The Impact of Promotion Price on the Valuation of Offer Price: The Moderating Effect of Product Involvement

Abstract

Abstract:

Conditional promotion offers a product for free or for a low, discounted price along with a required purchase. Value-discounting theory suggests that the extent to which consumers infer that the cost of the free product is low, their willingness to pay for it as a stand-alone product is likely to be low once the promotion is retracted. Based on anchoring theory and selective accessibility theory, however, we claim that how promotion price impacts the valuation of offer price depends on the extent of product involvement. The authors examine the impact of price information and the product involvement on the valuation of offer price by field experiment conducted at a store chain. The results show that, for low involve product, the product on promotion price is used as a natural anchor for value estimation. However, when the product is highly involved, consumers are less likely to consider the value of the product and are influenced by anchors such as the price of the focal purchase. Neither free offer nore low price devalue the offered.

Key words: promotion price, anchoring effect, value-discounting, product involvement

Zhang Feng, Zou Peng, Yu Bo. The Impact of Promotion Price on the Valuation of Offer Price: The Moderating Effect of Product Involvement[J]. , 2016, 28(10): 141-152.

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