September 09, 2013 Monday
Research Finding :
A Discount May Devalue a Product More Than a Giveaway
Experiment :
Consumers who were offered free bread sticks as a promotion from a pizzeria said they'd be willing to pay $5.06, on average, for them once the promotion ended.
This is only slightly less than the amount consumers were willing to pay when there had been no promotion!
By contrast, people who were offered the bread sticks at a discounted price of 50 cents were willing to pay just $2.76 once the promotion was over !
Underlying Reason :
The findings suggest that a discount promotion may devalue a product in consumers' minds, whereas a free promotion offer may not devalue a product at all !
Research Courtesy : say Mauricio M. Palmeira of Monash University in Australia and Joydeep Srivastava of the University of Maryland.
SOURCE: Free Offer ≠ Cheap Product: A Selective Accessibility Account on the Valuation of Free Offers
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