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Consumer Preference for Product Bundles: The Role of Reduced Search Costs

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Abstract

Most prior research on bundling from a consumer perspective has focused on how bundles are processed, particularly from a prospect theory or mental accounting perspective. In contrast, relatively little research has examined the factors that might drive consumer preference for bundles versus individual items. This article addresses one such factor: the potential to reduce search and assembly costs. Through exploratory interviews and two laboratory experiments, the authors show that preference for a bundle is greater when bundle choice will reduce search effort than when it will not, particularly among consumers who are less motivated to process information.

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... Prior work by Harris and Blair [4] and Sharpe and Staelin [5] suggests consumers may prefer bundles because bundle selection requires less cognitive effort-resulting in less information processing and a reduction in consumer search efforts. In addition to cognitive load, cognitive traits, such as one's need for cognition, have also been suggested as having an influence on the likelihood of bundle selection. ...
... Need for cognition can be thought of as an individual's motivation to process information and their inclination to engage in effortful thinking [6][7][8][9]. Consumers with lower need for cognition have been found to exhibit even greater preference for bundled products [4]. ...
... Prior work by Guiltinan [24] suggested consumers may prefer bundles because of the value they provide in reducing search efforts-not having to search for and assemble a set of individual selections. Work by Harris and Blair [4] has shown that consumers may prefer bundled choices over individual options, as it has been suggested that bundle selection reduces search efforts and requires less information processing. However, although Harris and Blair propose that bundle preference may be associated with an inclination towards reducing one's mental strain, cognitive load was not directly manipulated. ...
Article
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Product bundling is a common retail marketing strategy. The bundling of food items has the potential to increase profits in the grocery sector, particularly for fresh produce, which often has lower profit margins. Although prior work suggests consumers prefer bundles because they require less cognitive effort to select, no study has yet experimentally manipulated cognitive load when food bundles are included in the choice set. To test whether bundle preference differs when cognitive resources are constrained, a grocery shopping experiment was conducted with 250 consumers in the midwestern U.S., in a laboratory that featured a grocery store display. Consumers who grocery shopped under cognitive load had a higher odds of selecting a food bundle even when the bundle did not offer a price discount. Results suggest food bundles may be preferred because they require less cognitive effort to process, which could benefit consumers by simplifying the grocery shopping experience. Additional factors found to influence food bundle selection included whether the bundled items were perceived as being complementary and hunger levels. Food bundles could help lessen cognitive effort associated with grocery shopping and may especially appeal to those who do not enjoy food shopping.
... For consumers, bundling represents a reduction in transaction costs (Harris and Blair, 2006;Tanford et al., 2011) and increased savings (Kwon and Jang, 2011) because, usually, the total cost of purchasing the items separately would be more expensive than the buying them in a bundle (Arora, 2008;Heeler et al., 2007;Yan and Bandyopadhyay, 2011). Bundling alone may not create added value for the consumer, so a discount should be offered to motivate consumers (Stremersch and Tellis, 2002). ...
... For five-star hotels, the IPP is €98.00 and the OPP €99.00, which are very close. According to Raab et al. (2009), the closeness between the IPP and the OPP represents respondents' lower price consciousness (in line with the results of Harris and Blair, 2006;Nagle et al., 2014;Dominique-Ferreira et al., 2016). ...
... Results for mixed-joint bundling show that 80.3 per cent of respondents would accept the proposed bundles, with the main product being the room and dinner and massage the services of that would receive the discount. For consumers, bundling can be considered as a means of obtaining a price reduction (Harris and Blair, 2006). Therefore, in this context, the higher acceptance of the bundle offer suggests that consumers understand bundling as a purchase with associated savings and positive (in line with Repetti et al., 2015). ...
Conference Paper
Purpose: Price has an important influence on consumers’ purchasing decision and consequently in firms’ revenues and profitability. This paper aims to study customers’ price sensitivity of three and five-star hotels. Methodology: Data was gathered through an ad hoc questionnaire. The Van Westendorp Price Sensitivity Meter (PSM) was applied in order to estimate customers’ price sensitivity. Findings: Results show what is the optimal price both to three and five-star hotels. Research limitations/implications: The size of the sample could be higher. It would be important to know what characteristics and services customers value most in the hospitality industry in order to better understand what factors influence price sensitivity. This research may be important to managers understand how customers of three and five-stars hotels react to price changes. Practical implications: Findings help managers to structure effective prices and understand how they can increase or decrease their prices in order to generate more profits.
... For consumers, bundling represents a reduction in transaction costs (Harris and Blair, 2006;Tanford et al., 2011) and increased savings (Kwon and Jang, 2011) because, usually, the total cost of purchasing the items separately would be more expensive than the buying them in a bundle (Arora, 2008;Heeler et al., 2007;Yan and Bandyopadhyay, 2011). Bundling alone may not create added value for the consumer, so a discount should be offered to motivate consumers (Stremersch and Tellis, 2002). ...
... For five-star hotels, the IPP is €98.00 and the OPP €99.00, which are very close. According to Raab et al. (2009), the closeness between the IPP and the OPP represents respondents' lower price consciousness (in line with the results of Harris and Blair, 2006;Nagle et al., 2014;Dominique-Ferreira et al., 2016). ...
... Results for mixed-joint bundling show that 80.3 per cent of respondents would accept the proposed bundles, with the main product being the room and dinner and massage the services of that would receive the discount. For consumers, bundling can be considered as a means of obtaining a price reduction (Harris and Blair, 2006). Therefore, in this context, the higher acceptance of the bundle offer suggests that consumers understand bundling as a purchase with associated savings and positive (in line with Repetti et al., 2015). ...
Article
Full-text available
Purpose The purpose of this paper is to investigate and identify the price sensitivity of consumers of three- and five-star hotels and to determine the impact of bundling strategies on consumers’ price sensitivity. Design/methodology/approach To calculate price sensitivity, authors apply the van Westendorp’s price sensitivity meter (PSM). To understand the impact of bundling strategies, univariate and bivariate techniques are applied. Findings PSM results reveal the optimal prices and the range of acceptable prices for three- and five-star hotel. The bundling strategy results reveal that five-star customers are less sensitive to mixed-leader bundling. Regarding mixed-joint bundling, managers could improve sales through bundling strategies if they selected an attractive service (e.g. restaurants). Practical implications Findings assist hotel managers to understand the different price sensitivities, according to the hotel typology. Managers can manage prices without the risk of losing market share or revenue. The results help managers in deciding which bundling strategies they can create, as well as the services to be included to achieve highest profitability. Originality/value No research to date to the best of the authors’ knowledge has attempted to understand and compare the role of bundling strategies in three- and five-stars hotels. Moreover, no research has attempted to measure and compare customers’ price sensitivity of three- and five-stars hotels.
... For consumers, bundling represents a reduction in transaction costs (Harris and Blair, 2006;Tanford et al., 2011) and increased savings (Kwon and Jang, 2011) because, usually, the total cost of purchasing the items separately would be more expensive than the buying them in a bundle (Arora, 2008;Heeler et al., 2007;Yan and Bandyopadhyay, 2011). Bundling alone may not create added value for the consumer, so a discount should be offered to motivate consumers (Stremersch and Tellis, 2002). ...
... For five-star hotels, the IPP is €98.00 and the OPP €99.00, which are very close. According to Raab et al. (2009), the closeness between the IPP and the OPP represents respondents' lower price consciousness (in line with the results of Harris and Blair, 2006;Nagle et al., 2014;Dominique-Ferreira et al., 2016). ...
... Results for mixed-joint bundling show that 80.3 per cent of respondents would accept the proposed bundles, with the main product being the room and dinner and massage the services of that would receive the discount. For consumers, bundling can be considered as a means of obtaining a price reduction (Harris and Blair, 2006). Therefore, in this context, the higher acceptance of the bundle offer suggests that consumers understand bundling as a purchase with associated savings and positive (in line with Repetti et al., 2015). ...
Conference Paper
Price bundling is one of the most important pricing strategies in the hospitality industry. This paper aims to investigate the specific importance of mixed-joint bundling strategy in hotels' profitability. Data was gathered through an ad hoc questionnaire, administrated in three and five-star hotels'. Univariate and bivariate techniques were performed to eventually identify statistical differences. The results show statistical differences between bundling with two services and bundling with more than two services included. Bundling strategy with restaurant service included is more attractive to customers in the hospitality industry. With these findings, managers can structure effective but different bundling solutions for both 3 and 5 stars hotels.
... In 2012, a survey on the consumption behavior of iPad users in five Latin American countries was published by de Gammarano, Arruda-Filho, and Farias Filho (2012). This research aimed to explain consumer preferences in each of the five countries analyzed, using theories to describe the motivations for consumers to use technological devices in order to obtain social status (Katz & Sugiyama, 2006), justify their hedonic use through the utilitarian features of the devices (Okada, 2005), and the users' interest in similar products (Gill, 2008;Harris & Blair, 2006;Nunes, 2000). ...
... Previous generations were defined primarily by the titles and plots of the games; in addition, the consoles themselves were dedicated devices (with only one specific function) and did not diversify from their native form of interaction with users (Nascimento, 2013). However, the beginning of the 7th generation marked a new phase for the games industry and its users (Kozinets, 2008), where options emerged for a range of products and services that are integrated within a single device (Harris & Blair, 2006;Sawng et al., 2015;Lee et al., 2013), and thereby expanded the focus beyond the games themselves. Thus, video games consoles have come to be recognized as multifunctional terminals (Gill, 2008), considering that services such as Netflix, internet access with specific browsers, and features that allow vast capacities for storage and media recognition (such as USB technology) have come to be integrated within them. ...
