1. The effects of alternative price
promotional methods on
consumers' product evaluations
and purchase intentions
Jeanne Lauren Munger
University of Southern Maine, USA
Dhruv Grewal
Babson College, USA
Keywords Perception, Discounts, Pricing
Abstract This research examines the effects of bundling format (partially-bundled
attributes vs. unbundled attributes) and framing of promotional discounts (rebate,
discount and free-options) on perceived quality, price acceptability, perceived value and
subsequent purchase intentions. The results indicate that price reductions that are framed
as providing ``free'' product options are perceived more favorably than conventional
discounts which, in turn, are more favorable than rebates, holding the total amount of a
price reduction constant. The results also suggest that unbundling of deals (or
segregation of gains) enhances these perceptions.
Introduction
The concept that the perceived value of a product has a direct impact on
behavior has been well substantiated by both marketing academics and
practitioners. Because product quality and price directly influence value, it is
no surprise that the efforts of marketers have focused on improving product
quality and reducing price in order to enhance perceptions of value, and
consequently purchase intentions (Dodds et al., 1991; Grewal et al., 1998).
Considerable strategic effort has to be undertaken to make improvements in
product quality and offer reductions in price (via cost reductions) in order to
enhance perceived value. Tactical approaches, like presenting price
information in a bundled vs. unbundled format and alternative forms of
promotions (e.g. free options, conventional discounts and rebates), also
influence perceptions of value and behavioral intentions (Grewal and
Compeau, 1992; Compeau and Grewal, 1998). Therefore, marketers must
consider both strategic actions that result in actual improvements as well as
tactical acts that improve perceptions of value by presenting their products
and promotions in the most favorable light.
This research investigates the effects of different promotional price formats
on perceptions of price, quality, value, and purchase intentions, while
holding the absolute magnitude of the sales reduction constant. It extends
previous research by proposing that these perceptions are indeed influenced
The research register for this journal is available at
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Dhruv Grewal would like to acknowledge the support of a University of Miami
School of Business Summer Research Grant. The authors acknowledge the helpful
suggestions made by participants at the Fordham Pricing Conference, Hooman
Estelami, and Kent B. Monroe.
Tactical approaches
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001, pp. 185-197, # MCB UNIVERSITY PRESS, 1061-0421 185
An executive summary for
managers and executive
readers can be found at the
end of this article

2. by two advertising message characteristics: price presentation method (the
level of bundling of item prices) and the promotional method (free options,
conventional discounts and rebates).
Promotions and the price quality-value-purchase chain
The conceptual models of Dodds et al. (1991) and Grewal et al. (1998)
provide the theoretical framework for the influence of promotions on price
acceptability, quality, value and purchase intentions (see Figure 1). The
model provides a framework for studying the effects of bundling and framing
on perceptions of price, quality and value in addition to purchase intentions.
We intend to investigate whether the format used to present a promotional
discount or price reduction affects perceptions of price, quality, value and
purchase intentions. More specifically, differing levels of bundling and
different ways of framing the discount will have an impact even when the
total amount of the discount is held constant. A promotional discount can be
presented using a variety of different formats.
Price promotions can be developed and presented using a bundling (e.g. buy
a hamburger and large drink and get fries for an extra $25) or unbundling
tactic (item discounts provided). Even when the total amount of a discount
remains constant, the format of the promotional discount can influence a
variety of perceptions related to the attractiveness of the promotion. Bundled
discounts aggregated into one large amount may be perceived as delivering a
different level of value than those that are unbundled as several segregated
discounts (Yadav and Monroe, 1993).
Price presentation cues (bundling vs. unbundling of discounts)
The value function developed by Kahneman and Tversky (1979, 1984;
Tversky and Kahneman, 1981) provides the conceptual framework for
understanding the impact of different levels of bundling of discount
information on price perceptions. Three critical features are inherent within
the value function (see Figure 2). First, it is defined on deviations from a
reference point, incorporating the notion that the value of a particular
outcome is evaluated on the basis of gains and losses. Second, the value
function is commonly S-shaped, generally concave for gains and convex for
losses. This shape reflects the general tendency for people to be risk-averse
in the face of gains and risk-taking when facing losses. Third, the value
Figure 1. Role of promotional frames on the price-quality-value chain
Attractiveness of
promotion
186 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001

3. function is steeper for losses than for gains relative to deviations from the
reference point.
