Are “buy X get X free” price promotions effective? An acquisition-transaction value perspective

Abstract

Purpose “Buy X Get X Free” promotions are popular across retail settings. Retailers promote a variety of products using this promotional frame. However, past research contains mixed findings about the effectiveness of this promotion compared to the straightforward discount on a single unit of a product. The goal of this research is to employ a theoretical lens to examine the effectiveness of “Buy X Get X Free” promotions. Design/methodology/approach The theoretical framework was tested in two experiments using different products and samples. The data collected from each experiment were analyzed using both descriptive and inferential techniques to assess support for the theoretical arguments. Findings Findings reveal that at identical levels of per-unit discount, the “Buy X Get X Free” promotion is perceived less favorably by consumers than a straightforward single-unit discount. Consumers perceive lower transaction value and acquisition value and, thereby, a lower purchase intention, from the “Buy X Get X Free” promotion compared to a single-unit discount. Practical implications This research was conducted keeping in mind the popularity of the “Buy X Get X Free” promotion in the real world. The findings caution retailers against indiscriminately using this promotional frame. Originality/value Using a theoretical lens, this research proposes and validates a framework to systematically examine consumers' perceptions of the two popular discount frames. The proposed theoretical framework provides a richer understanding of the underlying consumer psychology that drives the evaluation of these promotions. Further, primary data from lab experiments validates the framework. The research also helps advance the understanding of consumer evaluation of sales promotions in general.

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