... Thus, video games consoles have come to be recognized as multifunctional terminals (Gill, 2008), considering that services such as Netflix, internet access with specific browsers, and features that allow vast capacities for storage and media recognition (such as USB technology) have come to be integrated within them. This technological convergence is perceived by users as highly innovative, and provides them with a variety of usage options within a single device (Lee et al., 2013;Nunes, 2000;Sawng et al., 2015), meaning that the adoption of converged products is perceived as less risky compared to that of dedicated products (Harris & Blair, 2006). ...
Article
This article presents a qualitative analysis of data obtained via semi-structured interviews on the preferences of users regarding 7th- and 8th-generation video games. The study evaluates the factors that influence consumption choices regarding these video games, with a focus on the Xbox 360, Nintendo Wii, PlayStation 3, Xbox One, PlayStation 4 and Wii U platforms. Nine profiles of consumption are identified, measured according user values and consumption preferences from the participants analyzed. The results of the analysis are arranged according to defined categories that describe the phenomena studied. The study concludes that factors such as love for the brand, technological convergence, social positioning, perceived risk, and attraction to the design of the equipment influence the process of use and consumption with respect to the technological devices studied.
... Moreover, bundle discounts attract customers to purchase multiple products, thereby raising customer switching costs and reducing customer turnover . From the customer's point of view, product bundling adds value for the customers by packaging complimentary or related products (Harris & Blair, 2006;Sarin et al., 2003). The utility of a product as perceived by the customers is affected by bundling by enhancing customers' perceived use of the bundled products (Harris & Blair, 2006). ...
... From the customer's point of view, product bundling adds value for the customers by packaging complimentary or related products (Harris & Blair, 2006;Sarin et al., 2003). The utility of a product as perceived by the customers is affected by bundling by enhancing customers' perceived use of the bundled products (Harris & Blair, 2006). This was also reinforced by Derdenger and Kumar in their study of 2013 wherein they provided a framework to understand the dynamic, long-term effects of bundling on demand and found that sales of both hardware and software components of products decrease in the absence of bundling, and consumers who had previously purchased bundles might delay purchases, resulting in lower revenues. ...
... Another benefit of bundling for customers is that it helps to reduce search costs and ordering costs, as reviewed by Sharpe and Staelin (2010). Harris and Blair (2006) show that the reduction of search costs through integrated bundling results in an increase in consumers' willingness to pay. Despite the various benefits associated with bundling, sometimes companies go overboard with their bundling efforts and are considered to be anticompetitive because of which they get caught in antitrust motions against bundling of software services as provided by IBM and later Microsoft, etc., which leads to prolonged litigations (Economides, 2001;Sidak, 2001). ...
Article
The present study was undertaken to gain an insight into the Indian customers' attitude towards bundling. Combination of household items and tourism services was found to be most likely to be purchased by customers in bundles. Price was found to be the most important factor in influencing the decision of the customer to purchase/not purchase the bundled offer. Using factor and cluster analysis, demographic characteristics of the customers most likely to respond positively to bundle offers have been identified. This information can be used by companies in framing their promotional and targeting strategies.
... Specifically, shoppers under moderate time pressure become faster and slightly more selective at information processing, whereas those under heavy pressure tend to skim through information superficially without examining every single detail. However, some studies have suggested that time pressure typically prompts decision makers to make decisions and execute decision-making strategies through simple means [25,26], and that people under time constraints can turn to other strategies to facilitate their information processing [27]. In addition, Levy [28] showed that when people were in a hurry, they hastened their decision making. ...
... When shopping under time pressure, specific characteristics of products typically draw the attention of consumers [26,36,52]. New characteristics added to a product often become essential factors that affect consumers' purchase decisions [53,54]. ...
Article
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The online shopping market is developing rapidly, meaning that it is important for retailers and manufacturers to understand how consumers behave online compared to when in brick-and-mortar stores. Retailers want consumers to spend time shopping, browsing, and searching for products in the hope a purchase is made. On the other hand, consumers may want to restrict their duration of stay on websites due to perceived risk of loss of time or convenience. This phenomenon underlies the need to reduce the duration of consumer stay (namely, time pressure) on websites. In this paper, the browsing behavior and attention span of shoppers engaging in online shopping under time pressure were investigated. The attention and meditation level are measured by an electroencephalogram (EEG) biosensor cap. The results indicated that when under time pressure shoppers engaging in online shopping are less attentive. Thus, marketers may need to find strategies to increase a shopper’s attention. Shoppers unfamiliar with product catalogs on shopping websites are less attentive, therefore marketers should adopt an interesting style for product catalogs to hold a shopper’s attention. We discuss our findings and outline their business implications.
... Accordingly, the economic system is marked by considerable information asymmetries among economic agents (Akerlof, 1970;Skaggs and Snow, 2004). This situation many times leads people as well as the whole economic system to seek ways to reduce the search costs (Chiou and Droge, 2006;Harris and Blair, 2006). A relevant aspect of the search costs is that depending on the situation, the cost of a complete search in a market is not economically feasible. ...
... For one NTBF to know everything about the innovation scenario by itself, it would have to incur in considerable search cost, that is, it would be necessary to maintain at least an employee to regularly monitor the innovation scenario, what would be an expensive and thus little feasible activity for this firm. However, the association to one ISA will decrease considerably these search costs, what corroborates studies of Chiou and Droge (2006) and Harris and Blair (2006), once these agents receive innovation information from the agents of innovation scenario and transfer it to the NTBFs. Thus, follows the first proposition: ...
Article
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The purpose of this paper is to analyze the role of innovation support agents (ISAs) in the development of new technology-based firms (NTBFs), from the perspective of information asymmetry between economic agents. It was performed a qualitative cross-case analysis about two business incubators, two business accelerators, and two science parks. According to the empirical data collected and posterior analysis we found that ISAs contribute to the development of NTBFs in the following ways: distributing market information to them, reducing their search costs; enabling their internal and external social capital formation; borrowing reputation to them; reducing the search costs of market agents to assess its NTBFs. Furthermore, these roles vary between different types of ISAs and due to their idiosyncratic aspects. Lastly, this research can be used as a reference by both, ISAs and NTBFs regarding the development of the informational and social aspects of this latter.
... Bundles might also give an illusion of worth when in fact some of the obtained items are worthless. Players are often drawn to choose bundles over single-priced options, because this cuts down on effort and search costs (Harris & Blair, 2006). However, this 'bundling bias' was shown to alter people's behaviour, so that they are less likely PE 652.727 to experience full value from all purchased items (Soman & Gourville, 2001) and might buy more than they had initially planned to; ...
Technical Report
Full-text available
This paper defines loot boxes and describes their behavioural effects, including problematic behaviour. It examines the regulatory framework at EU and national level within which loot boxes operate, provides an overview of public and industry practices, and derives recommendations. Framing the debate around loot boxes, away from gambling and towards consumer protection, would provide the EU with an array of tools to address problematic practices and minimise potential harm, especially for minors.
... This might be due to the consumer needs to spend a bigger size and quantity on the food product for the household consumption befitting their family size. According to Harris & Blair (2006), for consumers, buying in a bundle would also mean gaining a reduction in cost transaction. Only 121 respondents showed an interest in nutritional facts when buying food products for household consumption. ...
Article
The aim of this study is to determine the factors affecting the consumer buying behaviour toward food products in Selangor. Consumer behaviours comprise four factors: cultural, social, personal, and psychological factors. These factors influence consumer buying behaviour toward Malaysian local brands. Data were collected through online questionnaires using Google form. The sample of study consisted of 210 consumers in Selangor. In particular, principal components analysis (PCA) was employed in order to identify the factors that affect consumers on preferring locally produced food products. The findings of this study indicate that Halal logo was the first choice in terms of consumer’s perspective on the product attributes when buying food products followed by price. Size and quantity, and packaging are the third and fourth attributes considered by consumers when buying food products. Our result suggests that, by providing this consumer information to small scale or local sellers will encourage more consumers to purchase local food products.
... Bundling is well known to be an efficient way to introduce new products, and new products are often tied in with popular products in the market (Reinders et al., 2010). When shopping for frequently purchased products, consumers often are used to purchasing bundles of products due to the lower unit price compared to single products (Janiszewski & Cunha, 2004), higher efficiency in product searching (Harris & Blair, 2006), the convenience of purchasing (Nagyová & Košičiarová, 2017), and accommodation for both current and future consumption (Kwak et al., 2015). Bundle preference often relies on its global features derived from all components (Farquhar & Rao, 1976). ...
Article
New product development can not only satisfy consumers’ need to seek variety but also is important for a company to achieve long-term financial success in the food market. Bundling is well known to be an efficient way to introduce new products, especially when new products are tied in with popular products. Here we report a study designed to investigate how the variation in the flavors of the items within a three-item food bundle (i.e., flavor variety) and the difference in the packaging colors of these items (i.e., color variety) may interact to influence consumers’ ratings and choices of the bundles. The participants were asked to rate their liking of and willingness-to-pay (WTP) for each three-yogurt bundle before choosing a more favorable bundle out of each two-bundle choice set. On one hand, the results revealed that participants preferred the bundles consisting of two of the same popular flavors and one new flavor over those consisting of three different new flavors. On the other hand, the results revealed the color variety of bundles modulated their preference for bundles consisting of one popular flavor and two different new flavors. Collectively, our findings demonstrated how the color of food packaging might be used as a marketing tool to influence consumers’ preference for bundles by modulating their perception of the flavor variety of food bundles. These findings shed light on how to skillfully design the packaging and assortment for foods.
