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When More Is Less: The Impact of Base Value Neglect on Consumer Preferences
for Bonus Packs over Price Discounts
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4 authors, including:
Akshay Rao
University of Minnesota Twin Cities
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Keywords: bonus pack, price discount, percentage, numeracy, framing
arketing promotions in the forms of price and quan- on a $10 item, and a bonus pack may be presented as a 50%
tity changes are ubiquitous in the marketplace. quantity increment on an 8 oz. package. Consumers calcu-
While price discounts are among the most widely lating the net effect of these two promotions must consider
employed sales promotion tactics (e.g., DelVecchio, Krish- the percentages associated with the base values (i.e., 33%
nan, and Smith 2007; Mazumdar and Jun 1993), bonus off on a base of $10, and 50% more on a base of 8 oz.) to
packs, defined as offering more of the same product for the arrive at an evaluation of the respective deals.
same price (Mishra and Mishra 2011; Ong, Ho, and Tripp In examining consumers’ responses to these two types
1997), are becoming increasingly popular. Anecdotal evi- of promotions, some prior research has speculated that any
dence and a quick informal survey of flyers, newspaper observed preference for bonus packs might be due to the
inserts, and online coupons reveal the widespread use of way the options are framed (Diamond and Sanyal 1990).
bonus packs for a variety of product categories, including Specifically, a quantity increment might be perceived as a
clothing (e.g., buy one, get one free at Macys.com), grocery gain, while a price reduction might be perceived as a reduc-
products (e.g., soup, beer, chocolates), and household items tion in a loss. Because gains are likely to be preferred to
(e.g., toothpaste, hair care products, batteries). reductions in losses due to the curvature of prospect
The magnitude of both price discounts and bonus packs
theory’s value function (Kahneman and Tversky 1979),
is frequently communicated in percentage terms (Hardesty
bonus packs might be preferred to price discounts. How-
and Bearden 2003; Mishra and Mishra 2011). For example,
ever, this prospect theory–based speculation is theoretically
a price discount may be presented as a 33% price reduction
ambiguous because, in some regions of the prospect theory
value function, an incremental gain may not be as valuable
as a reduction in a loss. Moreover, the empirical evidence
for this speculation is mixed at best, with bonus packs being
preferred in some settings and price discounts being pre-
Haipeng (Allan) Chen is an Associate Professor and Mays Research Fel-
low, Marketing Department, Texas A&M University (e-mail: hchen@mays.
were among the top 25% in terms of accuracy, right before with previous research showing that perceptions of a firm’s profit
they responded to the focal dependent measures. This affected consumers’ reactions (Campbell 1999), we justified the
price and quantity changes with cost changes to control for profit
instruction was omitted in the low-motivation condition.
perceptions, to reduce the possibility of generating extreme reac-
We manipulated our last factor, outcome valence, as fol- tions (especially to changes that are unfavorable to consumers)
lows (unfavorable outcomes in parentheses): that would reduce the power of detecting the predicted differences.
Imagine that you are out of coffee beans and you have to Second, we used 33.33% instead of 35%, to reduce the effect of
buy some today. You noticed that due to decreases rounding and to make the correct answer unambiguous. Third, we
(increases) in transportation costs, the prices of your specified the same beginning price for the two focal brands (i.e.,
favorite brands of coffee beans have decreased (increased). $11.59) and told participants that both brands were sold by weight
and that they could buy as much, or as little, as they wanted, thus
The price was $11.59 per lb. for both brands. Now due to in effect equating the final price. Finally, we described the bonus
the price decrease (increase), you will get 50% more pack as “50% more” instead of “50% more free” to eliminate the
(33.33% less) of Brand A for the same price. In the mean- potential confound of the word “free.”
TABLE 1
Attitude Toward Offer Means (SD) in Study 3
Motivation = High Motivation = Low
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