1. Bundling or unbundling frequently purchased
products: a mixed method approach
Raj Arora
University of Missouri-Kansas City, Overland Park, Kansas, USA
Abstract
Purpose – This paper aims to use a mixed method (qualitative and quantitative) approach to exploring the effectiveness of price bundling.
Design/methodology/approach – The study is based on a concurrent, two-studies design where quantitative and qualitative data are both collected
(concurrently or sequentially) and analyzed separately. The first study is based on a nested experimental design, and the second study is based on in-
depth interviews. The setting for the study is frequently purchased products, specifically teeth-whitening products. The bundled items are: teeth
whitener, toothpaste, mouthwash, toothbrush and dental floss. Various forms of discounts are tested to assess the effectiveness of bundles. While
bundling has been investigated in marketing settings, the focus has been limited to consumer durables using quantitative scales. The experimental
study is followed by a qualitative investigation in order to add further insight into the consumer’s choice of a bundle. This mixed method approach
provides rich narrative that adds important insights about the decision process and offers suggestions for advertising development.
Findings – The findings do not support a bundling approach. Although the consumers perceive higher value of the bundle, the attitudes, intentions and
narratives support promoting these items individually rather than as a bundle.
Research limitations/implications – Caution is advised in extrapolating the results beyond the issues investigated in the study.
Practical implications – The findings suggest caution for marketers in designing product bundles, positioning, and promotion strategies.
Originality/value – There are three major contributions of this study. First, the current literature suggests price bundling is an effective strategy. This
study suggests that for certain products bundling may not be effective. Second, the past literature has not investigated the influence of type of discount
on effectiveness of a bundle. Third, most studies in price bundling are quantitative in nature. This study uses a mixed method approach. The quantitative
study is followed by a qualitative study to add further insights that will help understand consumer motivations behind the preferences.
Keywords Discounts, Price positioning, Dentistry, Product design, Product mix, Consumer behaviour
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
Price bundling is an important area in marketing. While price
bundling is frequently used by marketers, its effectiveness
needs more research especially for different product
categories. The intent of price bundling is to increase sales
by offering a discount when a pre-specified bundle of items is
purchased at the same time. Usually, the additional items in
the bundle are those that are complementary to the main
product. For buyers, the total cost of purchasing these items is
less than the cost of purchasing these products individually.
Stremersch and Tellis (2002) elucidate the distinction
between product bundling versus price bundling. They define
price bundling as the sale of two or more separate products in
a package at a discount. Product bundling refers to the case
where the bundled products are offered without any discount.
Thus, bundling products without a price discount may not
add any real value to consumers.
Sometimes price bundling is used as a temporary price
adjustment to the main product. This is often the case when
marketers are reluctant to make price adjustments on the
main product for fear that doing so may affect the product’s
perceived quality. So, marketers choose to offer adjustments
on other related or complementary products. Consider the
message: “Buy the digital camera and get the color printer
free.” With this approach the marketer is making a price
adjustment without the perception of lowering the price of the
main product, the digital camera.
There are several different variations of price bundling.
Pure component pricing refers to the case of pricing and
offering each item individually. Pure bundling refers to
offering a fixed bundle of goods to the buyer for a given price.
One example would be offering a preconfigured computer
and a specific printer for a fixed price. Mixed bundling refers
to a case where the buyer may choose to purchase the bundle
or purchase individually priced items.
While price has a direct impact on purchase intentions, its
effectiveness may be mediated by the form of discount,
namely coupons, gift card, instant discount, etc. This form of
discount has not been studied in marketing and is investigated
under the topic of type of discount.
Product setting
The setting for this investigation is the teeth whitening
products. A few years ago, tooth whitening was considered a
cosmetic procedure, something to be done at a dentist’s office.
Now, casual reading of magazines or watching television
commercials indicates that teeth whitening products are
entering the mainstream of acceptance by consumers. Once
The current issue and full text archive of this journal is available at
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Journal of Consumer Marketing
28/1 (2011) 67–75
q Emerald Group Publishing Limited [ISSN 0736-3761]
[DOI 10.1108/07363761111101967]
67

2. considered an option, it is now simply a “way of life.” The
teeth whitening products had their origins in the dentist’s
office; they are now accepted as “at home” products.
As the market for teeth whitening products grows, so does
the variety of teeth whitening products. For example, Crest’s
most popular Whitestrips is now joined by Night Effects.
According to Sensational Smiles, one of the manufacturers
of teeth whitening product, the teeth whitening industry
grossed over 11 billion dollars worldwide in 2007
(www.sensationalsmiles4u.net/about.html). The increased
market size is also having an effect on distribution practices
of these products. An estimated 45,000 dentist offices now
sell Whitestrips.