Thaler (1985) proposed that multiple gains should be separated since a set of
small gains will be perceived to be greater in total value than the sum total of
those gains presented by itself. He bases this conclusion on the premise that
the value function is concave for gains. It must be noted that price reductions
are likely to be perceived as gains (see Monroe, 1990). A price reduction is
likely to be viewed as a gain as the consumer is likely to compare the
reduced price (or sale price) against the original price (or reference price).
Thus, the reduction in the price that the consumer has to pay would be
perceived as a gain. This gain has been defined as transaction value in the
literature (see Grewal et al., 1998).
On the basis of this argument, one would expect that separating a
promotional discount into multiple discounts would result in more favorable
perceptions of the value of the savings (gain) (Kaicker et al., 1995). For
example, Kaicker et al. (1995) found that when consumers were exposed to
multiple gains, they preferred component pricing to bundle pricing.
Based on the above discussion, we hypothesize that the bundling vs.
unbundling of the promotional discounts will affect consumers' perceptions
of price, quality, value and purchase intentions. Because unbundling
involves separating the gains, they will be perceived more favorably than the
same total discount amount presented in a more bundled form.
H1: Promotional discounts that are presented in an unbundled form will be
viewed more favorably than the same discount presented in a bundled
form.
Framing of promotional discounts
Price comparison cues are extrinsic informational cues that contain a real or
implied reference price and an offered price (Della Bitta et al., 1981).
Previous research has found that the use of a price comparison cue affects
perceived savings and price acceptability (e.g. Blair and Landon, 1981;
Figure 2. Hypothetical value function
Perceived as gain
Bundling vs. unbundling
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001 187

4. Lichtenstein et al., 1991; Liefeld and Heslop, 1985; Rajendran and Tellis,
1994; Urbany et al., 1988). Berkowitz and Walton (1980) found that
comparison cues offering larger savings in terms of absolute magnitude were
more favorably perceived.
Thaler (1985) developed the concept of transaction utility based on prospect
theory (Kahneman and Tversky, 1979; 1984; Tversky and Kahneman, 1981).
This theory in conjunction with prior work on adaptation-level theory and
assimilation-contrast theory (see Monroe et al., 1991) serves as a framework
describing the effects of a comparison cue on perceptions. Transaction utility
(TU) is derived from comparing the actual selling price of a product to the
expected or fair price of that product (TU = f (selling price reference price).
When the selling price is inflated it would enhance consumers' price
expectations, therefore enhancing transaction utility through higher
perceived value. Thus, the way the price-promotion is framed is likely to
evoke different levels of reference prices (due to differential encoding of the
deal) and is likely to be valued differently (Heath et al., 1995; Folkes and
Wheat, 1995).
The way a price-promotion is framed is likely to affect consumers'
perceptions of price, quality, value, and purchase intentions (e.g. Chen et al.,
1998). We specifically examine the effects of three price-promotional frames
± rebate, discount and free options. The framing of the discount using free
options will be perceived most favorably. For example, Leigh and
Varadarajan (1991) found that consumers exposed to two price promotions ±
``buy one get one free'' and ``get two for the price of one'' took greater
advantage of the first offer. Additionally, results of Diamond (1992) suggest
that free-options may be preferred for small discounts as opposed to large
discounts. In our study, the discount size was small in a relative sense
(e.g. $1,000 saving on a $13,035 car is about 8 per cent).
We expect that rebates will be perceived the least favorably. Recent work
has demonstrated that consumers value their time (Marmorstein et al., 1992).
The time and effort involved with redeeming the rebate is likely to have an
adverse affect of their perceptions (e.g. lower value) and reduce their
purchase intentions (Chapman, 1987; Tat et al., 1988). Work by Folkes and
Wheat (1995) further suggests that due to the temporal distance involved in
getting the savings associated with the rebates at a later time they are likely
to evoke price perceptions similar to regular prices than discounts.
Furthermore, consumers tend to discount future outcomes more heavily.
Thus, rebates are likely to be viewed as less attractive than a regular
discount.
H2: Compared to discounts, rebates will be perceived as less attractive and
free options will be perceived as more attractive.
Methodology
Experimental design
A 2 (price presentation: 2 levels of unbundling) Â 3 (promotional frame: free
options, conventional discounts, rebates) between-subjects design was used
to test the hypotheses. An automobile was chosen as the product because
they frequently use these variations in price promotions and are a category
familiar to the subjects.
