Effect of product category on promotional choice: comparative study of discounts and freebies

Abstract

Purpose – Marketers have been using discounts and freebies for sales promotion strategy for a long time, yet a dilemma concerning better promotion remains. The paper tries to address this issue through empirical research by classifying sales promotion based on their utility and relatedness to the product to which they are bundled.Design/methodology/approach – Two hypotheses were drawn: there is a distinctive preference of sales promotional offering, when it is bundled with a product, and the preference of promotion varies with the product category it is bundled with; discounts by retailers are preferred over advertised discounts, but they negatively affect the credibility of the product The hypotheses were tested by a double‐staged experimental protocol. The first stage standardized the perceived price of the freebies, and the second stage consisted of a 2 × 2 × 2 mixed model experiment. The first hypothesis was tested with Friedman's Test and Wilk's λ, and the second hypothesis was subjected to t‐test an...