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Getting something free is great.
You can save yourself no end of money on market research by simply assuming that customers would like your product, provided it doesn't cost them anything and they don't have to give up anything else to get it. Honestly, you'll shift thousands of whatever it is.
But, of course, you won't make any money. And that's not ideal.
One ingenious way around this problem is to give away something for free at the same time that a customer is buying something else. That way you get to send out all those irresistible messages that there's something free to be had, whilst making the money you need from the revenue on other product.
By virtue of a cunning piece of mental accounting you can split the profit across both products and, providing you haven't ignored the cost of the two, still make a profit.
Unfortunately, recent research suggests that this may not always be as fiendishly clever as it seems.
And it's the usual problem of the unconscious mind's fondness for creating associations that's at the heart of the problem.
Researchers found that customers automatically devalued the product that was provided free. Because it was being given away their assessment of its worth to them was reduced.
In the absence of any other information - an important point that I'll come on to in a moment - customers' use price as a measure of value. So the offer draws attention to the products, but also creates the impression that they can only sell if they are aggressively bundled together in this way.
Whilst the bundled products might well still sell, there is a risk that attempts to sell either product at their intended price later on will be far less successful. In essence, the free promotion has the effect of making the product's regular price feel expensive.
The good news is that there does seem to be a way to counter this negative side to an attractive promotion. Where people were given a positive reason for the products being bundled together, they were far less likely to devalue either of them subsequently.
So, for example, saying the free product is there to enable customers to try something new, or appreciate what a good combination they were to use together.
If you want to use 'Free' as a means of attracting customers, be sure to explain the reason why you're giving away something of value. Otherwise, if left to their own unconscious devices, customers will think less of your product.
Source: Michael A. Kamins, Valerie S. Folkes, and Alexander Fedorikhin. Promotional Bundles and Consumers' Price Judgments: When the Best Things in Life Aren't Free. Journal of Consumer Research, 2009