... Durante as primeiras décadas do século XXI foi possível identificar um significativo crescimento do número de usuários de smartphones pela população mundial e brasileira e consequentemente as empresas prestadoras de serviço buscam ferramentas para que o cliente permaneça mais tempo on-line possível e uma das alternativas encontradas foi a oferta de serviços e aplicativos a estes usuários Harris e Blair (2006). ...
Article
Full-text available
Resumo A popularização dos smartphones tem evoluído bastante nas primeiras décadas do século XXI, o que gerou também a oportunidade mercadológica para o uso deste tipo de equipamento para o entretenimento, o objetivo deste artigo é realizar um levantamento do comportamento dos gamers de smartphones do Estado do Pará na preservação da privacidade de seus dados e sua segurança on-line, sendo que a metodologia da pesquisa foi baseada no modelo netnográfico aplicados em redes sociais, especificamente em grupo de gamers de jogos online, o resultado evidenciou a existência do paradoxo da privacidade nestes grupos de usuários de smartphones uma vez que 30% jogam por mais de 3 horas diárias e 77% não utiliza aplicativo de análise estática e 10% dos respondentes armazenam senhas no smartphone sem qualquer criptografia, sendo assim pode-se concluir que o paradoxo da privacidade é uma ação que ocorre concomitante entre o saber o que deve ser feito e realmente realizar a ação, mesmo sabendo que a omissão poderá acarretar sérios problemas futuros na preservação da informações pessoais. Palavras-Chave Informação; Telefonia móvel; Sistema de informação.
... shown that consumers are motivated to purchase bundles when they perceive it reduces the total 343 cost of goods and/or reduces search costs [21][22][23]. In this study, the store frequented by 344 participants that used a WIC-only section capitalized on product placement by locating it near 345 the front of the store. ...
Article
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) successfully improves participant nutrition, but program effectiveness is threatened by retail shopping challenges, which may reduce benefit redemption and participant retention. Focus groups with WIC participants examined barriers to using WIC benefits and potential strategies to improve redemption. The analysis included a three-pass qualitative process using deductive and inductive thematic analysis. Barriers included confusion over finding eligible products, difficulty checking out, and perceived stigma. Strategies included promotion and strategic placement of approved items and better customer service. Retailer practices and regional policy amendments are potential strategies for improving the WIC shopping experience and program effectiveness.
... Thus, as bike sharing, together with PT, was already included as baseline elements of the MaaS bundle, the respondents in our sample might not have perceived additional value in the mobility services provided by e-scooter sharing. Third, research on product/service bundling emphasizes the importance of value-adding complementarity of the products or services in the bundles, because otherwise consumers are more likely to purchase the products or services separately e.g., [77,79]. This agrees with Guidon et al.'s [45] findings, which showed that complementary mobility services such as PT and car sharing achieved the highest WTP among their respondents. ...
Article
Full-text available
Current mobility trends indicate that the popularity of privately-owned cars will decrease in the near future. One reason for this development is the diffusion of mobility services such as car or bike sharing, or Mobility-as-a-Service (MaaS) bundles. Especially, MaaS bundles have the potential to respond to environmental issues and provide reliable mobility to users, thus illustrating the possibilities of being mobile without owning a car. Most of the past research on MaaS bundles, however, has focused on bigger cities that already have good infrastructural bases. Building on previous work in the MaaS field, we conducted a choice-based conjoint survey (n = 247) in Austria to investigate consumer preferences for MaaS packages in a suburban area. Further, we gathered data on the consumers’ willingness to pay, especially for including electric vehicles in the form of e-car sharing and e-scooter sharing in MaaS packages. The results highlight the importance of package price as the attribute with the highest impact on purchase intention. Further, participants in our study most preferred MaaS packages that included e-car sharing to ones with e-scooter sharing. Using latent class analysis, we classified the respondents into three different segments with varying preferences for MaaS bundle features, and conducted market simulations.
... Hal ini dikembangkan kembali oleh (Estelami, 1999) yang membedakan dalam pemilihan produk, konsumen juga memperhatikan pada ada tidaknya barang pendukung (complementary bundles) atau yang bukan pendukung (noncomplementary bundles). Lebih lanjut (Harris & Blair, 2006) melakukan komparasi pemilihan produk dengan satu varian atau barang yang bervarian. ...
Article
Full-text available
This research aim to examine the affects of price bundling, product bundling on purchase intention and complementary product as moderating variable in convenience store. Sample was taken with purposive method as much 160 sample in questionnaire survey with closed question and 5-point likert scale. the collected data was processed using SmartPLS02. As the result of hyphoteis test are H1 accepted, which means that the price bundling variable has a significant on purchase intention. H2 is accepted, which means product bundling variable has a significant on purchase intention. H3 is accepted, which means complementary product has moderating effect on on relationship of price bundling to purchase intention. H4 is rejected, which means complementary product can’t be moderating variable on relationship of product bundling to purchase intention. Based on the result, price bundling and product bundling has a signinficant effect on purchase intention.
... Another context principle is product bundling. Bundles are sometimes perceived to be worth more than the individual parts because they reduce search effort, reduce ordering costs, or are featured and perceived to be a promotion (Harris & Blair, 2006;Sharpe & Staelin, 2010). Consumers are likely to spend more when initially offered a "loaded" model with the opportunity to delete some options opposed to when they are offered a base model with the opportunity to add some options (Levin et al., 2002). ...
Article
Variations in the pricing approaches firms employ may partially explain why observed industry prices appear inconsistent with economic theory. Some firms may use principles developed from psychology that do not fit traditional economic models to enhance their profits beyond the basic solutions from economic theory. This paper describes more than fifty of these principles, dividing them into four categories: framing, congruency, context, and signaling. By studying these principles from psychology, researchers and policy makers can better understand the prices they observe in the marketplace. By following more of these principles, firms may be able to enhance their performance. Journal of Applied Business and Economics http://www.na-businesspress.com/JABE/LarsonRB_Web16_1_.pdf
... Tourists receive numerous services at a lower cost on vacation packages (Wong and Kwong 2004;Wickens 2002). If a visitor selects to buy an all-inclusive package is due to the fact that the anticipated value of the package is high enough in contrast to the required market research and the acquisition of holiday services from various sellers (Harris and Blair 2006). Sheldon and Mak (1987) contribute that a lot of visitors believe package tours to be less expensive that independent holidays. ...
Chapter
All-inclusive hotels have been evolved as an attractive holiday choice for several travelers due to their ability to provide a relaxed holiday with predetermined costs and full amenities. Previous studies on that specific feature of hospitality firms have examined the motivations of travelers behind that choice, yet there is scarce evidence regarding the satisfaction of all-inclusive visitors and whether income and family size are significant determinants of their satisfaction. The study utilizes a large survey of “all-inclusive” visitors summing up to 1600 questionnaires for the exploration of the factors determining tourists’ satisfaction. This research adjoins the existent bibliography by exploring some additional determinants not examined by previous studies such as the size of the family and the income level of the travelers. Empirical evidence indicated that the factors of convenience and economy of resources were impacting customer satisfaction positively along with previous positive experience of visitors. Nevertheless, empirical evidence seem to differentiate when the impact of income and family size is taken into consideration. Specifically, the previous all-inclusive experience, convenience and economy of resources seem to be highly significant only for families with children while the same factors were insignificant for families without children. Finally, the same factors were highly and positively significant for low income visitors and start to become insignificant when examining the medium and high income groups. These evidence provide useful policy implications for hotel managers which offer all-inclusive packages, in order to improve their services and target adjust their tactic strategically based on customer characteristics.
... This is especially true if customers get used to their new found Internet speed or new exciting channels; they will be more reluctant to give them up. Marketers might wish to encourage bundle purchases to extend brand preference or to encourage consumers to spend more (Harris and Blair 2006). The added entertainment not only makes it harder for Comcast customers to leave, but in their minds it also helps justify the price for services. ...
Article
Full-text available
Students in Principles of Marketing often have little appreciation for the importance of pricing strategies. Given the emphasis on promotion in the marketing mix, students at this level often view marketing as advertising or selling and consider pricing as an afterthought. Instruction on pricing perpetuates this lack of awareness when pricing strategies are presented as mutually exclusive. The Comcast case as detailed in this paper provides a comprehensive yet concise overview of several key concepts in pricing. Its main value to marketing educators is in demonstrating how a company can use an integrated pricing strategy to increase revenue and customer satisfaction.
... Promoting certain dishes alongside complementary products, like a suitable wine, side dish, sauce, or dessert, is a well-known marketing technique used extensively in food service. Cross-product promotions like these can boost sales of plant-rich options by making it easier for diners to choose what to eat in combination (Harris and Blair 2006;Carroll et al. 2018), as well as encouraging diners to associate plant-rich dishes with other high-quality and well-branded products, leading them to transfer their positive perceptions from these to the target plant-rich dish. ...
... The literature on marketing has provided several justifications of bundling amongst which the creation of additional value by integrating products adapted to a specific need (Chiambaretto & Dumez, 2012). When there is a complementarity between different products, customers have an interest in purchasing them together due to additional advantages such as the reduction of search costs (Harris & Blair, 2006). In Senegal, CNAAS and the aggregators it works with, have trialled a range of options to encourage take-up of WII. ...
... It impacts our governing according the sociological structure, political environment and interactions between society and institutions. The use of different tools and strategies in the new technological environment (Zhou, Dong, Kong, & Liu, 2019) is becoming more and more common, attractive and integrated (Harris & Blair, 2006;Lee, Park, & Kang, 2018). The internet of things, nanotechnologies, robotics, artificial intelligence and innovative technology centers, among others, are transforming organizations and our society. ...
