Decision Difficulty in Bundle Choice: The Role of Complexity, Uniqueness, and Similarity
Marketing Science Institute Working Paper, Report No. 02-103
Posted: 23 Oct 2002
Date Written: May 2002
"Digital convergence" and "bundled services" are key characteristics of the current marketing environment. Bundles of disparate services such as telecommunications and energy-related offerings are becoming commonplace. The challenge for service providers is to determine how to configure packages that best meet customers' needs. One approach is to create a menu of bundles that makes the choice task easy for the consumers. Based on the literature on multi-attribute decision making, and using both qualitative methods (focus groups) and quantitative methods (surveys administered to households), they investigate the impact of three variables on perceived decision difficulty in bundle choice: (1) bundle size (the number of services in each bundle), (2) the number of unique services between competing bundles, and (3) the perceived similarity between the competing bundles.
This study finds that (1) larger bundles make decisions more difficult, (2) more unique (and fewer common) services between competing bundles increases decision difficulty for small (two-service) bundles (but interestingly not for large bundles), and (3) similar bundles of similar services present a more difficult choice compared to dissimilar bundles. These findings suggest that firms need to manage the number and nature of services they put together in bundles, as well as how they present the bundles in the marketplace (e.g., highlighting the differences across bundles and making them less similar to each other).
Keywords: Decision difficulty, bundling, consumer choice
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