Is $0 Better than Free? Consumer Response to "$0" versus "Free" Framing of a Free Promotion

Abstract

This research explores the framing effect of free promotions on consumer responses. Specifically, the same free promotion can be presented as "free" (e.g., "Get Product X for Free") or "$0" (e.g., "Get Product X for $0"). This study examines whether such presentations affect consumer preference for promotions. Results of ten experiments, including a field study, demonstrate that a free promotion is evaluated more favorably when presented as "$0" than "free." This framing effect occurs because of the differential focus on the benefits of free promotions. The "$0" frame leads consumers to focus more on the cost-saving benefit of a free promotion, whereby people perceive that they save the entire cost of a free offer because of the promotion. By contrast, the "free" frame leads consumers to focus on obtaining a free offer itself. Thus, people perceive that the benefit of a promotion is the certain gain of the free offer. Given that the value associated with avoiding loss (i.e., cost) is greater than the value of an equivalent gain, $0 promotions are evaluated more favorably. (C) 2019 New York University. Published by Elsevier Inc. All rights reserved.