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Free Gas! Ads Get Customers Revved Up

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The Associated Press

Published: June 9, 2008

MILWAUKEE - Two magic words are turning consumers' heads lately. Not "Get rich" or "Lose weight." Try "Free gas."

Businesses from banks and hotels to golf-club makers and blood-donation centers are offering promotions that involve free gas - generating more attention and goodwill from price-stunned drivers than traditional promotions might deliver.

For example, Callaway Golf Co. is giving away gas cards worth as much as $100 with the sale of certain drivers. Guests who book three nights through hotels.com will get $50 gas cards. And TCF Bank, based in Wayzata, Minn., is giving $50 gas cards to customers who open checking accounts.

The trend will grow in the short-term as more businesses jump on the free-gas bandwagon, predicts Baohong Sun, a marketing professor at the Tepper School of Business at Carnegie Mellon University.

"A lot of companies, when they make decisions they don't think independently," Sun said. "They'll jump into whatever their competitors are doing, so more companies are likely to mimic this strategy."

But why use gas cards at all? Why not just take $50 off the product price - or offer customers cash instead?

In theory, shoppers should react equally to a $50 discount and a $50 gas card. But buying decisions aren't always driven by logic, said Suzanne Shu, a marketing professor at the UCLA Anderson School of Management.

"The more the purchase feels discretionary, like staying at a luxury hotel, the more the gas cards have impact because people can use them to justify something they might not do otherwise," she said.

Also, people mentally allocate money toward certain expenses - so when an expense decreases the additional windfall seems even more satisfying, Shu said.

Even so, those two words might not retain their magic for long.

Marketing experts say motorists eventually will tune out free-gas promotions if too many businesses offer them. Also, as the price rises far enough past the emotionally charged $4 threshold, people will again learn to accept the cost.

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