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Resumo Este artigo tem como objetivo resumir as perspectivas tecnológicas e os cenários inovadores aplicados na região amazônica. Uma chamada de artigos para a edição especial possibilitou quatro manuscritos aceitos que servem como fonte para este resumo. Todos esses artigos enfocam casos específicos na região da Amazônia Legal e fornecem evidências empíricas sustentadas por teorias e literatura relevante. Todos os artigos enfatizaram a necessidade de investimento na forma de redes para desenvolvimento e inovação. Um descritivo, usando de abordagem qualitativa utilizando o software bibliométrico WordStat 8® identificou as palavras mais utilizadas nos quatro artigos que incluem esta edição especial. Os termos mais relevantes identificados foram: rede, inovação, firmas, produção, pesquisa e desenvolvimento. No total, esses artigos apontam para parceiros e instituições variadas, necessários para construir redes de desenvolvimento e inovação. Esta edição especial é um primeiro passo para construir uma base de conhecimento focada na região amazônica que falta na literatura acadêmica. Contribuições futuras devem construir e expandir a discussão de casos empíricos e refletir diferentes disciplinas que contribuem para indústrias, políticas, sociedade e redes. Isso é necessário para melhorar inovação e desenvolvimento econômico desta importante região. Palavras-chave: inovação; rede; empresas; pesquisa e desenvolvimento; região amazônica. Abstract This paper aims to summarize the technology perspectives and innovative scenarios applied in the Amazon region. A call for papers for the Special Issue yielded four accepted articles that serve as the source for the summary. All these articles focus on specific cases in the Legal Amazon region and provide empirical evidence supported by theories and relevant literature. All the articles emphasized the need for investment in the form of networks for development and innovation. A descriptive, qualitative approach using the bibliometric software WordStat 8® identified the words most frequently used in the four papers included this special issue. The most relevant terms identified were: network, innovation, firms, production, research and development. In total, these articles point to varied partners and institutions necessary for building networks to further development and innovation. This Special Issue is a first step to building a knowledge base focused on the Amazon region that is missing in the academic literature. Future contributions must build and expand the discussion of empirical cases and reflect different disciplines that contribute to industries, policies, society and networks. This is necessary to improve innovation and economic development of this important region.
... It impacts our governing according the sociological structure, political environment and interactions between society and institutions. The use of different tools and strategies in the new technological environment (Zhou, Dong, Kong, & Liu, 2019) is becoming more and more common, attractive and integrated (Harris & Blair, 2006;Lee, Park, & Kang, 2018). The internet of things, nanotechnologies, robotics, artificial intelligence and innovative technology centers, among others, are transforming organizations and our society. ...
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... Tourists receive numerous services for less money on package tours (Wong and Kwong, 2004;Wickens, 2002). If a visitor selects to buy an all-inclusive package is due to the fact that the anticipated value of the package is high enough regarding to shopping around and accumulating tourism products from various vendors (Harris and Blair, 2006). Sheldon and Mak (1987) contribute that a lot of visitors perceive package tours to be less expensive that independent holidays. ...
... Also, each item was purchased a la carte at $6.95 for each entrée and $2 for each option of side dishes and vegetables. Purchasing each item separately has been shown to decrease the purchase of vegetables, while a combination of products with a fixed single price (such as an entrée plus vegetable) increases the purchase of vegetables [32][33][34]. Finally, the perceived value assigned to certain products may have been problematic. ...
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In the transition from high school to university, vegetable consumption tends to deteriorate, potentially influencing immediate and longer-term health outcomes. Nudges, manipulation of the environment to influence choice, have emerged as important to behavior change goals. This quasi-experimental pilot study examined the impact of a contextually feasible evidence-informed nudge intervention on food purchasing behavior of older adolescents (1st year students) in a university residence cafeteria in British Columbia, Canada. A co-design process with students and staff identified a student relevant and operationally feasible nudge intervention; a placement nudge, fresh vegetables at the hot food table, combined with a sensory and cognitive nudge, signage encouraging vegetable purchase). Using a 12-week single-case A-B-A-B design, observations of the proportion of vegetables purchased were used to assess intervention efficacy. Data analysis included visual trend inspection, central tendency measures, data overlap, variability and latency. Visual trend inspection showed a positive trend when nudges were in place, which was more apparent with female purchases and during the first intervention (B) phase. However, further analysis showed lack of baseline stability, high variability across phases and overlapping data, limiting efficacy conclusions. Menu choices, staff encouragement, term timing and student finances are other potential influences. Further ‘real world’ nudge research is needed.
... Past research on consumers' evaluation of product bundles has largely focused on identifying factors that positively affect bundle attractiveness and profitability. These studies have found that several factors including search cost reduction (Harris & Blair, 2006a), compatibility risk reduction (Harris & Blair, 2006b), and bundle size (Engeset & Opstad, 2017) significantly influence consumers' evaluation of product bundles. Among these factors, functional complementarity between bundle items has been identified as the factor that most significantly influences the attractiveness of bundles (Gaeth, Levin, Chakraborty, & Levin, 1991;Harlam et al., 1995;Herrmann, Huber, & Coulter, 1997;Koukova, Kannan, & Ratchford, 2008;Strahilevitz & Myers, 1998). ...
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... For instance, Day (1965) employed systematic paired comparison in understanding the ice cream preference of consumers, in which two choices were provided to each sample for evaluation. Harris and Blair (2012) used binary logistic regression in their experimental study to examine the role of reduced search costs in consumer preference for product bundles. Regression was applied for testing store image perception (Thang and Tan 2003), consumer preference for country of origin in the labeling of fresh produce (Puduri, Govindasamy, and Onyango 2009), and the likelihood of consumer choice regarding product variants (Simonson and Winer 1992). ...
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... Consumers will purchase bundled sets if they offer better value as compared to purchasing the same items individually. The perceived benefits of purchasing a bundled package include reduced search costs, elimination of the assembly cost, minimal risk of product incompatibility, and volume discounts (Harris & Blair, 2006). Price bundling provides consumers with monetary and non-monetary benefits such as discounts and convenience (Kim, Bojanic, & Warnick, 2009). ...
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... This reduces unfairness perceptions. 24 Service products can be designed to hide discounts. Instead of varying the prices of food, which makes it difficult to increase once it has been lowered, restaurants can vary the product. ...
Book
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Creating a viable service requires a business model that allows for the costs of creating and delivering the service, in addition to a margin for profits, to be recovered through realistic pricing and revenue management strategies. However, the pricing of services is complicated. Pricing Services and Revenue Management explains how to set an effective pricing and revenue management strategy that fulfils the promise of the value proposition so that a value exchange takes place. This book is the fourth book in the Winning in Service Markets series by services marketing expert Jochen Wirtz to cover the key aspects of services marketing and management based on sound academic evidence and knowledge.
... Supply-side rational includes lower sorting and inventory holding costs, as well as increasing economies of scope (Eppen, Hanson, and Martin 1991;Keeney and Klein 1983;Gilbert and Katz 2001). Reasons on the demand side include variety seeking, savings from bundle purchase and reduced search cost (Harris and Blair 2006;Yadav and Monroe 1993;Farquhar and Rao 1976). From the competition perspective, Eppen, Hanson and Martin (1991) and find that bundling increases customer switching costs and reduces customer turnover. ...
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Understanding customer preference for bundles is key to the success of this widely-used segmented pricing strategy. In addition to conjoint analysis, researchers and practitioners often use a " build-your-own-bundle " or configuration approach to understand customer preferences for bundles. In a configuration study, subjects are asked to create an ideal bundle from a given menu of various products (or product attributes). The resulting choice data poses two challenges for researchers. First, as the size of the menu grows, the number of possible bundles grows geometrically. This implies a large number of alternatives in the choice set. Model estimation from a large choice set can be computationally expensive or even impossible. Second, because each customer only configures one ideal product bundle, researchers have only one choice observation per customer. Thus, researchers are limited to aggregate level analysis. In this study we show analytically that the aggregate choice model for bundles has a closed form representation which takes the form of a multivariate logistic (MVL) model. The parameters of the MVL model reflect the overall preference for bundles and preference heterogeneity. This model deals with the challenges of configuration data and provides clear insights into customer preference segmentation. This research highlights both the challenges and the benefits of using configuration data to analyze bundle preferences. 2
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Price dispersion is an important indicator of pricing strategy and market efficiency. However, the relationship between price dispersion and sales has not been explored, especially for durable goods such as automobiles. In this study, we use a unique data set from Autohome comprising the actual transaction prices of buyers to assess the extent of price dispersion in the new automobile market. Based on an empirical analysis of over 222,592 price observations for 59 vehicle models collected over a period of 48 months, we find that the percentage difference ( PD) and coefficient of variation ( CV) of new automobile transaction prices are 43.4% and 9.9%, respectively. In addition, the empirical results show that the price dispersions lower for non-sedan type, Chinese car brands, and produced by state-owned companies. We further investigate whether the increase in the price dispersion of a new automobile has a positive impact on automobile sales using a multiple quadratic regression model. The findings show that price dispersion has positively impact of sales. More interestingly, negative quadratic effects are observed, indicating a concave-down-increasing relationship between price dispersion and sales. This implies that an extreme price dispersion is less helpful than a moderate price dispersion. These findings advance knowledge of consumer buying behavior and seller pricing strategies, with important theoretical contributions and practical implications for automobile companies.
