1. University
of
Florida
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Journal
of
Undergraduate
Research
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Volume
15,
Issue
3
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Summer
2014
1
The Effects of Product Type, Price & Donation Level on
People’s Willingness to Accept a Donation-Product Bundle
Michelle Nastir and Dr. Alan Cooke
Warrington College of Business Administration, University of Florida
This research studies the effects of product type (hedonic vs. functional), price, and donation level on people’s likelihood of
purchasing a donation-product bundle. An online experiment of over 700 undergraduate business students found that people were
more willing to make a standalone donation than purchase a donation-product bundle at no additional cost when the donation level is
low (less than $10). Moreover, at the lowest price level ($3), people were more willing to purchase the bundle associated with a
functional product than with a hedonic product. Such findings shed light on the circumstances under which businesses and nonprofit
organizations can develop mutually beneficial partnership campaigns to increase both the sales of their products and the financial
support of a charity.
INTRODUCTION & LITERATURE REVIEW
According to the National Center for Charitable
Statistics, individual contributions to nonprofits made up
72% of all donations in 2012 (“Charitable Giving in
America”). Much research has been conducted on the
psychological and behavioral factors influencing
individuals’ willingness to donate to nonprofit
organizations. Such factors include anonymity, reciprocity,
social information, and message framing.
Previous research has found that individuals are more
likely to be influenced by, and accept, social information
(such as a reference level) in situations that they are
unfamiliar with, or that they consider to be ambiguous
(Crutchfield, 1955; Croson & Shang, 2008). An example
of a reference level would be, “the average person donates
$2.00 to X charity every month.” This sets a standard for
the potential donor and can influence how much he or she
decides to donate. Moreover, the number of individuals
who contribute decreases as the reference level increases,
yet the magnitude of the average conditional contribution
increases, and vice versa for small reference levels
(Alpizar, Carlsson, & Johansson-Stenman, 2008; Fraser,
Hite, and Sauer, 1988). For instance, as a reference level
increases from $5.00 to $10.00, the total number of people
donating decreases, but the average donation amount may
rise from $3.00 to $7.00.
Our research will focus on the impact of bundling
donations with product purchases. Previous research on
bundling has found that 78% of U.S. consumers would be
more likely to buy a product associated with a cause and
66% would switch brands to support a cause (Cone 2006
Millenial Cause Study, 2006). Additionally, consumers
prefer to know the exact amount of the purchase price that
will go to the cause or charity (Grau, Garretson, & Pirsch,
2007; Olsen, Pracejus, & Brown, 2003), and consumers
more easily interpret and accept donations framed in dollar
terms over percentage terms. Previous research has also
found that small donations are viewed as “cheap”, so
people are less likely to donate a small amount
independently. However, if the small donation is bundled
with a product, the consumer feels less guilty about it being
“cheap” since the seller set the magnitude of the donation
(Strahilevitz, 1999). Smith and Alcorn (1991) found that
people not only gain utility from the purchase of the
product, but also from the donation associated with the
purchase. The cost of the donation is shared between the
consumer and seller, so the added utility is greater than that
associated with a standalone donation (Liu, 2009).
While these studies have shed light on bundling effects,
most of them isolated the effects of certain factors such as
product type or the percentage of the product’s purchase
price making up the donation amount. Subsequently, these
findings cannot account for potential interactions between
various factors. Additionally, some studies have bundled a
donation with a gift as opposed to a product purchase. The
gift is of no cost to the consumer, so people should be more
willing to donate in exchange for something they perceive
to have value. On the other hand, bundling a donation with
a product purchase is not considered an exchange. The
consumer is incurring the cost of purchasing the product,
and gaining added utility from making a donation
simultaneously. This provides insights into how charities
and businesses can potentially increase frequency of
contributions and purchases by partnering with one
another. Our research, in particular, found significant
interaction effects between price level, donation level,
product type, and people’s willingness to accept the bundle
offer, which helps us further understand the conditions in
which product-donation bundles are most effective.
