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Journal Article

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

Mauricio M. Palmeira and Joydeep Srivastava
Journal of Consumer Research
Vol. 40, No. 4 (December 2013), pp. 644-656
Published by: Oxford University Press
DOI: 10.1086/671565
Stable URL: http://www.jstor.org/stable/10.1086/671565
Page Count: 13

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Topics: Prices, Market prices, Consumer prices, Wines, Zero, Tomato sauces, Toothpaste, Product value, Mousses, Pendants
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Free Offer ≠ Cheap Product: A Selective Accessibility Account on the Valuation of Free Offers
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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.

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