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Purpose The purpose of this study is to examine private households’ preferences for service bundles in the German energy market. Design/methodology/approach This investigation is based on survey data collected from 3,663 customers of seven mainly municipal energy suppliers in the German energy market. The data set was analyzed via a binary logistic regression model to identify the most prospective customers and their preferences regarding bundles of energy services. Findings The results indicate that potential adopters of energy-related service bundles have greater prior knowledge about service bundles; place higher importance on simplified handling, flat rates and long price guarantees; prefer to purchase a service bundle from an energy supplier; live in urban areas and have a gas tariff; are both less likely to have a green electricity tariff and to support the German energy transition; have a greater intention to purchase a smart home product; are less likely to already be prosumers; and prefer customer centers and social media as communication channels with energy providers. Practical implications This paper offers several implications for decision-makers in developing marketing strategies for bundled offerings in a highly competitive energy market. Originality/value This paper contributes to the sparse research on service bundles in the energy sector, despite the growing interest of energy suppliers and consumers in this topic. It expands the research focusing on the telecommunications sector.
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The adoption of electric vehicles (EVs) is accelerating. Knowing which factors determine EV purchases among the first innovative adopters, we now need to understand the preferences of wider customer segments that are currently entering the market. The bundling of EVs with additional services is one strategy for fostering EV adoption among the latter. Early studies have shown the potential of this marketing strategy for increasing EV customer acceptance. However, they often do not empirically test the identified bundles; no investigation to date has analyzed the effect of the most commonly applied bundle in practice – that of EV and charging services. We address this gap and create relevant insights for academia by conducting an online study with potential Swiss EV adopters. We applied two empirical approaches: a between-subject design experiment to study the effect of the essential bundle type on EV purchase willingness, and a choice experiment to identify the preferred bundle type of individual customer segments. We find that bundling EV and charging services increases EV purchase willingness of respondents with little prior knowledge of EVs. The choice experiment identified three customer segments that we name Tech-oriented adopters, Convenience-oriented adopters, and Likely non-adopters. They differ in the importance scores and part-worth utilities they attach to the individual attribute levels and general bundle preferences. Based on these results, we provide recommendations for policy and practice regarding how to promote and utilize bundles to foster EV purchases among later groups of adopters, and propose avenues for further research.
Chapter
Ahire, DeepakBhandari, SmritiKamble, KiranThe algorithm aims to find the Kth max sum pair of two indices of an array of N (N≥ 2) distinct elements [a1, a2, a3, ..., an]. If the sum of values represented by the 2 indices of a single pair in array A is the same as that of any other pair, i.e., if P(i, j) and P(m, n) are 2 distinct pairs and if (A[i]+A[j]=A[m]+A[n]), then the pair containing the index which represents the maximum of all 4 values represented by indices of the 2 pairs in the array obtains the highest priority, i.e., if (A[m]>A[i]>A[n]>A[j]), then the pair containing the index m obtains the highest priority. The purpose of this algorithm is to optimize the computation of recommendations on real time platforms. At the time of making a purchase on e-commerce platforms, with millions of options available in the product catalog, the algorithm can be used to recommend the best complementary product that can be bought as a pair with the main product or two all together different products of same type as of main product which can be bought as a combo or a pair. Not only the top recommendations, but random recommendations are also necessary so that the customers get a good breadth or variety of the available products in the catalog. In this paper, we propose an algorithm which can be used to address both the scenarios in real time and conclusively, it is evident that the time and space complexities are independent of K.
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In this research, we examine the effect of joint versus separate visual presentation on consumers’ product evaluation. Counter to prior research on hedonic editing and unpacking, which suggests that separate presentation or unpacking produces greater utility, we propose and demonstrate in this paper that joint visual presentation can increase product evaluation. This pattern of effects occurs because presenting products together facilitates mental imagery of the product consumption, which leads to greater perceived psychological ownership and higher product evaluation. As such, the effect of joint presentation on product evaluation is attenuated when mental imagery is disrupted under joint presentation, encouraged under separate presentation, or when products lack complementarity to elicit mental imagery of one cohesive consumption episode. Evidence from seven studies provides converging support for these hypothesized effects and their underlying process. Our findings contribute to the literature on visual presentation, unpacking, and imagery, offering relevant implications to marketers and retailers.
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Package promotion (or product bundling and bundle promotion) is widely adopted as an effective marketing strategy to increase sales, but the social tightness of the users significantly influences their willingness to purchase certain products. However, addressing these two factors simultaneously is not a trivial task because it is critical to properly choose a set of socially tight target users to encourage them to buy the products together (social tightness factor), and the selected users should have high preference for the package of products (preference factor). To address the aforementioned challenges, in this article, we study the research problem of promoting a package of products to a set of closely related friends. We formulate a new research problem, named package-oriented group identification (PGI), which can obtain a set of $t$ socially tight users (i.e., inducing more than $k$ edges) who have the maximum preference for a package of items. We prove that the proposed PGI problem is NP-hard, and we develop a polynomial-time algorithm named incremental solution construction with redundancy and infeasibility avoidance for PGI (ISCP) that can effectively and efficiently obtain a good solution to the PGI problem. We compare the performance of ISCP with four other baselines on a large-scale product copurchasing data set with more than 500 k products and 1.7 M copurchasing relationships. The results show that our proposed ISCP algorithm outperforms the other baselines in terms of solution quality and efficiency.
Thesis
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In just a few years, the Mobility as a Service (MaaS) concept has gone from an idea discussed by very few, to being a prominent topic in any transportation related debate. However, within this time, there have only been few rigorous studies that explore the various aspects of MaaS. This thesis aims to contribute to existing knowledge by providing empirical evidence on individual preferences for MaaS plans and their components. In doing so, first desk-research is conducted to summarise existing MaaS schemes and outline the MaaS ecosystem. Next, MaaS surveys that are able to capture individual preferences for MaaS products are designed and specific challenges in the design process identified. The MaaS surveys, including MaaS plan stated preference experiments, are applied in two case study areas of London and Greater Manchester. Using the novel data collected, individual preferences for MaaS plans are examined using two distinct studies: (1) a mixed methods research conducted in London, which expands the survey by adding a qualitative (in-depth interview) element to examine user preferences for MaaS plans and the ways individuals choose between them; and (2) a latent class choice model based on data collected from Manchester to examine whether there is heterogeneity in preferences. Finally, implications for industry and policy stakeholders are discussed as well as interventions that can best support the widespread adoption of MaaS. The results of this thesis show there is interest in the concept of MaaS among potential users as many see value in a single app that integrates different transport modes into a single service. In general, individuals are hesitant in purchasing pre-payed MaaS plans and would be more comfortable with a pay-as-you-go product option. While many people are reluctant towards MaaS plans, the results indicate that heterogeneity exists in preferences towards them and there are different user groups based on socio- demographic characteristics and current mobility habits. Smaller, less expensive plans including modes such as public transport and bike sharing can be used to target students or middle-income people with have high overall mode usage. Larger, more expensive plans that include modes such as taxi and car sharing in addition to public transport, will be attritive to individuals who are likely younger, male, well-educated, have higher income and already use many transport modes. Older population groups, individuals with low income and those that do not use any transport modes or are uni-modal are least likely to adopt MaaS plans. The thesis also provides insights into individuals’ preferences towards transport modes within MaaS plans. The analysis showed that respondents classify modes within MaaS plans into three categories: ‘essential’ modes that are pivotal to the individual and which they most likely already frequently use; ‘considered’ modes are those that they would be willing to include but may not yet use; and ‘excluded’ modes are those that they definitely do not want in their plans and would eliminate any plan that included these. Public transport consistently proved to be an essential mode, while taxi, car sharing and bike sharing could be ‘essential’, ‘considered’ or ‘excluded’ depending on the characteristics of the individual. The main contributions of this thesis are the novel data collected in two case study cities about individuals’ preferences for MaaS plans and the findings gained through the analysis providing insights into possible target audiences and product designs for MaaS plans.
Thesis
In just a few years, the Mobility as a Service (MaaS) concept has gone from an idea discussed by very few, to being a prominent topic in any transportation related debate. However, within this time, there have only been few rigorous studies that explore the various aspects of MaaS. This thesis aims to contribute to existing knowledge by providing empirical evidence on individual preferences for MaaS plans and their components. In doing so, first desk-research is conducted to summarise existing MaaS schemes and outline the MaaS ecosystem. Next, MaaS surveys that are able to capture individual preferences for MaaS products are designed and specific challenges in the design process identified. The MaaS surveys, including MaaS plan stated preference experiments, are applied in two case study areas of London and Greater Manchester. Using the novel data collected, individual preferences for MaaS plans are examined using two distinct studies: (1) a mixed methods research conducted in London, which expands the survey by adding a qualitative (in-depth interview) element to examine user preferences for MaaS plans and the ways individuals choose between them; and (2) a latent class choice model based on data collected from Manchester to examine whether there is heterogeneity in preferences. Finally, implications for industry and policy stakeholders are discussed as well as interventions that can best support the widespread adoption of MaaS. The results of this thesis show there is interest in the concept of MaaS among potential users as many see value in a single app that integrates different transport modes into a single service. In general, individuals are hesitant in purchasing pre-payed MaaS plans and would be more comfortable with a pay-as-you-go product option. While many people are reluctant towards MaaS plans, the results indicate that heterogeneity exists in preferences towards them and there are different user groups based on socio-demographic characteristics and current mobility habits. Smaller, less expensive plans including modes such as public transport and bike sharing can be used to target students or middle-income people with have high overall mode usage. Larger, more expensive plans that include modes such as taxi and car sharing in addition to public transport, will be attritive to individuals who are likely younger, male, well-educated, have higher income and already use many transport modes. Older population groups, individuals with low income and those that do not use any transport modes or are uni-modal are least likely to adopt MaaS plans. The thesis also provides insights into individuals’ preferences towards transport modes within MaaS plans. The analysis showed that respondents classify modes within MaaS plans into three categories: ‘essential’ modes that are pivotal to the individual and which they most likely already frequently use; ‘considered’ modes are those that they would be willing to include but may not yet use; and ‘excluded’ modes are those that they definitely do not want in their plans and would eliminate any plan that included these. Public transport consistently proved to be an essential mode, while taxi, car sharing and bike sharing could be ‘essential’, ‘considered’ or ‘excluded’ depending on the characteristics of the individual. The main contributions of this thesis are the novel data collected in two case study cities about individuals’ preferences for MaaS plans and the findings gained through the analysis providing insights into possible target audiences and product designs for MaaS plans.