In addition to the effects of bundling, product type also
has an influence on people’s perception of an appeal and

2. MICHELLE NASTIR AND DR. ALAN COOKE
University
of
Florida
|
Journal
of
Undergraduate
Research
|
Volume
15,
Issue
3
|
Summer
2014
2
willingness to donate. Strahilevitz and Myers (1998)
suggested that people are more willing to purchase a
donation-product bundle when the product is considered
“frivolous,” as the altruistic act of giving to charity
neutralizes the guilt associated with an unnecessary
purchase. Therefore, in our research, we manipulated the
product type (hedonic, functional) presented to the
respondents as part of the bundle offer.
All in all, our research is unique since we measured the
interaction effects of bundling, product price level (low,
high), donation level (low, high), and product type
(hedonic, functional) on an individual’s willingness to
make a contribution, as opposed to isolating the effects of
each factor.
HYPOTHESES
Based on previous research findings, we made the
following hypotheses:
H1: People will be more willing to purchase a bundle
than to make a standalone donation.
H2: People will be more willing to purchase a bundle
than to purchase a hedonic product on its own at higher
price levels.
STUDY 1
We conducted a pretest survey to test for people’s
perceptions of product type (hedonic versus functional) and
the appeal of various local charities, holding other factors
constant.
Procedure
We distributed a survey to 154 undergraduate business
students (between the ages of 18 and 24) at the University
of Florida. Participants were recruited through the
Warrington College Behavioral Research Pool.
Respondents were randomly presented with questions.
They were specifically presented with seven product
images and descriptions, and then asked to rate the degree
to which they consider each product practical and hedonic,
as well as how likely they would be to purchase the
product at the listed price on a scale of 1 (very unlikely) to
5 (very likely). We presented two products (one hedonic
and one practical) at three different prices (low- $3,
medium- $9, high- $30). The latter part of the survey
presented respondents with a description of three local
charities (with three different causes), and asked how likely
they would be to donate to the listed charity on a scale of 1
(very unlikely) to 5 (very likely). Respondents were also
presented with an example of a donation-product bundle,
and asked what percentage of the time they purchase such a
bundle when they have the opportunity to do so. We used
the results from this study to determine which products
people considered to be hedonic and functional, as well as
which charity had the greatest general appeal.
STUDY 2
691 undergraduate business students (between the ages
of 18 and 24) at the University of Florida, excluding those
who participated in the pretest survey, participated in this
experiment.
Design
Respondents saw three offers based on a 3 (offer type:
product, charity, bundle) × 3 (base price: $3, $9, $30) × 2
(product price: high vs. low) × 2 (donation level: high vs.
low) × 2 (product type: functional vs. hedonic). The order
of presentation of base price and offer type were
counterbalanced using a Graeco-Latin square design, whil
product price, donation level, and product type were
manipulated between-subjects. A different product was
presented for each cell of the base price by product type
design (see Table 1). For product offers, the respondent
was presented with a picture and description of a product
(either hedonic or functional), as well as its price, and
asked to rate his/her likelihood of purchasing the product at
the listed price on a scale of 1 (very low) to 5 (very high).
For charity appeals, the respondent was presented with the
description of a charity and once again asked to rate his/her
likelihood of donating $X to the given charity on a scale of
1 (very low) to 5 (very high). For bundles, the respondent
was presented with a picture and description of a product
and the charity associated with its purchase, as well as the
total price of the bundle (showing separately the dollar
amount of the product price that makes up the donation).
The respondent was then asked to rate his/her likelihood of
purchasing the bundle at the listed price on a scale of 1
(very low) to 5 (very high).
Product prices were set to be either 33% higher (high) or
equal to (low) the base price.. Donation levels were set to
either 16.7% (low) or 33% (high) of the base price. Bundle
prices were set to the sum of product price and donation
level, although all three prices were presented to
participants (see Table 2).
