Impact of Bundle Type, Price Framing and Familiarity on Purchase Intention for the Bundle

Posted: 21 Jan 2015

See all articles by Bari A. Harlam

Bari A. Harlam

CVS/pharmacy

Aradhna Krishna

University of Michigan, Stephen M. Ross School of Business

Donald R. Lehmann

Columbia Business School - Marketing

Carl F. Mela

Duke University - Fuqua School of Business

Date Written: January 19, 2015

Abstract

Bundling of products is very prevalent in the marketplace. For example, travel packages include airfare, lodging, and a rental car. Considerable economic research has focused on the change in profits and consumer surplus that ensues if bundles are offered. There is relatively little research in marketing that deals with bundling, however. In this article we concentrate on some tactical issues of bundling, such as which types of products should be bundled, what price one can charge for the bundle, and how the price of the bundle should be presented to consumers to improve purchase intent. For example, we hypothesize that bundles composed of complements of equally priced goods will result in higher purchase intention. We also hypothesize that price increases will result in larger purchase intention changes than price decreases. Further, we expect that the presentation format for describing the price of the bundle will influence purchase intention in general, and depending on the price level of the bundle, different presentation formats will result in higher purchase intention. Finally, we hypothesize that purchase intention changes associated with different price levels will be higher for subjects who are familiar with the products than for subjects who are less familiar with the products. We used an interactive computer experiment conducted among 83 Master of Business Administration (MBA) students to test our hypotheses. Our findings suggest that: (1) bundles composed of complements have a higher purchase intent than bundles of similar or unrelated products, (2) consumers are more sensitive to a bundle price increase than to a bundle price decrease of equal amounts, (3) different presentation formats for describing the price of the bundle influence purchase intention, and (4) more familiar subjects respond to different presentations of equivalent bundles in different ways than less familiar subjects. We did not find any support for the hypothesis that bundles composed of similarly priced items have higher purchase intent than bundles composed of unequally priced products.

Suggested Citation

Harlam, Bari A. and Krishna, Aradhna and Lehmann, Donald R. and Mela, Carl F., Impact of Bundle Type, Price Framing and Familiarity on Purchase Intention for the Bundle (January 19, 2015). Journal of Business Research, Vol. 33, No. 1, 1995. Available at SSRN: https://ssrn.com/abstract=2552275

Bari A. Harlam

CVS/pharmacy ( email )

One CVS Drive
Woonsocket, RI 02895
United States
401-770-3799 (Phone)
401-769-2211 (Fax)

Aradhna Krishna (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Donald R. Lehmann

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Carl F. Mela

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7767 (Phone)

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