Promotional Bundles and Consumers’ Price Judgments: When the Best Things in Life Aren’T Free

Michael Kamins, Stony Brook University, USA
Valerie Folkes, Marshall School of Business, University of Southern California, USA
Alexander (Sasha) Fedorikhin, Kelley School of Business, Indiana University, USA
Three experiments examined consumers’ willingness to pay (WTP) for products bundled together in a promotion. Describing one of the disparate products in the bundle as “free” decreased WTP for each product when sold individually. However, a “freebie” offer did not influence the overall price for the bundle of disparate products, a finding robust across different settings and populations. The differential effect of freebies is explained by varying judgment difficulty, with the price being easier to arrive at for just a single product than for the combination. Consistent with this explanation factors influencing judgment difficulty moderated the freebie devaluation effect.
[ to cite ]:
Michael Kamins, Valerie Folkes, and Alexander (Sasha) Fedorikhin (2010) ,"Promotional Bundles and Consumers’ Price Judgments: When the Best Things in Life Aren’T Free", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 542-542 .