Does "Bait and Switch" Really Benefit Consumers?

William L. Wilkie , Carl F. Mela , Gregory T. Gundlach

While the field of marketing science has long been interested in the effects of promotional efforts, public policy issues involving illegal marketer fraud and deception have generally not been addressed in this body of work. One key exception to this generalization is a Marketing Science article suggesting that the practice of "bait and switch" may be beneficial to consumers and, furthermore, that the Federal Trade Commission should investigate revising its standards to legitimize this practice (Gerstner and Hess 1990). This finding and recommendation seemed so significant that it is surprising that the recommendation has not, to date, been explored in greater detail.

In this paper we further explore the impact of the two components of bait and switch: out of stock and upselling. We do this by using Moorthy's (1993) theoretical modeling framework to systematically extend and assess the Gerstn and Hess model. We find that the previously reported increase in consumer welfare that arises from allowing out of stock conditions at retailers is actually due to the utility created by salespersons' explaining product features and benefits, not by the out of stock. Thus, the ramifications i both our legal and modeling analyses are that deceptive bait-and-switch practices result in harm to consumers and should not be legalized.

Our paper concludes by proposing worthwhile modeling issues for further exploration. In addition, we suggest that our procedure for analyzing public policy issues (by exploring the confluence of law, consumer behavior, and marketing models) can serve as a useful exemplar for further contributions to public policy by marketing scientists.

(Pricing; Promotion; Public Policy; Bait and Switch)