Sometimes “Fee” Is Better Than “Free”: Token Promotional Pricing and Consumer Reactions to Price Promotion Offering Product Upgrades

Mao, Wen

doi:10.1016/j.jretai.2015.09.001

Cited by 22 publications

(25 citation statements)

References 24 publications

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“…The contrast between ZP and LP was of particular interest to this study. As Mao ( 2016 ) noted, in the context of price promotions offering product upgrades, it generated greater sales when the upgrades were offered at a low token price (e.g., buy a Canon camera and upgrade its memory capacity from 16G to 32G for ¥0.1) rather than for free (e.g., buy a Canon camera and upgrade its memory capacity from 16G to 32G for free). He suggested that when an upgrade was offered at a low price, its perceived attractiveness would be enhanced due to that the consumers tended to compare the token price with the upgrade's normative value and found the token price disproportionally small relative to the retail price; whereas when an upgrade was offered free, consumers were prone to evaluate it with the amount of required purchase.…”

Section: Discussionmentioning

confidence: 99%

“…In the second price frame, the tie-in product was offered at zero price while the total price of the bundle remained the same (zero price condition, ZP). Furthermore, a recent study reported an interesting finding that for price promotions offering product upgrades, it could be more effective when the upgrade was offered at a small token price (e.g., buy a Canon camera and upgrade its memory capacity from 16G to 32G for ¥0.1) rather than for free (Mao, 2016 ). We speculate that the tie-in product in a bundle might be treated as an “upgrade” in Mao's study.…”

Section: Introductionmentioning

confidence: 99%

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The Temptation of Zero Price: Event-Related Potentials Evidence of How Price Framing Influences the Purchase of Bundles

Zhang

et al. 2018

Front. Neurosci.

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Studies have revealed that consumers are susceptible to price framing effect, a common cognitive bias, due to their limited capacity in processing information. The effect of price framing in a bundling context and its neural correlates, however, remain not clearly characterized. The present study applied the event-related potentials (ERPs) approach to investigate the role of price framing in information processing and purchase decision making in a bundling context. Three price frames were created with practically identical total prices (with a maximum difference of ¥0.1, which was about equal to 0.016 US dollars) for a bundle with two components, a focal product and a tie-in product. In normal price condition (NP), both the focal and tie-in products were offered at a normal discounted price; in zero price condition (ZP), the tie-in product was offered free while the total price of the bundle remained the same as NP; whereas in low price condition (LP), the tie-in product was offered at a low token price (¥0.1), and the focal product shared the same price as the focal product of ZP. The behavioral results showed a higher purchase rate and a shorter reaction time for ZP in contrast to NP. Neurophysiologically, enlarged LPP amplitude was elicited by ZP relative to NP, suggesting that ZP triggered a stronger positive affect that could motivate decision to buy. Thus, this study provides both behavioral and neural evidence for how different price framing information is processed and ultimately gives rise to price framing effect in purchase decision making.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Temptation of Zero Price: Event-Related Potentials Evidence of How Price Framing Influences the Purchase of Bundles

Zhang

et al. 2018

Front. Neurosci.

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“…Recent findings indicate that reference dependence and attribute evaluability (Palmeira 2011, Mao 2016) may actually lead to situations where customers prefer a very small fee over a gift. More specifically, Palmeira (2011) finds that increasing price (an undesirable attribute) from zero can result in an increase in choice share as the small non-zero price offers a reference point that can help to more easily assess the attractiveness of the promotion.…”

Section: Theory and Hypotheses On "X + N Free" Versus "X For $Y"mentioning

confidence: 99%

“…As in our "X + N free" settings reference points are always provided by the X units that have to be paid for, we do not expect that customers have difficulties in determining appropriate reference price levels. Mao (2016) proposes that a promotional framing of a product upgrade which charges a (very) small fee (a token such as 1 cent) could be more effective than a free gift because the small fee provides a reference point to evaluate the upgrade. Due to the very small fee of the upgrade, the upgrade is evaluated as very attractive, which leads to an overall attractive price.…”