Base Prices Hedonic Functional
$3.00
Godiva chocolate
bar
Stapler
$9.00
Handmade artisanal
jam
Laundry detergent
$30.00 Floor lamp
Gift card for
Dragonfly Sushi &
Sake restaurant
Table 1: Hedonic vs. Functional Products at Each Base Price

3. THE EFFECTS OF PRODUCT TYPE & PRICE/DONATION LEVEL ON PEOPLE’S WILLINGNESS TO ACCEPT A DONATION-PRODUCT BUNDLE
University
of
Florida
|
Journal
of
Undergraduate
Research
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Volume
15,
Issue
3
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Summer
2014
3
This design implies that for each combination of base price
and product type, there exists an extended factorial design
of product price by donation level including the conditions
in which each is absent (when offer type is product and
charity, respectively). Crucially, this allows comparison of
product-charity bundles do their constituent components,
priced at the same levels, as in the following example:
1. Product alone: $3.00 chocolate bar
2. Donation alone: $1.00 to the Ronald McDonald
House
3. Bundle: $4.00 chocolate bar, of which $1.00 will
go to the Ronald McDonald House
RESULTS
Prior to analyzing the data, we eliminated unreliable
results. We eliminated the data of those who rated their
attention level at less than or equal to 3 (somewhat) and
those having incomplete data. This reduced our sample
from 691 to 503 (27%).
After manipulating the price level across the various
base prices ($3.00, $9.00, $30.00), final product prices
came out to: $2.00, $3.00, $6.00, $9.00, $20.00, and
$30.00. Overall, people were more willing to purchase the
product alone at the higher product prices of $20.00 and
$30.00. However, people were more willing to accept the
bundle offer when the product price was $6.00 or $9.00.
We also accounted for the influence of product type, in
addition to product price, on people’s willingness to
purchase the product alone and the bundle offer. We found
that in general, people were most willing to accept the
product alone for a $20.00 functional product. However,
people were most willing to accept the bundle offer for a
$6.00 functional product, which contradicts our fourth
hypothesis and previous research findings (see Tables 3
and 4).
There are statistically significant differences between the
average of people’s willingness to purchase the product
alone and the average of people’s willingness to purchase
the bundle for products priced at $6.00, $9.00, $20.00, and
$30.00 (see Tables 3 and 4). At the $6.00 and $9.00
Table 2: Product, Donation, & Bundle Prices Matrix
Table 3: Average Willingness to Accept Offers
for Functional Products
Table 4: Average Willingness to Accept Offers
for Hedonic Products
Donation
amount
Donation
amount
Donation
amount
Donation
amount
Donation
amount
Donation
amount
Donation
amount
Donation
amount
Donation
amount
ABS
ABS
ABS

4. MICHELLE NASTIR AND DR. ALAN COOKE
University
of
Florida
|
Journal
of
Undergraduate
Research
|
Volume
15,
Issue
3
|
Summer
2014
4
product price levels, people were much more willing to
accept the bundle than the product alone. In contrast, at the
$20.00 and $30.00 product price levels, people were much
more willing to buy the product alone than the bundle. This
contradicts our second hypothesis that states people should
be more willing to accept the bundle valued at “$X” over
the product priced at “$X”.
However, we also found significant interaction effects
between product price and product type at the $20.00 and
$30.00 price levels, as well as at the $3.00 price level,
which could help explain these results (see Tables 3 and 4).
At the $3.00 price level, people were much more willing to
buy the product alone than the bundle offer when the
product was hedonic (a Godiva chocolate bar), and vice
versa for the functional product (a stapler, see Figure 1).
This contradicts Strahilevitz and Myers’ findings (1998).
People may have figured that they are going to buy the
practical product anyway, so might as well give to charity
at no additional cost.
On the other hand, at the $20.00 and $30.00 price levels,
people were much more willing to buy the bundle versus
the product alone when the product was hedonic, as
predicted (see Table 4). From this result, we can infer that
people are influenced by the product’s link to charity.