Two levels of unbundling were used. In the less unbundled option, subjects
were presented the price for the standard equipment ($10,320), premium
equipment ($388), comfort equipment ($1,222), power equipment ($595),
Prospect-theory
Adverse affect
188 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001

5. read defogger ($160) and removable sunroof ($350). In the more unbundled
option, subjects were similarly presented the price for the standard
equipment ($10,320), read defogger ($160) and removable sunroof ($350).
However, the equipment within the other three packages was further
individually priced (e.g. the price of the premium equipment attributes were
provided: map lights $158, color-keyed fronts $78, and intermittent wipers
$152).
The promotional frame of the price reduction included three levels:
(1) free options;
(2) discount; and
(3) rebate off the list.
Each condition involved an automobile with standard base features with a set
of options for the particular model being evaluated. The description of the
standard base model and the options remained constant across treatment
conditions.
The only thing that varied was the format for presenting the sales reduction.
The following three promotional frames were used in the experiment:
Free options. The standard components of the base model and each option
package were described. The discount presented a set of free options.
Discount. The standard components of the base model and each option
package were described. A conventional discount was presented.
Rebate. The standard components of the base model and each option package
were described. A rebate was presented.
The sales reductions presented in this research were designed to be both
plausible and relevant to the respondents. This allowed for a believable cover
story in order to reduce the possibility of demand artifacts due to hypothesis
guessing by subjects.
Subjects
A sample of 204 students participated in the experiment. Students were
recruited from two universities, one a large Midwestern university and the
other a small university in the Northeast. The students who participated were
either in their junior or senior year at college. Subjects were assigned
randomly to each of the six treatment conditions.
It was expected that a large proportion of the students in the sample might be
considering the purchase of an automobile within a relatively short time.
This should have helped in stimulating a sufficient level of involvement in
the research in order to assure a fairly high level of processing the
information as might occur in the early stages of information search in the
automobile purchase process. Since an automobile purchase was a decision
that students might face in the near future, it lent credibility to the cover
story.
Experimental procedure
Subjects were processed in small groups of four to 12 subjects each, although
a small number of students were processed individually. Each of the
conditions was represented in each group session. Subjects were told that the
purpose of the study was to ascertain their attitudes toward a specific
automobile that was for sale.
Three promotional frames
High level of processing
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001 189

6. After subjects were oriented to the task, they were told to look over a
brochure for an automobile, which was provided. After subjects had looked
at the brochure, they were asked to respond to several measures relating to
the automobile presented in the brochure. Next, they were asked to look over
the stimuli which were presented as the sticker price information for a
specific automobile with a ``Graduate Package'' that they were told was for
sale. After that subjects reviewed the price and option information they were
asked to respond to a series of measures relating to their evaluations of the
specific automobile presented in the sticker price information.
Dependent variable measurement
After subjects have been exposed to the automobile with the ``Graduate
Package'' they were asked to complete a series of evaluative ratings relating
to the stimuli. Seven-point bipolar scales were developed to measure price
acceptability, perceived quality, perceptions of value, and purchase
intentions. The internal reliability of each set of scales was assessed using
correlations or Cronbach's alpha, as presented below:
(1) Price acceptability (two items, r = 0.42):
. inexpensive/expensive;
. acceptable price/unacceptable price.
(2) Quality (four items, alpha = 0.72):
. bad/good;
. undesirable features/desirable features;
. poor performance/excellent performance;
. not very durable/very durable.
(3) Value (three items, alpha = 0.78):
. very bad deal/very good deal;
. bad buy for the money/good buy for the money;
. bad value for the money/good value for the money.
(4) Purchase intentions (two items, r = 0.72):
. would not consider buying/would consider buying;
. definitely will not buy/definitely will buy.
Results
ANCOVA procedures were used to test the hypotheses. The means are
provided in Table I. The analysis of covariance results from evaluating H1
and H2 are summarized in Table II. Gender was treated as a covariate in our
analysis. The interaction term was not significant in all four ANCOVAs.
H1: We expected that unbundled options would be viewed more favorably
than partially bundled deals. We found support that the unbundled
format was viewed more favorable than the bundled format for
consumers' perceptions of quality (p < 0.05) and their purchase
intentions (p < 0.10). However, bundling vs. unbundling did not
significantly affect price acceptability or value perceptions.
