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

Palmeira, Mauricio; Srivastava, Joydeep

doi:10.1086/671565

Cited by 66 publications

(56 citation statements)

References 17 publications

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“…From the vantage point of the service provider, a specific challenge of the freemium model relates to the so-called zero price effect (ZPE) (Shampanier, Mazar, & Ariely, 2007). Research on the ZPE has found that a zero price not only reduces perceived sacrifice but also increases perceived quality (Palmeira & Srivastava, 2013;Shampanier et al, 2007). In the freemium context, the ZPE can be theoretically explained by the concept of mental accounting (Thaler, 1985).…”

Section: User Behavior In Freemium Servicesmentioning

confidence: 99%

What drives subscribing to premium in freemium services? A consumer value‐based view of differences between upgrading to and staying with premium

Mäntymäki

Islam

Benbasat

2019

Information Systems Journal

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Fostering the conversion of free users to premium subscribers and retaining those premium users are critical objectives for freemium service providers. Building on consumer value theory, we empirically examine the differences between basic and premium users in terms of the emotional, functional, social, epistemic, and economic values driving basic users' decisions to upgrade to premium subscriptions and premium users' decisions to retain their paid subscriptions. We employ enjoyment, intrusiveness of advertising in the free subscription, ubiquity, social connectivity, the discovery of new content, and the price value of the premium subscription as drivers of intentions and test our model using data from a leading digital content service that employs the freemium model. Our results show that enjoyment and price value of the premium subscription predict the intention to upgrade to premium, whereas the intention to retain the premium subscription is driven by ubiquity and the discovery of new content. Interestingly, social connectivity has no effect on the intention to upgrade but does have a small negative effect on the intention to retain the premium subscription. Contrary to our expectations, intrusiveness of advertising in the free subscription had a negative effect on the price value of the premium subscription. Collectively, our results imply that the intention to retain the premium subscription is influenced by attribute‐level value perceptions such as ubiquity, the discovery of new content, and social connectivity whereas the intention to upgrade is driven by benefits, ie, enjoyment and price value of the premium subscription.

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Section: User Behavior In Freemium Servicesmentioning

confidence: 99%

What drives subscribing to premium in freemium services? A consumer value‐based view of differences between upgrading to and staying with premium

Mäntymäki

Islam

Benbasat

2019

Information Systems Journal

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“…Specifically, free gifts enable companies to not only attract potential consumers who normally would not buy their brands but to also increase the wallet share of existing consumers by promoting sales (Zeelenberg andVan Putten 2005, Liu et al 2011). Free offerings are also proven to be more effective than cash discounts and increase value perception (e.g., Monroe 1973, Winer 1988, Palmeira and Srivastava 2013. Particularly, compared to cash discounts (expressed in monetary terms and thus perceived in relative terms), free gifts tend to be appreciated in their own right since they are presented in nonmonetary terms and are thus not comparable to a purchase cost (Nunes and Park 2003).…”

Section: Prior Research On Free Giftsmentioning

confidence: 99%

“…Our research also contributes to limited research on complimentary gifts. Although a number of research focuses on the effectiveness of promotional free gifts over price discounts (e.g., Palmeira andSrivastava 2013, Nunes andPark 2003), research that examines different types of free gifts is scarce. In this research, we delve into specific characteristics of free giftsthe extent to which free gifts are experiential or material in nature.…”

mentioning

confidence: 99%

Free Drink or Free Mug? Managing Service Experience with Experiential vs. Material Complimentary Gifts

Chun

Hiang²

2016

Service Science

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In the marketplace, complimentary gifts can take the form of experiential elements (e.g., a meal) or material items (e.g., tangible objects such as a mug). We identify these free gifts as a meaningful service design choice that helps service providers innovate service. Specifically, we examine the circumstances under which experiential or material gifts are preferred and generate greater consumer satisfaction, enhancing the overall service experience. Across three experiments, we demonstrate that consumers are generally happier with experiential offerings, and they prefer (and are more satisfied with) experiential offerings on ordinary consumption occasions; experiential elements are believed to further enrich otherwise mundane experiences. However, this experiential advantage disappears for consumers on meaningful and special occasions because of a strong desire to obtain a memory cue that will help them recall the experience. Indeed, the preference for a material item holds only when the gift has the quality to serve as a salient memory marker. This research provides insight for managers to take into account consumption occasions or types of consumers (e.g., special occasions, repeat customers) to effectively design service bundles with complimentary gifts and thus better manage overall service experience.

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“…Specifically, respondents were asked to indicate how much the regular price of the sweater or scarf might be. Positive affect ( α = 0.95) and feelings of reciprocity ( α = 0.93) were measured with a scale taken from Palmeira and Srivastava (). First, a mediation analysis was tested by substituting consumers’ price assignments to the individual items for perceived loss (Hayes, ; Model 4; 5,000 resamples).…”

Section: Resultsmentioning

confidence: 99%

“Retail is detail! Give consumers a gift rather than a bundle”: Promotion framing and consumer product returns

Lee

2018

Psychology and Marketing

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Retailers often use the promotion strategy of offering supplementary products (e.g., free gift, bundle) to attract consumers and increase sales. Despite the growing literature on the promotions that are differently framed but offer economically identical values, little research has examined the link between promotion framing and consumer product returns. The current article sheds light on this relationship, hypothesizing that a free gift promotion would be superior to a bundle promotion in reducing consumer product returns. The findings suggest that a gift-framed promotion leads to a lower product return intention than an economically equivalent bundle promotion, because consumers tend to perceive more loss from giving up the gift-framed (vs. bundle-framed) deal. Further, this study examines a moderating role of brand familiarity (familiar vs. unfamiliar) and shows that the merits of free gift framing on product return intention via perceived loss are amplified (attenuated) when the promoted brand is familiar (unfamiliar). Overall, the investigations of this study imply that it is better to frame a promotion as a "free gift" than a "bundle" to increase perceived loss in returning the purchase and thus to decrease consumer product returns. This strategic intervention works especially when the gift is offered by familiar brands. K E Y W O R D Sbrand familiarity, bundle, free gift, perceived loss, product returns, promotion framing

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

Cited by 66 publications

References 17 publications

What drives subscribing to premium in freemium services? A consumer value‐based view of differences between upgrading to and staying with premium

What drives subscribing to premium in freemium services? A consumer value‐based view of differences between upgrading to and staying with premium

Free Drink or Free Mug? Managing Service Experience with Experiential vs. Material Complimentary Gifts

“Retail is detail! Give consumers a gift rather than a bundle”: Promotion framing and consumer product returns

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