Section: Theory and Hypotheses On "X + N Free" Versus "X For $Y"mentioning

confidence: 99%

Multi-unit price promotions and their impact on purchase decisions and sales

Drechsler

Leeflang²,

Bijmolt³

et al. 2017

EJM

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Purpose The purpose of this paper is to compare the impact of different multi-unit promotions (MUPs) and a single-unit promotion (SUP) on store-level sales and consumer-level purchase probability and quantity decision. Design/methodology/approach The paper combines two empirical studies. Study 1 applies a hierarchical multiplicative model to store-level sales data for four product categories provided by a large Dutch retail chain. Study 2 presents a laboratory experiment in which the quantity requirements of the two focal MUP frames are manipulated to assess their impact on consumer purchase decisions. Findings The paper provides empirical evidence for the superiority of the “X for $Y” above “X + N free”, which confirms the hypotheses based on prospect theory, mental accounting and theory about gift-giving. Quantity requirements of four to five units show the largest effects. In addition, the superiority of the “X for $Y” frame holds for functional product categories, but not for the hedonic categories. Practical implications The paper provides managerial insights into the relative effectiveness of alternative MUPs and an SUP and how this promotional effectiveness depends on the type of product category and quantity requirements. Originality/value This paper combines actual sales data and experimental data. This “mixed approach” extends existing knowledge by comprehensively evaluating two MUP frames, namely, “X + N free” and “X for $Y” promotions, and an SUP.

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“…As pessoas são expostas frequentemente a estímulos para compra de produtos, seja no supermercado, nas ruas, no trabalho ou em casa (estes dois últimos tendo o contato com o estímulo por meio dos aparelhos de comunicação -televisão, computador, celular, etc.). A aquisição dos bens e serviços é feita pelo pagamento de um preço e a avaliação do melhor preço, considerando as opções disponíveis e acessíveis para compra, geralmente é uma atividade que requer empenho do indivíduo, para que não ocorra um equívoco na escolha (Mao, 2016;Huang et al, 2017). Decidir pelo preço que traga mais benefícios pelo menor custo não é uma tarefa simples e muitos consumidores (Zhang & Jiang, 2014), geralmente, ficam vulneráveis durante esta atividade, principalmente por falta de motivação para conseguir um bom negócio na transação.…”

Section: Introductionunclassified

Efeitos da metáfora da verticalidade e do foco regulatório motivacional do consumidor sobre as avaliações de preços

Costa¹

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Agradecer inicialmente a Deus pela realização de um sonho de estudar na maior e melhor universidade do Brasil, a USP. Os obstáculos foram muitos, mas todos eles deixaram a conquista ainda mais valiosa. Gostaria de expressar minha eterna gratidão ao meu orientador Prof. Dr. Claudio Felisoni de Angelo, desde o início do doutorado o professor acreditou na minha capacidade, delegando atividades e confiando plenamente no meu êxito para a conclusão do curso. O professor sempre teve comigo um tratamento de muita cordialidade e de muito respeito pelas minhas ideias na condução da pesquisa. Sou infinitamente grato pela chance de ter sido aluno de professores que sempre admirei, seja por seus livros ou artigos, são eles:

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Sometimes “Fee” Is Better Than “Free”: Token Promotional Pricing and Consumer Reactions to Price Promotion Offering Product Upgrades

Cited by 22 publications

References 24 publications

The Temptation of Zero Price: Event-Related Potentials Evidence of How Price Framing Influences the Purchase of Bundles

The Temptation of Zero Price: Event-Related Potentials Evidence of How Price Framing Influences the Purchase of Bundles

Multi-unit price promotions and their impact on purchase decisions and sales

Efeitos da metáfora da verticalidade e do foco regulatório motivacional do consumidor sobre as avaliações de preços

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