H2: The effects of the price-promotional frames indicated that they
significantly affected price acceptability (p < 0.05), quality (p < 0.10),
``Graduate package''
Analysis of covariance
190 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 10 NO. 3 2001

7. value (p < 0.10) and purchase intentions (p < 0.05). The results
supported our hypotheses that rebates would be perceived least
favorably and free options most favorably. The only variable where the
plot of means was not in the right direction was for perceived quality.
The perceived quality of the rebate was viewed no differently than the
conventional discount condition.
Conceptual model linkages. We also examined the effects of price and
quality perceptions on value perceptions using regression analysis. The
results suggest that the model is significant (F(2,201)=124.72, p < 0.001,
adjusted R2
= 0.55). As predicted, both price acceptability and quality had
significant effects on perceptions of value (price acceptability: std. = 0.31,
t = 6.43, p 0.001, quality: std. = 0.61, t = 12.51, p 0.001). Regression
results were also used to examine the effects of price acceptability, quality
and value on consumers' purchase intentions (F(3,200) = 53.10, p 0.001,
adjusted R2
= 0.44).
Mediation test. Procedures suggested by Baron and Kenny (1986) and
Hastak and Olson (1989) were followed to assess whether perceived value
mediates the effects of promotional frames and promotional bundles on
purchase intentions. Baron and Kenny (1986) recommended that three
conditions need to be satisfied between the independent variables
(promotional variables), mediator (perceived value) and the dependent
variable (purchase intentions) to establish mediation.
First, the independent variables (bundling and frame) need to affect the
mediator (perceived value). The previous results provide evidence that
Dependent variable Rebate Discount
Free
options
Total
means
Partially-unbundled Price acceptability 4.53 4.98 5.08 4.87
Quality 4.86 4.89 5.18 4.98
Value 4.73 5.04 5.09 4.95
Purchase intentions 3.75 4.09 4.12 3.99
Unbundled Price acceptability 4.37 4.84 5.13 4.78
Quality 5.28 5.01 5.36 5.22
Value 4.96 5.11 5.27 5.11
Purchase intentions 4.18 3.96 4.84 4.32
Total means Price acceptability 4.45 4.91 5.11
Quality 5.08 4.95 5.27
Value 4.84 5.07 5.18
Purchase intentions 3.96 4.02 4.48
Note: N = 34 in each cell
Table I. Means for the various conditions
Df Price Quality Value
Purchase
intentions
Covariate-sex 1 8.81*** 1.09 0.39 0.33
Bundling 1 0.44 4.36** 1.67 3.40*
Frame 2 4.21** 2.76* 2.91* 3.38**
B Â F 2 0.09 0.53 0.17 1.94
Error 197
Notes: * p 0.10; ** p 0.05; *** p 0.01;
Table II. ANCOVA results
Regression analysis
JOURNAL OF PRODUCT BRAND MANAGEMENT, VOL. 10 NO. 3 2001 191

8. framing affected perceptions of value (see Table II). The results did not
support the effect of bundling on value perceptions. Thus, we can only assess
whether the effect of the promotional frame on purchase intention was
mediated by value perceptions. Second, the independent variables
(promotion and bundling) need to affect the dependent variable (purchase
intentions). As shown in Table II, these two factors do affect purchase
intentions. Third, the mediator (value) needs to affect the dependent variable
(purchase intention), while the effects of the independent variables
(promotional frames and bundling) are reduced. The analysis of covariance
results indicate that when value is treated as a covariate, the effect of the
framing is not significant (F(2,196) = 1.99, p = 0.14). Furthermore, it must be
noted that the effect of value (covariate in the ANCOVA results) is
significant (F(1,196) = 94.08, p 0.001). Thus, the results of our mediation
analysis provide support that the effect of promotional frame on purchase
intention was completely mediated by value perceptions.
Implications and future research avenues
The results of this investigation provide evidence that the framing of
discounts impacts consumer perceptions, and also influence subsequent
purchase intentions. Our results suggest that consumers who were exposed to
promotions that included something for free viewed them more favorably
than promotions that involved rebates, which further resulted in more
favorable purchase intentions. These results suggest that marketing mangers
need to carefully plan their promotional budgets and the allocation of the
budget over different forms of promotions. Providing promotions that
emphasize free giveaways are likely to be more effective than a standard
discount (e.g. 20 per cent off) or a rebate.
