Topic: No Such Good Thing As A Free Lunch: The Negative Effect of Zero Price on Consumer Demand
Speaker: Fengyan Cai, Associate Professor of Marketing, Shanghai Jiao Tong University, Antai College of Economics & Management
Time: Monday, 16 April, 13:30-15:00
Location: Room 217, Guanghua Building 2
Both intuition and prior research indicate that people like cheap products and that free products are particularly attractive. Therefore, compared to a low price, a zero price can substantially enhance consumer demand. In this research, we show that a zero price can also backfire. We argue that zero pricing produces two parallel tendencies: positive feelings about obtaining a product or service without spending money, plus cognitive scrutiny of the offer for hidden or incidental costs (i.e., non-monetary costs that consumers may need to pay if they take the offer). Such scrutiny is especially likely for zero (vs. low) prices, which can seem “too good to be true.” When this cognitive scrutiny indicates that incidental costs are low, consumer demand will be boosted by the positive affect associated with the zero price. However, when incidental costs seem more substantial, the anticipated burden of these costs overrides the positive affect and results in reduced consumer demand. Through four lab experiments and one field study in the auto repair service industry, we show that a zero (vs. low positive) price does indeed reduce consumer demand when incidental costs are high. The proposed mechanism (the relative importance of affect versus deliberation) is tested and supported.
才凤艳，博士毕业于香港中文大学，目前就职于上海交通大学安泰经济与管理学院。才博士的研究兴趣集中在消费者信息处理、判断与决策方面。目前已经在Journal of Marketing Research, Journal of Consumer Research, Journal of Consumer Psychology, Psychological Science, Journal of Experimental Social Psychology等国际杂志发表论文多篇。
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