The Price of “Free”-dom: Consumer Sensitivity to Promotions with Negative Contextual Influences

Abstract

Past research has shown that monetary promotions (e.g., discounts) are more likely to be processed relative to and integrated with the original product price than are free promotions. We posit that because of this difference, free promotions are more focal and salient than monetary promotions. In a set of three experiments, we demonstrate that this salience results in free promotions being less susceptible than equivalent monetary discounts to negative contextual information on quality that can potentially lower purchase intentions. We show that this effect can be reversed when respondents focus on other pieces of information that diminish the salience of the free promotion.