Article
We evaluate the impact of bundling on firms’ product and pricing strategies by developing and solving a multi-stage game theoretic model to represent strategic interactions between two competing firms. Each firm is able to produce two homogeneous products and can opt to bundle them together, which may have the dual benefits of providing added value to consumers and reducing marginal cost for firms. One firm (the leader) determines its product offering before the other (the follower), and both then simultaneously set prices. We demonstrate the existence and uniqueness of a Nash equilibrium and show that the option to bundle can benefit all competitors simultaneously. When mixed bundling is not an option, we characterize and quantify the leader’s advantage in terms of profitability. However, when mixed bundling is an option, the follower may reverse its profit disadvantage by using it as a potential threat. Furthermore, our numerical results show that (i) bundling enhances the balance between firms’ total profit and consumer surplus; (ii) for the firm that bundles, value addition and cost saving brought by bundling act as strategic complements in that their combined benefit is larger than the sum of individual benefits; and (iii) value addition and cost saving improve the market demand, firms’ total profit as well as consumer surplus.
Article
Software made from autonomous business services is gaining popularity. Now end users can build large applications by assembling a suite of services. Because some end users might have limited knowledge of their requirements and the functionality of available services, the key challenge is to find the services needed to build an application. The task of finding the services matching requirements requires specialized knowledge—knowledge of requirements and the functionality of available services—not just mere general competence. Moreover, the complexity of the requirements could also hinder the ability of end users to select services. However, there is little research into how the end users’ sophistication and requirement complexity affect their ability to avoid duplication (i.e., select the most cost-effective set of services) and select a set of services that satisfy their requirements. We provide a conceptual framework for the choice problem faced by the decision maker and develop a set of hypotheses on end user's sophistication and requirement complexity, and the impact of these factors on outcome performance—the ability to avoid duplication and select the appropriate services. Then we conduct an empirical study to test the hypotheses. Empirical results offer support for all hypotheses. Our work has several implications. We demonstrate both conceptually and empirically that end users’ naivety has a significant impact on service duplication. For a profit-maximizing service vendor, knowledge of the end user's sophistication/naivety allows there to be different pricing strategies: (1) a pure component strategy, (2) a pure bundling strategy, or (3) a mixed bundling strategy.
Chapter
In this paper, we study the bundle design problem for offering personalized bundles of services using historical consumer redemption data. The problem studied here is for an operator managing multiple service providers, each responsible for an attraction, in a leisure park. Given the specific structure of interactions between service providers, consumers and the operator, a bundle of services is beneficial for the operator when the bundle is underutilized by service consumers. Such revenue structure is commonly seen in the cable television and leisure industries, creating strong incentives for the operator to design bundles containing lots of not-so-popular services. However, as customers might choose to bypass a bundle completely if it is not sufficiently attractive, we need to impose a quality of service (QoS) constraint on the lower bound of the perceived attractiveness. In this paper, we make two major contributions (1) recognizing the inherent differences in customer preferences, we propose an approach for detecting different user classes, and for each user class, make an appropriate bundle recommendation; and (2) in order to make the bundling scheme even more adaptive to unknown customer preferences, we propose a dynamic bundling strategy, which allows customers to “trade in” any number of undesirable services dynamically so that they can be replaced by an alternative set of services. A step to generate fixed or static bundles is also studied. The pros and cons of different bundling strategies are illustrated using a real-world dataset collected from a large leisure park operator in Asia that manages a large collection of attraction providers.
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Objective The present study examined the effect of ingredient bundles (i.e. measured ingredients with recipes) and recipe tastings as a strategy to increase the selection of healthy, target foods (kale, brown rice and whole-wheat pasta). Design Each of the three conditions was tested once per week for three weeks. The conditions were: Treatment 1 (T1), recipe tastings only; Treatment 2 (T2), ingredient bundle plus recipe tastings; and Control, no intervention. Setting A food pantry in Bridgeport, CT, USA. Participants Food pantry clients. Results Controlling for family size and intervention week, the likelihood of clients in T2 ( n 160) selecting at least one target item compared with the Control group ( n 160) was 3·20 times higher for kale, 4·76 times higher for brown rice and 7·25 times higher for whole-wheat pasta. Compared with T1 ( n 128), T2 clients were 2·67 times more likely to select kale, 7·67 times more likely to select brown rice and 11·43 times more likely to select whole-wheat pasta. No differences between T1 and the Control group were found. Conclusions Findings suggest that innovative, nudging strategies such as ingredient bundles may increase appeal of foods and encourage pantry clients to select healthier options.
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The amount of meat consumed is having a negative impact on both health and the environment. This study investigated the probability of eating meat and the amount eaten at a meal within different social, temporal and situational contexts. Dietary intake data from 4-day diet diaries of adults (19 years and above) taken from the UK National Diet and Nutrition Survey (2008/9-2013/14) were used for the analysis. Individual eating occasions were identified and the effects of where the food was eaten, with whom, day of the week, age and gender on the probability of eating meat and amount of meat eaten were modelled using general linear mixed models. Each factor showed distinctive effects on the probability of eating meat and the amount consumed. The amount of meat eaten was greater when eating with family members compared to when alone or with other companions. Both the probability and amount of meat eaten in a single eating occasion were higher on Sundays compared to the rest of the week. Eating out (e.g. restaurants/cafes) increased the probability of consuming meat and the amount compared to other situations (e.g. home, work). When considering the factors influencing meat consumption, attention must be paid to the effects of social, temporal, and situational factors as they all work to shape consumption behaviour. This information should be used in the design of interventions and development of policies for the most effective way to reduce meat consumption.
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Displaying bundles of healthy foods at the grocery store is a health nudge that simplifies shopping and may have the potential for increasing fruit and vegetable (F&V) purchasing. To evaluate the impact of food bundling, we conduct an artefactual field experiment with community participants in a laboratory set up as a grocery store. Dual-self theory suggests that food choices may differ depending on whether shoppers are under cognitive load - in our experiment, we exogenously vary whether bundles are displayed (with and without a price discount) and whether shoppers are under cognitive load. Our findings align with prior studies that suggest unhealthy options are more likely to be selected when cognitive resources are constrained. When bundles are displayed, we observe increased F&V purchasing. We also observe a significant interaction between cognitive load and price discounting. We find discounted bundles are more effective in the absence of cognitive load, but non-discounted bundles are more effective when shoppers are under cognitive load. Although more research is warranted, our findings suggest that when shopping under cognitive load, it is possible that discounts impose additional cognitive strain on the shopping experience. For retailers and policymakers, our results point to the potential power of bundling as a strategy for increasing healthy food purchasing.
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Purpose Marketers often combine products in bundles to increase demand. Research has shown that itemizing the prices of the individual products in the bundle raises evaluations in some situations. The purpose of this paper is to investigate how bundle size influences the effect itemizing prices have on bundle evaluation. Design/methodology/approach The authors conduct two experiments. In the first, they test the effects of price presentation formats (itemized vs consolidated) and bundle size on consumers’ evaluations of product bundles. In the second experiment, they test the proposed mechanism that itemizing the price leads to a more realistic price expectation which in turn enhances evaluation. The authors also test whether this effect is stronger for larger bundles. Findings In Study 1, the authors find that large, but not small, bundles are evaluated more positive when presented with itemized prices. In Study 2, mediated moderation analysis supports the prediction that price expectation mediates the effect of the price presentation × bundle size interaction on bundle evaluations. The findings show that itemizing prices results in more realistic price expectations and that this effect is stronger for larger bundles. In turn, more realistic price expectations lead to higher evaluation. Research limitations/implications The implication of this research is that by directing attention to individual items in the bundle, consumers are better able to assess bundle benefits. More research is needed to investigate other potential explanations for the findings in Study 1. Further research should also investigate whether the findings reported here holds in other settings, with other products and with other types and size of bundles. Practical implications Managers are recommended to itemize the prices of product bundles, particularly when bundles are large. Originality/value This paper extends our knowledge about the effect itemizing the prices of individual items in a bundle has on consumer evaluation by demonstrating the moderating effect of bundle size and showing that more realistic price expectation explains these effects.
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Der Übergang in die Elektromobilität stellt den Automobilhandel aufgrund des Kundenverhaltens vor neue Herausforderungen. Kunden sehen sich neben einer im Vergleich zu konventionellen Fahrzeugen schlechteren technischen Performance [1]sowie einer als unzureichend wahrgenommenen Ladeinfrastruktur [2] mit weiteren Unsicherheiten und wahrgenommenen Nachteilen im Zuge der Nutzung von Elektroautos konfrontiert, die in ihrer Summe zu einer geringen Nutzungsabsicht insbesondere von Privatkunden führen: Zum einen ergeben sich hohe Kosten für die Batterie dieser Fahrzeuge, die viele Kunden nicht bereit sind zu zahlen [3][4].
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Privatkundenlösungen gelten bereits im Einzelhandel (Arnold et al. 2009) sowie in weiteren Branchen als vielversprechende Möglichkeit, sich im Wettbewerb zu profilieren (Schmitz 2014). Sie stellen eine Kombination aus systematisch aufeinander abgestimmten Sach- und Dienstleistungen zur Lösung eines individuellen Kundenproblems dar, wobei die Wertschöpfung nur in Zusammenarbeit zwischen Kunde und Anbieter erfolgen kann (Tuli et al. 2007, S. 1f.).
