What Are Product Bundles and How to Bundle Products

Abstract

Bundling is widely practiced in today’s marketplace, with companies using joint pricing for the sale of two or more products and/or services in a single package (Guiltina 1987; Kaicker et al. 1995; Stremersch and Tellis 2002). Yadav and Monroe (1993), drawing from transaction utility theory, examined consumer perceptions of savings when evaluating a bundle offer, and found that consumers gained transaction utility from discounts associated with the component products in a bundle, plus any other discounts associated with the bundle. Simonin and Ruth (1995) adopted a quasi-experimental procedure to investigate the effects of bundling on consumer evaluations and reservation price judgments. They found that the form of the bundle and consumer attitudes toward the brand to be important determinants in the evaluation of the bundle itself. Mulhern and Leone (1991) and Harlam et al. (1995) examined the complementary effects of the items offered in bundles, and found that bundles composed of complementary items will receive higher purchase intentions from consumers than the bundles of unrelated ones.