The teeth whitening product-market is in transition from a
new market to a mature market. The teeth whitening market
is witnessing the introduction of new whitening products.
Given the mix of new as well as established products, it is
expected that some consumers will be in their early stages of
learning about the product, while others may be more
knowledgeable about the product. Thus, we expect that some
consumers would be “new” to the market, whereas others
may have considerable knowledge and/or experience with the
products. This provides a good opportunity to study the
differences in communication between these two groups, viz.
relatively new and those with greater knowledge. Thus, the
research question is: does the effectiveness of type of discount
and price bundling vary by the level of knowledge of the target
audience?
In summary, this study focuses on three issues:
1 whether consumers prefer to purchase bundled items or
individual (unbundled) items;
2 the influence of form of discount (gift card, cash discount
or free items); and
3 if the effectiveness varies by the knowledge of the target
market.
The next section provides a review of literature and develops
the necessary hypotheses to be tested.
Literature review
Price bundling
Price bundling involves setting one price for a bundle of
products. It is practice followed widely in computer products
where the bundle price includes the computer and other
related items such as the printer, monitor, software, etc.
Automobile manufacturers (dealers) also use price bundling
(a premium package option may include heated seats, xenon
lights, sports suspension, day and night rear view mirror,
etc.). The assumption is that the bundle priced items offer
more value and are therefore more attractive to the buyer.
The seller makes the buyer aware that the buyer is getting a
bargain in the bundle because if the items are purchased
separately, the aggregate price far exceeds the bundle price
(Yadav and Monroe, 2003).
The important question in price bundling has to do with
the relative effectiveness of price bundle, i.e. do consumers
prefer a bundle priced package or prefer to purchase the items
individually. There is some evidence that bundling results in
savings as compared to buying individual items. For example,
Estelami (1999) conducted a descriptive study of savings
resulting from fast food bundle items. The study was based on
existing price bundles in fast food category, computers and
photographic equipment. The findings show that on average
consumers save approximately 8 percent by buying a bundle
package.
Perceived value
Rather than measuring the amount of savings, other
researchers have focused on perceived value of buying a
bundle. Naylor and Frank (2001) formulated a regression
model with bundle packaging, quality, cost, and
disappointment/delight as predictors of value for an all-
inclusive stay at a resort. The variable disappointment/delight
was a composite of two variables: expecting to find the bundle
and the outcome of price bundle. The findings revealed that
quality had the maximum impact (t ¼ 12:58), followed by
prior visit (t ¼ 2:58) and disappointment/delight (t ¼ 2:48)
on the perceived value of the products.
A related aspect of overall value derived from a bundle has
to do with the loss from partial consumption of items in a
bundle. An example is that of buying a season ticket to a
sporting or music event. Soman and Gourville (2001)
introduce the concept of transaction decoupling to explain
the value of a bundle package of goods. They use the setting
for multiple shows (days) tickets to show that people are more
likely to forego seeing a show when they purchased a season
ticket or multi-performance ticket as compared to those who
purchased a single event ticket. Their findings revealed that
subjects were less likely to use the last day of ski tickets or
vacation day when purchased as a bundle. The explanation is
based on the concept of sunk cost that there is greater
pressure to use the tickets if they are paid for than if they are
free. Nevertheless, a couple of points in this study are worth
noting. The subjects in the experimental groups were told to
assume that they had four individual tickets (one group) while
the other group was told that they had a four-day pass.
Second, since the total cost of tickets was the same, the study
focused on product bundling and not price bundling. Thus,
interesting as the findings are, they do not explicitly consider
whether or not price bundling is effective. Since the cost of
the four-day pass is the same on a unit basis, they also do not
help in assessing the issue of quantity discount for purchasing
items in large quantities.
Heeler et al. (2007) conducted an experimental study to
estimate what the subjects would be willing to pay for an
equivalent bundle of items. The setting for their study was the
optional package in automobiles. The group of subjects in the
bundled options category was asked to estimate the total
market price of all options if purchased individually, while the
subjects in the unbundled options category were asked to
estimate the total market price of all options as a bundle. The
results revealed significant differences in estimates of market
price; the expected price was significantly lower for the
bundled condition.
Parguel et al. (2007) describe the perceived benefits of
bundling in packaged goods. They posit that marketers often
bundle products where they include an extra sample size or
full size item. Their study focuses on “buy two get one free”
type promotions. The setting for the study was shower gel
bottles or chocolate. The free product was either pre-
packaged or combined as an individual item. The results
revealed that subjects perceived higher monetary benefit for
separate item bundle as compared to pre-wrapped bundle.
