According to a new study in the Journal of Consumer Research, consumers may value a free gift more than a deeply discounted promotional item, especially if it comes from a prestigious brand.
According to its authors, Mauricio M. Palmeira (Monash University) and Joydeep Srivastava of the University of Maryland; “Since consumers believe the value of a free product is likely to be consistent with the value of the purchased one, pairing a free product with a high-end one may very well increase perceptions of its value.”
And these findings may provide brands not currently offering this service, a way to gain confidence from the consumer with minimum effort and overhead costs.
Brands will need to take care to discount in the right way...
More often then not cosmetics companies such as Lancôme or Clinique offer bonus products for free or at a low discounted price with the purchase of a full-priced product, which is where the authors say has built momentum for them with consumers.
When a free product is paired with an expensive one, consumers assume it is worth more than if it was offered at a low discounted price, they told CosmeticsDesign.com USA.
However, they go on to explain the conundrum of the matter lies with the fact that consumers also tend to look at special offers in different ways. So for the likes of a luxury brand offering say a free skin cream with a purchase, consumers assume it isn’t cheap. But, according to the study's findings, consumers might, on the other hand assume the product is cheaper if the brand offers it for $1.
“Promotions with low discounted prices devalue products more than free offers. In fact, free offers may not devalue products at all when they are paired with an expensive purchase, as consumers will use the price of the focal product to estimate the value of the supplementary product,” the authors added.