| dc.description.abstract | In sales, offering a product for different prices is a common strategy used by companies to promote products and attract consumers. A common promotional tactic is to supplement a required purchase (i.e., a focal product) by offering a free or discounted product (i.e., a supplementary product).
Some previous studies argue that offering a product for free lowers the product’s value and makes consumers less willing to pay for it. According to Kamins, Folkes, and Fedorikhin (2009), offering any one of the products in a bundle as “free” makes consumers less willing to pay for each product when unbundled and sold individually. Raghubir (2004) also argued that the low cost of the supplementary product makes consumers less willing to pay for it as a stand-alone product after the conditional promotion has been terminated. However, several research has examined that consumers’ evaluation of the supplementary product after the promotion has been terminated was higher when it was offered for free than when it was offered at a low, discounted price (Palmeira & Srivastava, 2013). Given the conflicting points of view regarding to the influence of offering a supplementary product for free and the limited research on impacts of complementarity of the products in conditional promotion, this dissertation focuses on the contextual factors of how consumers determine their willingness to pay for a supplementary product after different types of temporary promotions are terminated by using five experiments.
Study 1 shows the similar results found by Palmeira and Srivastava (2013) that when a supplementary product is offered for free, a consumer’s willingness to pay is higher than if the product is offered for a discounted price. In addition, we found the price of a supplementary product and a consumer’s IRP are two independent factors that can influence a consumer’s willingness to pay. A high IRP leads to a higher willingness to pay for the supplementary product than a low IRP. Furthermore, regardless of the supplementary product’s price, the IRP would be the main anchor when estimating willingness to pay.
In line with the results of study 1, study 2 also demonstrated the significant effect of IRP on a consumer’s estimated willingness to pay. Moreover, the results revealed that the IRP and the price of the focal product independently influenced a consumer’s willingness to pay. A higher (lower) priced focal product predicted an increase (decrease) in consumers’ willingness to pay for a supplementary product.
Study 3 provides strong support for the proposed multiple anchoring judgment theory: the promotional price of the supplementary product can increase (decrease) consumers’ willingness to pay for the supplementary product after the promotion ends if it is higher (lower) than consumers’ IRP only when the promotional price is regarded as plausible price information. Consumers use their IRP as a criterion to judge whether the ERP is plausible contextual price information or not.
Study 4 provides additional evidence for the proposed multiple anchoring judgment theory. The original price of the supplementary product can increase (decrease) consumers’ willingness to pay for the supplementary product after the promotion ends if it is higher (lower) than consumers’ IRP only when the original price is regarded as plausible price information.
Study 5 explored the role of the relationship between the price of the focal product and the IRP of the supplementary product, on consumers’ willingness to pay for a supplementary product. Consumers will have higher (lower) willingness to pay for a supplementary product that shares a higher (lower) level of attribute complementarity with the focal product only when the price of the focal product is much higher than the consumer’s IRP for the supplementary product. Limitations and future avenues for research are also discussed. | en_US |