Rational economic theory would predict that people would
be indifferent between the two options since both are
valued the same in terms of price, yet the consumer may
achieve greater utility in purchasing the bundle since
he/she feels they have done a good deed. This added “feel-
good” utility offsets the potentially negative feelings of
guilt associated with the purchase of a hedonic product,
especially one costing $20.00 or $30.00
In addition to product price, we also found significant
main effects and interaction effects of donation price and
type on people’s willingness to accept the bundle offer vs.
the donation alone. After accounting for donation level
(16.67% or 33.33% of base price), we were left with the
following final donation amounts: $0.50, $1.00, $1.50,
$3.00, $5.00, and $10.00. Our data found that in general,
people were most willing to accept the $0.50 donation
amount alone. However, people were most willing to
accept the bundle when the donation was $1.50 and
bundled with a hedonic product (see Table 4).
There are significant effects at donation levels of $0.50,
$1.00, $5.00, and $10.00. At all four of these donation
levels, people were much more willing to accept the
donation alone over the bundle offer. These results
contradict our first hypothesis stating that people would be
more willing to accept the bundle valued at “$X” over the
donation alone of “$X”. This makes sense if people place
greater value on the donation or charity than on the product
itself (for example, they may not need or want X product),
and would thus feel less guilty in giving the donation
directly to the charity than indirectly through a business.
Also, people may gain greater utility from altruistically
giving to charity rather than giving to charity while
simultaneously making a seemingly “selfish” purchase.
At donation levels of $0.50 and $1.00, we found
statistically significant interaction effects between donation
price and product type on people’s willingness to accept
the bundle offer. At both of these levels, people were much
more willing to accept the bundle offer when the product
was functional, contradicting previous research findings
(see Figure 2). This aligns with our findings for products
priced at $3.00, reinforcing the possibility that people
figure they are going to make the purchase anyway, so they
might as well simultaneously make a contribution to
charity at no additional cost.
All in all, we found significant interaction effects (some
of which contradict our hypotheses and previous research)
between donation/product price and product type on
people’s willingness to accept the donation/product alone
vs. the bundle offer (see Tables 3 and 4).
Figure 1: One's Likelihood to Accept the $3 Product Alone vs.
the Bundle Depending on Type
1:
Product
alone
2:
Bundle
1:
Donation
alone
2:
Bundle
Figure 2: One’s Likelihood to Accept the $0.50 Donation
Alone vs. the Bundle Depending on Type

5. THE EFFECTS OF PRODUCT TYPE & PRICE/DONATION LEVEL ON PEOPLE’S WILLINGNESS TO ACCEPT A DONATION-PRODUCT BUNDLE
University
of
Florida
|
Journal
of
Undergraduate
Research
|
Volume
15,
Issue
3
|
Summer
2014
5
GENERAL DISCUSSION
Studying the effects of bundling products with charitable
donations can provide useful insights in marketing for both
consumer good businesses and nonprofit organizations. If a
business were able to increase the frequency of purchases
without incurring any additional costs, why wouldn’t they
do so? Not only could they increase revenues, but this
would also help the company establish a positive brand
image, strengthening customer loyalty in the long run. The
same goes for nonprofit organizations since they could
potentially raise more contributions (at no additional cost)
by partnering with a consumer good business. However,
contrary to our hypotheses, at certain price levels, people
were more willing to purchase the product or make the
contribution alone than purchase the donation-product
bundle. Future research could provide insights into why
this happens, shedding light on other psychological factors
by interviewing specific respondents.
Future research should also look into the influence of the
link between the type of charity and product on people’s
willingness to accept an offer. In other words, does the
extent to which the charity is relevant to the product with
which it is bundled influence people’s perception, and thus,
their willingness to purchase the bundle? Our research
looked at the overall influence of type, but what specific
products and charities would maximize revenue for both
the business and nonprofit organization? For example, it’s
fair to assume that people would more readily accept a
bundle if the product were cat food and the donation were
to the Humane Society or Big Cat Rescue.
Another interesting idea for future research is to link a
certain charity with a product based on the product’s target
demographic. For example, if middle-aged women
generally buy cat food, then would linking the purchase of
cat food with a donation to the American Heart Association
or Susan G. Komen (although irrelevant to cat food) lead to
an increase in purchases?
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