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Xiaomeng Fan's Lecture Notice:When Free Products are Too Costly: A Dual Process Model for Understanding the Effects of Zero Pricing on Consumer Demand

Publish Date: 2018/09/26 10:51:51    Hits:

Title:When Free Products are Too Costly: A Dual Process Model for Understanding the Effects of Zero Pricing on Consumer Demand

Presenter:Xiaomeng Fan

Time:2018.9.28 14:00-16:30

Location:A1048

Abstract:

Both intuition and prior research indicate that a zero (vs. low) price can substantially enhance consumer demand. Here, I show that a zero price can also backfire. Zero pricing produces two parallel tendencies: positive affect, plus cognitive scrutiny of the offer for nonmonetary costs (e.g., time costs, risk of disappointment). Although consumer demand can be boosted by positive affect associated with zero pricing, if noteworthy nonmonetary costs are detected, the anticipated burden of these costs overrides the positive affect and results in reduced demand. Results of four lab experiments and one natural experiment in the field show that zero (vs. low) prices can reduce consumer demand when nonmonetary costs are nontrivial. Whereas nonmonetary costs played little role in consumers’ reactions to offers involving low prices, the same costs significantly undermined demand when the offers were free, thus supporting the specialness of zero pricing in triggering cognitive scrutiny over nonmonetary costs.

Introduction:

Xiaomeng Fan is a PhD Candidate in Marketing at the Kellogg School of Management, Northwestern University. Her research focuses on understanding consumers’ affective reactions to brands and products, and how these reactions interact with cognition and motivation to influence consumer learning, judgement and decision making. The interplay between affective and cognitive responses is examined in her dissertation project regarding evaluative conditioning and in another research regarding information processing of zero prices. She also studies the dissociation of wanting (motivational) versus liking (affective) systems in human beings, and the unique impact of each system on consumers’ purchasing behavior. Prior to the PhD program, Xiaomeng received her Masters degree in Consumer and Family Sciences from Purdue University and her Bachelor of Business Administration degree from Renmin University of China.