Impact of bundle type, price framing and familiarity on purchase intention for the bundle

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1995-01-01

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Abstract

Bundling of products is very prevalent in the marketplace. For example, travel packages include airfare, lodging, and a rental car. Considerable economic research has focused on the change in profits and consumer surplus that ensues if bundles are offered. There is relatively little research in marketing that deals with bundling, however. In this article we concentrate on some tactical issues of bundling, such as which types of products should be bundled, what price one can charge for the bundle, and how the price of the bundle should be presented to consumers to improve purchase intent. For example, we hypothesize that bundles composed of complements 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. © 1995.

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10.1016/0148-2963(94)00014-6

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Harlam, BA, A Krishna, DR Lehmann and C Mela (1995). Impact of bundle type, price framing and familiarity on purchase intention for the bundle. Journal of Business Research, 33(1). pp. 57–66. 10.1016/0148-2963(94)00014-6 Retrieved from https://hdl.handle.net/10161/28433.

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Scholars@Duke

Krishna

Anirudh Krishna

Edgar T. Thompson Distinguished Professor of Public Policy in the Sanford School of Public Policy

ANIRUDH KRISHNA is the Edgar T. Thompson Professor of Public Policy and Political Science at Duke University. His research investigates how poor communities and individuals in developing countries cope with the structural and personal constraints that result in poverty and powerlessness. His most recent book, The Broken Ladder: The Paradox and the Potential of India’s One-Billion (Cambridge University Press and Penguin Random House India), won the A. K. Coomaraswamy Award of the Association for Asian Studies. Krishna has authored or co-authored seven other books, including One Illness Away: Why People Become Poor and How they Escape Poverty, and more than eighty journal articles and book chapters. In 2011, he was awarded an honorary doctorate by Uppsala University, Sweden. Before returning to academia, Krishna spent 14 years managing diverse rural and urban development initiatives for the government of India. He has advised the World Bank, the United Nations, national governments, and non-government organizations. His recent research on talent ladders is described in this TEDx talk.

Mela

Carl Frederick Mela

T. Austin Finch Foundation Distinguished Professor of Business Administration

Carl F. Mela is the T. Austin Finch Foundation Professor of Marketing at Duke University and past Executive Director of the Marketing Science Institute. He holds an engineering degree from Brown University, and a Ph.D. in Marketing from Columbia University. Prior to his Ph.D., he held management positions at Hewlett Packard, Hughes Space and Communications, and Proxima Corporation.

Prof. Mela is a data scientist focused on the long-term effects of marketing activity on brand equity and the effect of digital marketing technology on consumer and firm behavior. Articles along these lines appear in the Journal of Marketing Research, Marketing Science, Journal of Marketing, Harvard Business Review, and the Journal of Consumer Research and have received or been a finalist for forty best paper awards including the INFORMS John D.C. Little and Long-Term Impact Awards and the American Marketing Association’s William O’Dell and Paul Green Awards.

An ISMS Fellow, Prof. Mela is also a co-editor at Quantitative Marketing and Economics, serves or has served as an Associate Editor of the Journal of Marketing Research and Marketing Science, and is or has been on the editorial boards of the Journal of Marketing and Marketing Letters. Professional boards include the Word of Mouth Marketing Association, Unilever, Information Resources, Incorporated, the Marketing Science Institute, and the Advertising Research Foundation.


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