One factor that might drive our results is that the perceived amount of effort
involved in redemption of rebates as compared to free additions or
giveaways. Often, rebates are associated with greater expenditures of time
and energy for redemption than free features. Retailers and marketers need to
be aware of the extent to which perceptions of the time and effort are
involved in redeeming different types of discounts. The redemption effort is
likely to have a negative influence on perceptions of the value. The goal of
this future research would be to better understand the impact of perceived
effort associated with different discount formats on perceptions of quality,
price acceptability, value and purchase intentions. Furthermore, future
research should also investigate the phenomenon across a broader range of
product categories and discount amounts, where consumers might perceive
differences in the costs/benefits tradeoff.
Future research is also needed to better understand the impact of bundling of
discounts on perceptions of quality, price acceptability, value and purchase
intentions. The results of this investigation provide evidence that bundling of
discount information affects perceptions of quality and value. It provides
directional support for the claim that gains that are segregated are perceived
more favorably than gains that are aggregated, in line with the predictions of
Thaler (1985). These results have important implications for marketing
managers and retailers. They emphasize that separating a promotional
discount into a number of discounts was more affective in influencing
purchase intentions than one large discount. It also lends credibility towards
the practice followed by auto-dealers of offering discounts on various car-
items.
Redemption of rebates
Impact of bundling
192 JOURNAL OF PRODUCT BRAND MANAGEMENT, VOL. 10 NO. 3 2001

9. Further investigation is necessary to determine the impact of segregation of
discount information across a broader range of discount magnitude. The
overall percentage discount of 8 per cent in this study may have fallen short
of the minimum level necessary for consumers to perceive a promotional
discount or process a price promotion (see Grewal et al., 1996).
The value function implies that the way a particular outcome is presented in
terms of gains will influence perceptions. That is, a promotional discount
that is presented as a gain will be perceived more favorably than one that is
not. For example, a hamburger, French fries and soda can be presented at a
total discounted meal price, or it can be presented with separate discounts for
each individual component along with the total discount. The former
presents the promotional price in a completely bundled format, without
explicit mention of the amount of overall savings. The latter uses an
unbundled format, with an explicit mention of both the savings for each
individual component and the total discount. Because there are many ways to
present promotional discount information, the level of bundling used to
present promotional prices in this study fall somewhere on a continuum
between the two extremes of fully bundled and completely unbundled. Very
little research has been conducted to determine the extent to which the level
of bundling impacts perceptions.
Studies of the effect of reference price as a comparison cue have typically
varied the absolute magnitude of the sales reduction presented to subjects.
Berkowitz and Walton (1980) held the reference price constant and varied
the absolute magnitude of the discount resulting in different selling prices.
As expected, the size of the discount had a positive affect on value
perceptions. Similar results were also found by Urbany et al. (1988). It
would be useful to examine whether the effects of alternative frames vary as
a function of the magnitude of the discount.
Recent research has also found that the presentation of the discount size
(absolute dollar amount vs. relative percentage) has a differential effect on
consumers' perceptions of value (see Darke and Freedman, 1993; Darke et
al., 1995). Thus, examining whether the effectiveness of promotional-frames
would vary by the presentation of the discount would also be important.
Overall, the results of this investigation indicate that further study of these
phenomena is warranted. Another direction for future research is to study
these phenomena for a variety of product categories and price levels.
Automobiles were selected as a target product in part because it was likely
that subjects would respond to the absolute magnitude of the reductions.
Future studies should use several target products representing a range of
prices and price reductions in order to better understand this phenomenon.
Research needs to examine whether these frames are evaluated differently as
a function of ethnic differences (e.g. Green, 1995). Some cultures are likely
to be less time-sensitive and may view rebates as being as attractive as
regular discounts. Clearly, there is need for further research to examine the
role price-promotions (and varying frames) play in influencing consumer
behavior. Understanding perceptual responses to price information are
worthy of further research as they have important theoretical and managerial
implications.
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12. Executive summary and implications for managers and
executives
Words have power ± do not abuse it
It is free! What a great word! We rush out to get that ``free'' offer because we
think we are getting a bargain. Of course, if we stop and think for a moment,
we realise that as Henry Ford put it: ``There's no such thing as a free
lunch''. But, whatever our rational mind tells us, we are still attracted by the
offer of something free.