Gilbride et al. (2008) investigate the effects of product
bundling using discrete choice design. The products
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3. investigated are a tote bag and a garment bag. Their findings
are similar to Heeler et al. (2007) in that subjects expect a
bundle to cost less. The results support bundling strategy
when the reference prices of individual items are not shown.
Thus, subjects perceive that mere bundling is cost effective.
Products within a bundle
A number of studies suggest that the overall attractiveness of a
bundle depends on the items within a bundle. For example,
the researcher may manipulate the salience of the items in a
bundle. Or some researchers use the term focal product or tie-
in (accompanying the focal product) product. This research
draws from reference pricing research. Janiszewski and Cunha
(2004) use this reference pricing framework to investigate the
sensitivity in price discount in a bundle set of items. They
describe products as the focal (more important) product such
as pizza and a tie-in product (less important) such as Coke.
The findings reveal that consumers are more sensitive to the
price discount on a less important product than an equivalent
amount of discount on the important product. Their
explanation is that the less important product may lie on
the steeper portion of the value function. They conclude that
the preference for the bundle is mediated through perceived
value of the bundle.
Another study that focuses on salience of items within a
bundle is by Raghubir (2005). The overall tag line is “buy one
get one free” offer. The between subjects one way
experimental design investigation involved subjects choosing
a pearl necklace and a pearl earrings either as a bundle
package for $66.00 or buy pearl necklace and get earrings
free, or buy earrings and get the necklace free. The dependent
variable was the price the subjects were willing to pay on an
open-ended scale. The lowest mean value of willingness to
pay was $20.22 for necklace with free earrings. The highest
mean value was $35.42 when the necklace was offered as free
with the purchase of earrings. The mean value for willingness
to pay was $23.46 for the bundle option.
Another type of product variation within a bundle explores
the effect of complementary or substitute products. Sheng
et al. (2007) test the effect of price discount in a setting
involving bundle products as well as product
complementarity. The high complementarity product pair
was a clothes washer and a dryer, whereas the low
complementarity pair was grill and chair. The price
discount was either 10 percent or 30 percent of the original
combined bundle price. For example, high complementarity
and low price discount condition would include the statement
– buy the washer at $400.00 and get the drier for $ 320.00
(10 percent off the combined price of $ 800.00). The
dependent variables in a 2 £ 2 between subject experimental
design were perceived price and perceived quality.
The findings revealed the significant main effect of price
discount on perceived price. The higher price discount was
perceived as more attractive and fair priced. The interaction
effects of price discount and product complementarity were
significant on perceived quality. The low price discount and
high complementarity had the most impact on perceived
quality, whereas a larger price discount has an adverse effect
on perceived quality.
Koukova et al. (2008) focus on products in the digital age.
Their study investigates consumers’ willingness to pay for
print and electronic form of book and newspaper. The
findings revealed that subjects were not willing to purchase
dual subscription unless the discount was very large. The
authors attribute the findings to limited shelf life (and thus
limited use) of information.
Perceived risk
In addition to savings or value derived from a bundle, there is
research suggesting that bundle items are perceived as less
risky. Sarin et al. (2003) formulate various propositions
showing that perceived risk is reduced by credibility and the
amount of discount offered in a bundle. The study has not
been empirically tested. Similarly Hsu and Chang (2007)
summarize major findings on price bundling and posit various
propositions and develop a comprehensive model of
consumer choice. This model has also not been tested
empirically; nevertheless the formulation shows various
factors such as risk, effort, cost, benefit, etc. leading to
perceived value.
In summary, the relevant research findings suggest that
consumers perceive they are receiving monetary savings by
buying a bundle. The research is not conclusive as to whether
it is in the interest of buyers (and marketers) to promote
bundled items. Furthermore, there is little evidence to suggest
the relative effectiveness of various forms of monetary rewards
(gift card versus instant discount). For this paper we are using
complementary products related to teeth care. Based on
above conceptualization and findings the following hypothesis
is formulated:
H1. It is expected that the impact of price bundling will be
significant. Specifically, it is expected that a bundle
product will have a greater favorable impact on
attitudes and intentions to use teeth whitening
product.
H2. It is expected that instant discount will be preferred to
other forms of discount.
