How Social Crowding Affects Price Comparisons of Bundling Promotions
Jeonggyu Lee, Ph.D. Student, Department of Marketing
Faculty Advisor: Rajneesh Suri, Ph.D., Department of Marketing
LeBow College of Business
BACKGROUND
It is not uncommon for consumers to
see various forms of bundle promotions
displayed inside a store such as “buy
one get one free,” “buy one get one 50%
off”. Buying decisions of promoted
bundling are frequently made in a retail
store, even when stores are crowded.
According to International Council of
Shopping Centers (2014), almost 45%
of annual retail sales occur during the
holiday seasons when complaints of
store crowdedness peak. However,
limited numbers of studies have
examined consumers’ deal comparison
process in the social crowding context.
PURPOSE AND HYPOTHESIS
In my study, I integrate and advance these two streams of research on the
effect of free promotion salience and social crowdedness accompanying with
the feeling of anxiety. I expect that consumers show higher deal liking toward
free-gift bundling promotion (“buy one get one free”) under uncrowded
condition because the word “free” itself can give an impression to avoid
overloading cognitive to infer the price of bundle. In addition, processing
fluency of the target promotion will induce consumers to form favorable
attitude toward free-gift promotion. On the other hand, in crowded
environments, consumers are eager to escape from those situations due to high
level of anxiety, and, in turn, they are likely to use their heuristics that they
regard free-gift promotion (“buy one get one free”) as a monetary loss.
Because retailers seems to force them to purchase additional item even when
they are not sure what they really want. As a result, consumers will choose a
price discount bundle as reduction in losses. Thus, I posit:
H1a: High level of social crowding will lead to greater preference for
price discount promotions than for free-gift promotions.
H1b: Low level of social crowding will lead to greater preference for freegift promotions than for price discount promotions.
H2: Anxiety will mediate the relationship between the level of social
crowding and preference for promotion.
MODEL AND METHODS
Research design
Study 1a: Social crowding and preference for bundling
promotion
I designed this study to evaluate whether social crowding
has the potential to affect the preference for promotion deal.
Method and Procedure
3 (social crowdedness: control vs. uncrowded vs. crowded)
× 2 (promotion type: free-gift vs. price discount)
between-subjects design was used in this study.
Participants (N = 97) were recruited using the online
survey website Mechanical Turk, and assigned
randomly to one of the six manipulated conditions
and received monetary compensations.
Respondents in social crowding conditions were exposed to a either a crowded picture or a uncrowded one.
They were encouraged to spend a few minutes looking at the image before briefly describing how they
would feel if they were in the presented scene. Then, participants were told to imagine that they have run
out of shampoo and need to go for shopping. They come across a local retailer’s sales promotion in the
mall, which offers a package of two identical bottles of shampoo with a unit price. In free-gift promotion
(“buy one get one free”) condition, participants read “The product on the left is the Neutrogena shampoo.
Original price is $7.35. Consider the following promotion from Neutrogena: Buy one Neutrogena shampoo
and get another for free.” In price discount promotion (buy two get 50% off) condition, participants read
“The product on the left is the Neutrogena shampoo. Original price is $7.35. Consider the following
promotion from Neutrogena: Buy two Neutrogena shampoo and get 50% off.” Afterwards, respondents
assessed deal liking with four items items captured a deal liking (“How much did you like the deal? (1 =
“dislike extremely,” and 7 = “like extremely”)”; “How much did you like the bundle off? (1 = “dislike
extremely,” and 7 = “like extremely”)”; (Coulter & Roggeveen, 2014)). Finally, participants were asked to
indicate their age and gender. Reponses to these items had no effect on the results of study and are not
discussed further. After completing the questionnaire respondents were debriefed and thanked for their
participants.
Study 1b: Anxiety as a mediator
This study has two objectives. The first objective is to replicate the effects observed in the previous study
about how social crowdedness moderates the effect of different types of bundling promotion on price liking
or deal liking of particular bundling promotion. A second objective is to identify the role of anxiety in
social crowded environments.
Method and Procedure
I used a 3 (social crowdedness: control vs. uncrowded vs. crowded) × 2(promotion: free-gift vs. discount)
between-subjects design. I applied the different stimuli (ads for bundling promotion) and similar
procedures from study 1a. Four items were used to measure a deal liking (“How much did you like the
deal? (1 = “dislike extremely,” and 7 = “like extremely”)”; “How much did you like the bundle off? (1 =
“dislike extremely,” and 7 = “like extremely”)”; “The promoted price for this shampoo represents a good
deal (1 = “disagree strongly,” and 7 = “agree strongly”)”; “The price listed in the promotion represents a
fair price (1 = “disagree strongly,” and 7 = “agree strongly”); α = .925”; (Coulter & Roggeveen, 2014)). I
examined the role of anxiety as a mediator in this study. Participants’ anxiety were measured using seven
Likert scale that built on past scales of anxiety. For example, sample items included the following: “I feel
more nervous and anxious than usual,” “I feel tense or wound up,” “I get a sudden feeling of panic (α =
.955)”
RESULTS
Manipulation check. As I expected, participants in crowded condition reported
that they felt more crowded (M = 6.22, SD = 1.56) than those in uncrowded
condition (M = 1.29, SD = 0.46; t(57) = 15.79, p < .001). Therefore, I predicted
that the manipulation of perceived crowdedness was successful.
Main analyses. I proved preference of consumers toward free-gift over price
discount promotions totally depending on the level of social crowding in the
store. The moderation relationship between the level of social crowding and deal
liking was statistically significant (F(2,91) = 3.295, p < .05). When consumers
are in the uncrowded environment, they are more likely to choose a free-gift than
price discount bundling because it is easier for them to process information of
promotion. On the other hand, when consumers are in the crowded environment,
they are more likely to choose a price discount than a free-gift bundling since
they prefer reduction in losses to gains due to their activation of defensive
system.
BIBLIOGRAPHY
Chandran, S., & Morwitz, V. G. (2006). "The Price of “Free”‐dom: Consumer Sensitivity to
Promotions with Negative Contextual Influences". Journal of Consumer Research, 33(3), 384-392.
Coulter, K. S., & Roggeveen, A. L. (2014). "Price Number Relationships and Deal Processing
Fluency: The Effects of Approximation Sequences and Number Multiples". Journal of marketing
research, 51(1), 69-82.
Maeng, A., Tanner, R. J., & Soman, D. (2013). "Conservative when crowded: social crowding and
consumer choice". Journal of marketing research, 50(6), 739-752
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