Framing a price bundle: the case of “buy/get” offers

Purpose – The underlying thesis of this paper is that consumers will infer that the costs of production of a product that is offered free are low, and this will reduce the price they are willing to pay for the product when it is a stand‐alone offering. Design/methodology/approach – Two laboratory experiments examine how consumers respond to products that have been offered as “free gifts with purchase” of another product. Findings – Study 1 shows, that when an economically identical offer is framed as a joint bundle (Buy X and Y for $), compared with when it is framed as a “Buy one, get one free” offer, consumers are willing to pay less for the product offered “free.” Study 2 shows that, when a product is given away “free,” then consumers are willing to pay less for it as a stand‐alone product, especially when the original promotional offer does not include the price of the free gift. Research limitations/implications – Results imply that the design and communication of consumer promotions affect the price consumers are willing to pay for a product. Practical implications – Managerial implications for the design and communication of consumer promotions are discussed. Originality/value – The paper adds to the growing body of research that shows that a price promotion has more than just an economic effect; it also has an informational effect through which it affects consumer responses.