fan & Fengyan Cindy Cai & Galen V. Bodenhausen, 2022. "The boomerang effect of zero pricing: when and why a zero price is less effective than a low price for enhancing consumer demand," Journal of the Academy of Marketing Science, Springer, vol. 50(3), pages 521-537, May.

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