``Free'' is one of those words ± like ``new'' or ``exclusive'' ± that hits the
human psyche at a very base level. And marketers need to understand when
and how to use these words for maximum advantage. If you litter your
communications with these responsive words, the consumer soon becomes
suspicious. But when you use them sensibly and sparingly the result is
usually advantageous.
Few ± if any ± consumers really consider actual value
Consumers operate on the basis of perceptions. We'll all deny this when
asked, of course. It is only that silly woman next door, or the sucker in the
pub who fall for these so-called free offers. Not so. We make a judgment
about the value of an offer on the basis of our initial reaction. We've all said
it: ``That's a good offer''.
So Munger and Grewal are right to say that ``F F F marketers must consider
both strategic actions that result in actual improvements as well as tactical
acts that improve perceptions of value by presenting their products and
promotions in the most favourable light''.
It is one thing to know that consumers view promotions involving a free offer
more favourably than most other promotions, but we should also appreciate
that there has to be real value in the offer. The use of the magic word ±
``free'' ± should not be a con. We need to balance the creation of value for
our customers with the way in which we communicate that value.
The right words make a promotion stronger
When we decide to use a promotion to push sales or attract customers ±
ideally within the context of our overall brand strategy ± we should consider
the tactic as well as the strategy. Some managers seem to have a thing about
not giving things away free despite the evidence that the promotion will work
better if that is the basis of the offer.
So, having decided to undertake a sales promotion we should structure that
promotion to make it more attractive and communicate the promotion so as
to really whet the consumer's appetite. These tactical considerations are, in
their way, as important as the strategic decision to use a sales promotion.
Too often everyone stops thinking once the sales promotion decision is made.
Some junior sprog is given the task of putting together the promotion and the
big managers wander off to their next away day or the golf course. We need
to pay attention to the offers we put out. We should think about the way in
which the words we use motivate or demotivate customers and we should
want the best possible outcome from the promotion.
Think about what you are asking the customer to do
If the customer gets the deal straight up they are more likely to take
advantage. If that customer has to wait or has to go out of the way to secure
196 JOURNAL OF PRODUCT BRAND MANAGEMENT, VOL. 10 NO. 3 2001
This summary has been
provided to allow managers
and executives a rapid
appreciation of the content
of this article. Those with a
particular interest in the
topic covered may then read
the article in toto to take
advantage of the more
comprehensive description
of the research undertaken
and its results to get the full
benefit of the material
present

13. the deal, that customer is less likely to take advantage. We must consider ±
alongside the actual value of the offer we are making ± the cost in time and
effort to the consumer.
Munger and Grewal stress this point when they say: ``Retailers and
marketers need to be aware of the extent to which perceptions of the time and
effort involved are involved in redeeming different types of discount''. The
more effort needed from the customer, the less likely the offer will be taken
up. It is not just actual time and effort, either, but the consumer's perception
of the time and effort. If the consumer thinks it is a schlep to go up to
customer services on the sixth floor, then they will need a better deal to make
them take that extra trip.
Structuring our promotions is something of an art. We should consider the
size of the offer (to us and in the mind of the consumer), the way in which we
word the offer and the actions that the consumer has to take to redeem the
offer. The best offer will involve a high degree of perceived value and little
effort for the consumer. And, we hope a significant difference between
perceived and actual value in our favour.
The caveat ± once you have given a free gift you cannot stop giving
The problem with free offers is that the consumer comes to expect them. Look
at some of the fast food chains. These firms keep on offering free product
because they are trapped into the need to do so. When we make strategic
decisions about sales promotions we need to recognise that the fact of the
promotion will affect the consumers' overall perception of our offer.
When we go into the burger bar, we take the meal deal. Why? Because we
are not going to pay for the drink as it is always rolled into the meal deal for
free. My son assumes he will get a free lolly at our local restaurant because
he has always been given one. It is part of the deal, part of the consumer's
expectations. The free offer ceases to be a promotion and becomes a core
part of your product or service offer.
So, when we step down the road of making free offers we must be prepared to
accept the fact that some consumers will come to expect the deal. Otherwise,
we should be wary about making such offers too frequently. In truth, the
sales promotion always affects brand perceptions and the stronger the
promotional offer the more it will influence the brand. If you don't want to be
known as a service that always offers a deal, don't do too many promotional
offers and when you do, target them carefully.
(A preÂcis of the article ``The effects of alternative price promotional methods
on consumers' product evaluations and purchase intentions''. Supplied by
Marketing Consultants for MCB University Press.)
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