The Impact of Item Complementarity in Freebie Promotions on Value Discounting
Author
Abstract
According to the value-discounting hypothesis, freebie promotions can lower consumers’ willingness to pay (WTP) for both the focal and freebie products when these products are later sold separately. Freebie promotions might increase sales in the short run, but damage the attractiveness of the items in the promotional packages over the long run. Therefore, exploring the impact of freebie promotions and the relevant factors that might influence the value-discounting effect are highly important. This research examines how the complementarity of the items in freebie promotions influences value discounting of the focal and freebie items, and it explores possible mediating mechanisms. Two experiments demonstrate functionally-related complementary (vs. non-complementary) promotions reduce value discounting of both the focal and freebie items. Moreover, promotional attractiveness and perceived risk mediate the impact of functionally-related complementarity on the value-discounting effect. A third experiment provides evidence that affective-based complementarity also produces a similar effect on value discounting, but this acts only through the internal mechanism of promotional attractiveness. The findings have significant implications to both theory and practice.
