Understanding the Impact of Promotional Framing on Sales
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Chapter 1: The Psychology of Promotions
Imagine you're selling clothing and planning a special Easter promotion. How should you present it? One option is to advertise a "free gift": “Purchase a sweater for $50 and receive a scarf at no extra cost!” Alternatively, you could present it as a bundle: “Get both a sweater and a scarf for $50!” Although these promotions essentially offer the same deal, the framing can significantly influence customer perception and behavior.
Research in psychology indicates that the manner in which a promotion is framed can indeed impact customer responses.
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Section 1.1: The Value Perception of Bundle Promotions
A study conducted by Priya Raghubir examined whether customers valued items differently when promotions were framed as a free gift versus a bundle. In this experiment, 74 undergraduate students were randomly assigned to view two different advertisements for Piasso pearls. The ads were identical apart from their headlines.
In the "free gift" scenario, participants learned that pearl earrings were a complimentary gift with the purchase of a pearl necklace for $66. Conversely, in the bundle scenario, they were informed that both the earrings and the necklace could be purchased together for the same price.
Following the advertisements, participants were asked how much they would pay for the earrings alone. Those in the "free gift" group indicated a lower willingness to pay compared to those in the bundle group. This suggests that when an item is presented as "free," consumers tend to assign it a lesser value, which can affect pricing later on.
In the context of our example, customers would likely assign a lower value to the scarf if it’s framed as a free gift compared to when it’s part of a bundle deal. The key takeaway is that if you aim to charge higher prices for additional products after a sale, framing the promotion as a bundle is more effective.
Section 1.2: Repurchase Intentions and Perceived Value
Another study by Hsinhsien Liu and Hsuan-Yi Chou supported these findings by exploring how the framing of promotional items influences customers' repurchase intentions. They found that when items are marketed as a bundle, customers perceive the supplementary item (like the scarf or earrings) to be more valuable. Conversely, when items are presented as a free gift, the perceived value diminishes.
This research highlighted that promotional framing not only affects immediate purchases but also future buying behavior. When a "free gift" is offered, customers tend to view the main item (the sweater or necklace) as more valuable, which can lead to increased likelihood of repurchasing it later. However, they are less inclined to buy the supplementary item again.
In contrast, with a bundle promotion, the main item is valued less, reducing the chances of repeat purchases, while the supplementary item gains perceived value and encourages future purchases.
Chapter 2: Reducing Returns with Effective Framing
A third study by Shinhyoung Lee and Youjae Yi investigated whether promotional framing impacts return rates. With the rise of liberal return policies, understanding how to reduce returns is essential for many businesses. Their findings indicated that framing promotions as a free gift resulted in lower return rates compared to bundle promotions.
The researchers noted that customers feel a greater sense of loss when returning an item labeled as "free," as opposed to one included in a bundle. Thus, if the goal is to minimize returns, using the free gift framing is advisable.
So What Should You Do?
The way you frame your promotion influences several factors:
- Customers’ perception of product value
- Their intention to repurchase after the promotion
- Likelihood of returns
Your promotional strategy should align with your product goals.
Use the "free gift" approach if:
- You want customers to perceive the main item as more valuable.
- You aim to drive more sales of the main item.
- You seek to lower return rates.
For example, if you’re selling online writing courses and offering an SEO e-book, the free gift strategy could boost course sales while minimizing returns.
Use the "bundle" approach if:
- You want customers to perceive the supplementary item as more valuable.
- You’re looking to sell more of the supplementary item.
- Return rates are not a significant concern.
For instance, if you sell skincare products and want to promote moisturizers with eye creams, the bundle strategy could enhance eye cream sales post-promotion.
Bonus Insight: The Power of “$0”
In additional research by Jieun Koo and Kwanho Suk, it was revealed that consumers respond more positively to “$0” promotions compared to “free” offers. The “$0” framing encourages customers to focus on the savings rather than the offer itself, making it a more appealing option.
In summary, consider using “$0” instead of “free” when marketing promotions to enhance customer perception.
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