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New data on the duration of the purchase decision process for cars and major household appliances are analyzed using two multivariate techniques (AID and MCA) in combination. The results emphasize the importance and complexity of interactions among variables and highlight the effects of previous experience in buying and using the product.
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When offering product/service bundles to customers, marketers must decide how best to configure the bundles such that consumers do not find the bundle-choice particularly difficult. This paper examines perceived decision difficulty in selecting from a menu of bundles, where the bundles vary on the number of component services, the number of unique services between competing bundles, and their perceived similarity. It is found that larger bundles make decisions more difficult, more unique services between the competing bundles increases decision difficulty for small, but not large, bundles and similar bundles pose greater choice difficulty than dissimilar bundles. Implications of the results are discussed.
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The authors examine the growing and pervasive phenomenon of brand alliances as they affect consumers' brand attitudes. The results of the main study (n = 350) and two replication studies (n = 150, n = 210) together demonstrate that (1) consumer attitudes toward the brand alliance influence subsequent impressions of each partner's brand (i.e., "spillover" effects), (2) brand familiarity moderates the strength of relations between constructs in a manner consistent with information integration and attitude accessibility theories, and (3) each partner brand is not necessarily affected equally by its participation in a particular alliance. These results represent a first, necessary step in understanding why and how a brand could be affected by "the company it keeps" in its brand alliance relationships.
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Evidence suggests that some consumers react to promotion signals without considering relative price information. We adopt Petty and Cacioppo's Elaboration Likelihood Model (ELM) to explain this behavior in terms of the ELM's peripheral route to pursuasion in which the promotion signal is taken as a cue for a price cut. Experimental results show that low need for cognition individuals react to the simple presence of a promotion signal whether or not the price of the promoted brand is reduced, but that high need for cognition individuals react to a promotion signal only when it is accompanied by a substantive price reduction. Copyright 1990 by the University of Chicago.
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Bundling is pervasive in today's markets. However, the bundling literature contains inconsistencies in the use of terms and ambiguity about basic principles underlying the phenomenon. The literature also lacks an encompassing classification of the various strategies, clear rules to evaluate the legality of each strategy, and a unifying tramework to indicate when each is optimal. Based on a review of the marketing, economics, and law literature, this article develops a new synthesis of the field of bundling, which provides three important benetits. First, the article clearly and consistently defines bundling terms and identifies two key dimensions that enable a comprehensive classitícation of bundling strategies. Second, it formulates clear rules for evaluating the legality of each of these strategies. Third, it proposes a framework of 12 propositions that suggest which bundling strategy is optimal in various contexts. The synthesis provides managers with a framework with which to understand and choose bundling strategies. It also provides researchers with promising avenues for further research.
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Individuals often use several different strategies such as the expected value rule, conjunctive rule, and elimination-by-aspects, to make decisions. It has been hypothesized that strategy selection is, in part, a function of (1) the ability of a strategy to produce an accurate response and (2) the strategy's demand for mental resources or effort. We examine effort and accuracy and their role in strategy selection. Several strategies that may be used to make choices under risk are simulated using a production system framework. This framework allows the estimation of the effort required to use the strategy in a choice environment, while simultaneously measuring its accuracy relative to a normative model. A series of Monte-Carlo studies varied several aspects of the choice environments, including the complexity of the task and the presence or absence of dominated alternatives. These simulations identify strategies which approximate the accuracy of normative procedures while requiring substantially less effort. These results, however, are highly contingent upon characteristics of the task environment. The potential of production system models in understanding task effects in decisions is stressed.
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Three studies were conducted to examine the role of need for cognition on attitudes formed as a result of exposure to advertisements. Prior research on need for cognition has used only long messages, counterattitudinal topics, or employed instructions that specifically told participants to evaluate products. Results of our studies reveal that need for cognition also affects the processes of attitude change when no explicit evaluation instructions are provided and when exposures are to relatively short, unfamiliar advertising messages presented in either self-paced or externally controlled formats. Consistent with prior research, attitudes of high need for cognition individuals were based more on an evaluation of product attributes than were the attitudes of low need for cognition persons (Studies 1 and 2). In addition, the attitudes of low need for cognition individuals were based more on simple peripheral cues inherent in the ads than were the attitudes of high need for cognition persons (Study 3). Implications for the study of personality variables in consumer behavior are discussed.
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Information search is a critical component of the purchase decision process for most consumer durables. This paper postulates a descriptive model of information search and tests the hypothesized relationships using survey data obtained from a probability sample of new automobile purchasers. The results support the hypothesis that there are at least two unique components of prior knowledge: specific product knowledge and general product-class knowledge. The former causes less external search, the latter causes more external search. Cost of search was found to be negatively related to external search, while external search was found to be positively related to cost savings. Satisfaction was found to be related to cost savings but not to external search.
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Issues and problems that emerged in using the Bettman-Park coding scheme for verbal “think-aloud” protocols are discussed, and ways to resolve them are suggested.
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Bundle offers consisting of two or more products often include a price discount. The impact of the price discount on the perceived attractiveness of the bundle has been shown to depend on which product is discounted. It has been argued that discounts are more effective when they are assigned to the product that will receive the most weight in the overall evaluation of the bundle. We propose that the perceived value of the discount may also depend on a referent specific to each product. Six studies are used to provide evidence that (1) price discount framing effects can be explained by reference dependence and (2) that reference dependence and product importance independently contribute to price discount framing effects. Copyright 2004 by the University of Chicago.
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This article focuses on the bundling of products with promised contributions to charity. Two lab experiments and one field study are conducted that compare the effectiveness of promised donations to charity in promoting "practical necessities" (e.g., a box of laundry detergent) to their effectiveness in promoting "frivolous luxuries" (e.g., a hot fudge sundae). The results suggest that charity incentives are more effective-in-promoting frivolous products than in promoting practical products. This research extends prior work on the effects of bundling complementary positive outcomes into the domain of affect-based complementarity with product-charity bundles. Copyright 1998 by the University of Chicago.
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If utility (net of price) varies by consumption occasion, the consideration set of a rational consumer will represent trade-offs between decision costs and the incremental benefits of choosing from a larger set of brands. If evaluating a brand decreases bias and uncertainty in perceived utility, the decision to evaluate a brand for inclusion in a consideration set is different from the decision to consider an evaluated brand. The decision to consumer is, in turn, different from the decision to consider. This article provides analytical expressions for these decision criteria and presents four aggregate implications of the model: (1) distributions of consideration set sizes, (2) order-of-entry penalties, (3) dynamic advertising response, and (4) competitive promotion intensity. Copyright 1990 by the University of Chicago.
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The effects of prior knowledge about a product class on various characteristics of pre-purchase information search within that product class are examined. A new search task methodology is used that imposes only a limited amount of structure on the search task: subjects are not cued with a list of attributes, and the problem is not structured in a brand-by-attribute matrix. The results indicate that prior knowledge facilitates the acquisition of new information and increases search efficiency. The results also support the conceptual distinction between objective and subjective knowledge.
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A short form for assessing individual differences in need for cognition is described.
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Although bundling, the selling of two or more products and/or services at a single price, has a history of economic research, marketing-oriented investigations have appeared only recently. This paper examines buyers' perceptions of overall savings when they evaluate a bundle offer. Such perceptions of overall bundle savings may consist of two separate perceptions of savings, each with a different relative influence: (1) perceived savings on the individual items if purchased separately and (2) perceived additional savings on the bundle. Results of an experiment indicate that additional savings offered directly on the bundle have a greater relative impact on buyers' perceptions of transaction value than savings offered on the bundle's individual items. The effect of each saving is also influenced by the magnitude of the other saving.
Article
The subjective value given to time, also known as the psychological interest rate, or the subjective price of time, is a core concept of the microeconomic choices. Individual decisions using a unique and constant subjective interest rate will refer to an exponential discounting function. However, many empirical and behavioural studies underline the idea of a non-flat term structure of subjective interest rates with a decreasing slope. Using an empirical test this paper aims at identifying in individual behaviours if agents see their psychological value of time decreasing or not. A sample of 243 individuals was questioned with regard to their time preference attitudes. We show that the subjective interest rates follow a negatively sloped term structure. It can be parameterized using two variables, one specifying the instantaneous time preference, the other characterizing the slope of the term structure. A trade-off law called “balancing pressure law” is identified between these two parameters. We show that the term structure of psychological rates depends strongly on gender, but appears not linked with life expectancy. In that sense, individual subjective time preference is not exposed to a tempus fugit effect. We also question the cross relation between risk aversion and time preference. On the theoretical ground, they stand as two different and independent dimensions of choices. However, empirically, both time preference attitude and slope seem directly influenced by the risk attitude.
Article
As product lines have broadened in many industries (particularly service industries), the use of mixed price bundling has increased. In mixed price bundling, a firm offers its customers the choice of buying one or more products/services individually or of buying a "bundle" of two or more products or services at a special discount. The author presents a normative framework for selecting appropriate types of services for different mixed-bundling discount forms. The framework extends the economic theory of bundling (which historically has been applied to tie-in sales) to permit explicit consideration of different types of complementarity relationships and strategic marketing objectives.
