The boomerang effect of zero pricing: when and why a zero price is less effective than a low price for enhancing consumer demand.

ABSTRACT: Prior literature has demonstrated the power of zero pricing to boost consumer demand, but the current research shows a novel "boomerang effect": a zero (vs. low, nonzero) price can lower demand when the offer comes with high incidental costs (e.g., the time cost in commuting to an offline class; the physical risk of getting a new vaccine). Five studies show that zero pricing, relative to low pricing, has a boosting (boomerang) effect on demand when incidental costs are low (high). The diverging effects of zero pricing on demand are explained by a dual-process model with a positive affective pathway and negative scrutiny pathway. Zero pricing triggers both positive affect and cognitive scrutiny of incidental costs; when incidental costs are high, the scrutiny pathway overrides the affective

SUBMITTER: Fan X 

PROVIDER: S-EPMC8852885 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature