The Science Behind “Free Gift” and Bundling Promotions
Use these insights from psychology to optimize your offerings
Imagine you sell clothes. You want to have a special promotion for Easter. How should you frame it? For example, you could frame the promotion as a free gift: “Buy a sweater for $50, and get a scarf free!” Or, you could frame the promotion as a bundle: “Buy a sweater and a scarf for $50!” These promotions are materially the same. The only difference is in how they are framed. Does it matter? Does framing the promotion affect your returns?
Research from psychology has found that it does matter: the promotional frame you use can affect your customers’ perceptions and behaviour.
Bundle Promotions Elicit a Higher Willingness to Pay
One study by Priya Raghubir looked to see whether framing promotions as a free gift versus as a bundle changed how much customers valued the products. Raghubir randomly assigned 74 undergraduate students to two conditions that featured promotion advertisements for Piasso pearls. The ads in each condition were identical except for the headline.
- In the free gift condition, participants were told that Piasso’s pearl earrings were included as a free gift with the purchase of a pearl necklace for…
