Skip to main content

Battle royal: Zero-price effect vs relative vs referent thinking

Abstract

This article confronts three psychological influences: relative thinking, referent thinking, and the zero-price effect. The experiment conducted in the context of bundles with complementary components, confirms previous evidence around the dominance patterns between relative and referent thinking when the bargain is a discount; however, when the discount is changed to a free product (worth the same as the discount), the zero-price effect arises. Specifically: (1) if actual price coincides with expected price, relative thinking is the norm, unless the zero-price effect appears; (2) if actual price moderately deviates from expected price, referent thinking is superior to any other effects, relative thinking and the zero-price effect; and (3) if the deviation is extreme, a battle royal among influences takes place: relative thinking beats referent thinking as long as the zero-price effect does not appear. If the zero-price effect is present, it will cancel referent thinking and reverse relative thinking.

This is a preview of subscription content, access via your institution.

Fig. 1
Fig. 2

References

  • Kahneman, D., & Tversky, A. (1984). Choices, values and frames. American Psychologist, 39(4), 341–350.

    Article  Google Scholar 

  • Kahneman, D. (2011). Thinking fast and slow. New York: Farrar, Straus and Giroux.

    Google Scholar 

  • Nicolau, J. L., & Sellers, R. (2012). The free breakfast effect: an experimental approach to the zero price model in tourism. Journal of Travel Research. doi:10.1177/0047287511418370.

  • Nunes, J. C., & Park, C. W. (2003). Incommensurate resources: not just more of the same. Journal of Marketing Research, 40, 26–38.

    Article  Google Scholar 

  • Palmeira, M.M. (2011) The zero-comparison effect. Journal of Consumer Research, 38, forthcoming.

  • Saini, R., Rao, R. S., & Monga, A. (2010). Is that deal worth my time? The interactive effect of relative and referent thinking on willingness to seek a bargain. Journal of Marketing, 74, 34–48.

    Article  Google Scholar 

  • Shampanier, K., Mazar, N., & Ariely, D. (2007). Zero as a special price: the true value of free products. Marketing Science, 26(6), 742–757.

    Article  Google Scholar 

  • Tversky, A., & Kahneman, D. (1986). Rational choice and the framing of decisions. Journal of Business, 59(4), 251–278.

    Article  Google Scholar 

  • Zhang, S., & Fitzsimons, G. J. (1999). Choice–process satisfaction: the influence of attribute alignability and option limitation. Organizational Behavior and Human Decision Processes, 77(3), 192–214.

    Article  Google Scholar 

  • Zhang, S., Kardes, F. R., & Cronley, M. L. (2002). Comparative advertising: effects of structural alignability on target brand evaluations. Journal of Consumer Psychology, 12(4), 303–311.

    Article  Google Scholar 

  • Zhang, S., & Markman, A. B. (1998). Overcoming the early entrant advantage: the role of alignable and nonalignable features. Journal of Marketing Research, 35, 413–426.

    Article  Google Scholar 

  • Zhang, S., & Markman, A. B. (2001). Processing product unique features: alignability and involvement in preference construction. Journal of Consumer Psychology, 11(1), 13–27.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Juan L. Nicolau.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Nicolau, J.L. Battle royal: Zero-price effect vs relative vs referent thinking. Mark Lett 23, 661–669 (2012). https://doi.org/10.1007/s11002-012-9169-2

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11002-012-9169-2

Keywords

  • Relative thinking
  • Referent thinking
  • Zero-price effect