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The authors propose a probabilistic approach to optimally price a bundle of products or services that maximizes seller's profits. Their focus is on situations in which consumer decision making is on the basis of multiple criteria. For model development and empirical investigation they consider a season ticket bundle for a series of entertainment performances such as sports games and music/dance concerts. In this case, they assume consumer purchase decisions to be a function of two independent resource dimensions, namely, available time to attend performances and reservation price per performance. Using this information, the model suggests the optimal prices of the bundle and/or components (individual performances), and corresponding maximum profits under three alternative strategies: (a) pure components (each performance is priced and offered separately), (b) pure bundling (the performances are priced and offered only as a bundle), and (c) mixed bundling (both the bundle and the individual performances are priced and offered separately). They apply their model to price a planned series of music/dance performances. Results indicate that a mixed bundling strategy is more profitable than pure components or pure bundling strategies provided the relative prices of the bundle and components are carefully chosen. Limitations and possible extensions of the model are discussed.
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Though consumers commonly are assumed to be actively involved in important purchase decisions, the author proposes that consumers in fact often relinquish control to external experts, or surrogates, in such situations. As a result, the purchase decision is often a joint process over which the end consumer does not necessarily retain primary control. The author conceptualizes the surrogate function as an interface between the flow of market channels and the sequence of stages involved in consumer decision making. The roles played by surrogates at these stages are explored and ramifications for marketing theory, consumer research, and managerial practice are discussed.
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Two studies explored how and why the camera angle used to photograph products in ads may affect viewers' product evaluations. The findings suggest that such camera angle effects are likely to emerge when viewers' motivation to process ad information is either low or moderate rather than high. When processing motivation was low, evaluations were most favorable when the viewer seemed to be looking up at the product, least favorable when he or she looked down at the product, and moderate when the product was at eye level. However, when processing motivation was moderate, eye-level shots produced the most favorable evaluations. The authors suggest that the use of different processing heuristics may be responsible for these camera angle effects.
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In today's marketplace, price bundling is widespread: Manufacturers and retailers routinely offer multiple products for a single, bundled price. Although the effects of price bundling on purchase behavior have been well researched, the effects of price bundling on postpurchase consumption behavior have received almost no attention. In this article, the authors build on the sunk cost literature (e.g., Thaler 1980, 1985) and predict that price bundling leads to a disassociation or "decoupling" of transaction costs and benefits, thereby reducing attention to sunk costs and decreasing a consumer's likelihood of consuming a paid-for service (e.g., a theater performance). Four studies show this to be the case. In two lab studies, the authors show that having a bundled four-day ski pass as opposed to four one-day ski tickets decreases a person's likelihood of skiing on the final day of a four-day ski vacation. They replicate this result in a field study, showing that multiperformance ticket holders are more likely to forgo a given theatrical performance than are single-performance ticket holders, all else held constant. In a final study, the authors show that the decreased attention to sunk costs brought about by price bundling can be either cognitively driven (i.e., it is difficult to allocate a single payment across multiple benefits) or motivationally driven (i.e., there is an underlying desire to avoid consumption). Their findings have practical implications for managers interested in predicting or influencing actual product consumption.
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The authors report the results of an experiment examining the effect of functional compatibility risk on consumer’ preference for product bundles vis-à-vis separate items. In a laboratory experiment, 90 undergraduate business students were asked to choose bundled or unbundled stereo equipment after reading product information that either did or did not prime fears of functional compatibility risk. The results indicate that heightening the salience of functional compatibility risk may be a practical way for marketers to increase consumer’ choice of bundled products, particularly among consumers who are more uncertain of their product knowledge.
Article
Investigated dominant simplifying strategies people use in adapting to different information processing environments. It was hypothesized that judges operating under either time pressure or distraction would systematically place greater weight on negative evidence than would their counterparts under less strainful conditions. 6 groups of male undergraduates (N = 210) were presented 5 pieces of information to assimilate in evaluating cars as purchase options. 3 groups operated under varying time pressure conditions, while 3 groups operated under varying levels of distraction. Data usage models assuming disproportionately heavy weighting of negative evidence provided best fits to a signficantly higher number of Ss in the high time pressure and moderate distraction conditions. Ss attended to fewer data dimensions in these conditions. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
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The paper investigates the premise that bundling prompts consumers to purchase more than they ordinarily would. Two theoretical justifications for increased purchasing with bundling are reviewed, and an experiment regarding consumer evaluation of bundling is reported. Anomalies in the experimental results demonstrate that bundles appear to create contexts that influence evaluation and choice, and some support for increased purchasing was found. Further research is needed to understand more fully the bundle context, the effects created and the process evoked.
Article
Consumers' reactions to multi-product bundles — two different products sold for one price — were obtained by systematically varying the attributes of both the primary product (e.g., VCRs) and the tie-in product (e.g., videocassette tapes). Respondents were given written product descriptions as well as the opportunity to inspect the actual products before responding. The results across a variety of dependent measures suggest that evaluations of the primary product and the tie-in product are averaged or balanced when evaluating product bundles. Furthermore, attributes of the tiein product had a much larger effect on the evaluations of product bundles than would be expected on the basis of their monetary worth alone. Other aspects of our results suggest that product bundling as a marketing strategy compares favorably with the use of cash rebates, especially when the bundle is enhanced by including a high-quality tie-in product.
Article
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 or 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.
Article
The identification of sellers and the discovery of their prices is given as an example of the role of the search for information in economic life.
Article
A theory and methodology are developed for explicitly considering the cost of comparing diverse choice alternatives. The theory allows (1) explicit analytical measures of the cost of using various simplified decision strategies, and (2) predictions regarding the distribution of mistakes a consumer is likely to make when reducing decision-making effort.
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Bundling, the joint offering of two or more items, is a common selling strategy, yet little research has been conducted on buyers' evaluation of bundle offers. We developed and tested a model of bundle evaluation in which the buyers anchored their evaluation on the item perceived as most important and then made adjustments on the basis of their evaluations of the remaining bundle items. The results of two computerized laboratory experiments suggested that people tend to examine bundle items in a decreasing order of perceived importance and make adjustments to form their overall evaluation of the bundle. Copyright 1994 by the University of Chicago.
Article
This article examines how consumer evaluations of multiple price changes differ from the evaluation of a single price change of an equal amount. Consistent with R. Thaler's theory about segregation versus integration of gains and losses, we find that multiple price decreases are evaluated more favorably than a single price decrease and multiple price increases are evaluated more unfavorably than a single price increase. However, these effects are moderated by consumer price uncertainty and relative magnitude of the prices being evaluated. Because price-uncertain consumers consider higher ranges of prices acceptable, they are less unfavorable to multiple price increases and more favorable to multiple price decreases than certain consumers. Moreover, when the magnitude of one price is very small relative to other prices, consumers' preference for multiple price decreases (relative to a single price decrease) is reduced. However, this effect is not found when there are price increases.
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Utilizing an involvement perspective and Punj and Stewart's (1983) interaction framework of decision making, the relationship between external search effort and a number of motivating antecedent variables is investigated and evaluated across five related consumer electronic products. The findings confirm four of five hypothesized relationships between total search effort and the following variables: purchase involvement (+), attitudes toward shopping (+), time availability (+), and product class knowledge (−). The relationship between ego involvement and total search effort was not significant. The influence of these variables upon a number of subindices of external search, including retailer search, media search, interpersonal search, and neutral sources search, is also investigated and reported.
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I. Introduction, 475.—II. The model: positive properties, 477.—III. The model: normative properties, 490.—IV. Implications and conclusion, 495.
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This paper addresses key aspects of commodity bundling decisions in business enterprises both in general and as they relate to the International Tourism industry in particular. The considerable importance and complexity of bundle mix and bundle pricing decisions on the transportation, sightseeing, and resort level of Tourism are discussed. The authors develop the basic theoretical structure and framework underlying bundling decisions and define key elements of required decision information. The complexity of the determination of optimal bundling mixes in a multiservice environment is demonstrated, and an algorithm which greatly facilitates such determination under certain assumptions is outlined and discussed. Finally, the problem of allocating joint bundle profits among associated profit or cost centers is reviewed in detail. A number of alternative allocation criteria based on commonly acceptable notions of bargaining power and fairness are proposed. Their relevance and applicability to international tourism and tourist enterprises are discussed.© 1979 JIBS. Journal of International Business Studies (1979) 10, 37–50
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This research investigates the effects of bundling on consumers' reservation prices for the bundle and its components including a new product (i.e., the primary product) and a tie-in product. Based on a quasi-experimental procedure (n = 180) involving mixed-product bundles of personal care products, the study examines the effect of the product combination, the form of the bundle (whether a within- or between-brand bundle), and attitudes toward the brand(s) as important determinants of consumers' evaluation of the bundle itself. The results show that prior attitudes toward the component brands significantly affect the evaluation of the bundle, which, in turn, mediates the influence of these prior attitudes on consumer reservation prices for the bundle itself and, subsequently, for both the new product and the tie-in individually.
Article
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)
edu) is a professor and chair of the Department of Marketing and Entrepreneurship He is the author of several books, along with numerous articles in such journals as the Public Opinion Quarterly, and others. He has served on the editorial boards of the
  • A Edward
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Edward A. Blair (blair@uh.edu) is a professor and chair of the Department of Marketing and Entrepreneurship, Bauer College of Business, University of Houston. He is the author of several books, along with numerous articles in such journals as the Journal of Marketing, the Journal of Marketing Research, the Journal of Consumer Research, Public Opinion Quarterly, and others. He has served on the editorial boards of the Journal of Marketing Research, the Journal of the Academy of Marketing Science, and the Journal of Business Research. by guest on June 2, 2013jam.sagepub.comDownloaded from
Duluth, MN: Association for Consumer Research
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Ed. Kent B. Monroe. Duluth, MN: Association for Consumer Research, 61-65.
Consumer External Search: Amount and Determinants InConsumer and Industrial Buying Behavior
  • Joseph W Newman