Method
Design and procedure
A 2 £ 4 nested factorial design was used to study the influence
of bundling and form of discount. The factor price bundle
had two levels (individual items or bundled items), and the
factor form of discount had four levels (no discount, discount
in the form of a gift card, instant cash discount and free
items). Since the form of discount is not applicable for buying
just the focal product (individual unbundled item), the factor
form of discount is nested within price bundle. Thus, five
different brochures were designed to show various
combinations of price bundles with applicable forms of
discount. The brochures were designed to resemble
professionally designed promotional pieces.
The price bundling option started with the following major
paragraph heading: “Imagine beautiful white teeth in just
three days!”. This was followed by the statement, “Purchase
your choice of well-known brands of teeth whitening product
kit. You may choose the bundle package kit from Crest,
Colgate or any other brand you like.” A bordered box
described the items in the bundle as: teeth whitener (any
form), toothpaste, mouthwash, toothbrush, and dental floss.
The unbundled version was similar with the exception of
showing the prices of individual items. The various forms of
discount were displayed within another bordered box. For
example the instant discount condition included, “$10.00
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4. instant savings when you buy the bundle for $34.99.” Finally,
the bottom of the brochure included pictures of the products
included in the bundle. The overall type of discount of
message and credibility was similar to that in earlier studies
(Maheswaran and Meyers-Levy, 1990; Meyerowitz and
Chaiken, 1987).
Two booklets were prepared. The first booklet contained
the instructions and the brochure stimuli. Subjects were
instructed to look at the following brochures as they would at
any brochure or ad in a magazine. They were further
instructed that after they had looked at the brochure, they
should put the booklet away and not refer to it further during
the experiment. The second booklet contained the
questionnaire.
Subjects
The subjects for the experiment were students attending an
urban midwestern university. The sample is ideal for
investigating teeth whitening products. The respondents
were primarily in the younger age brackets with 34 percent
under 25 and another 33 percent from 25 to 34 year, another
17 percent between 35 and 44 year and the remaining were 45
years or older. The sample contained a relatively larger
proportion of females (54 percent). A large proportion of the
sample was college graduates with 32 percent working on
their undergraduate degrees and 39 percent working on their
graduate degrees and 19 percent working on their post-
graduate degrees. A total of 431 subjects agreed to participate
in this study and were administered the questionnaire in
groups of less than 5. For the qualitative portion, Creswell
(2002) has emphasized the importance of selecting
respondents that will provide rich and complex responses to
questions. Consistent with this purpose and understanding,
45 subjects were selected. Participants were informed that the
study was being conducted for academic purposes and that
the investigators were grateful for their help.
Questionnaire
The questionnaire included items to assess attitude and
intention. The attitude toward purchasing the items was
measured using an eight-point semantic differential scale with
end points as: good (bad) idea, beneficial (harmful) and
desirable (undesirable). The intention to purchase the items
was measured with the question, “If you decide to have your
teeth whitened, how likely is it that you will choose the
products in the brochure?” The end points of the eight-point
scale were “very likely” and “not likely.” In addition, the
questionnaire included measures for standard demographic
information and items to test manipulation of factors.
Results
Manipulation check
The manipulation of price bundling was tested using three
different recall measures. One was whether they recall seeing
one bundle price or separate prices for all items in the
brochure. Of the respondents, 95 percent in the separate price
condition answered this question correctly. In the second
manipulation question subjects were asked to indicate if they
recall seeing any discount. A total of 92 percent in the no
discount condition answered this question correctly. Finally a
third question was, “Did you get the impression that you can
purchase dental care products individually, or only as a
bundled package containing teeth whitener and other
products?” In total 92 percent in the individual items
condition answered this question correctly.
The manipulation of type of discount was also tested using
a multiple choice response format showing four types of
discounts in different brochures. The correct responses were
88 percent for no discount condition, 73 percent for free gift
card, 88 percent for instant discount and 67 percent for free
items, yielding an average correct response rate of 83.5, which
far exceeds the expected rate of 25 percent average of all four
categories. These tests reveal that the bundle as well as the
form of discount was successfully manipulated.
Attitude
There were two measures of attitudes: attitude toward teeth
whitening products in general and attitude toward the specific
teeth whitening product mentioned in the study. The former
was measured prior to exposure to the brochure whereas the
latter measured the attitude after reading the brochure. These
were measured using an eight-point semantic differential scale
with end points as: good (bad) idea, beneficial (harmful) and
desirable (undesirable). A reliability coefficient was calculated
before arriving at the composite attitude score. The reliability
coefficients (alpha) for the two attitude measures were 0.81
and 0.87 respectively indicating that the statements
measuring the attitudes are internally consistent. The mean
attitude scores for the two measures were 5.92 and 6.20. The
paired comparison difference in the two attitudes was
significant at p ¼ 0:00, indicating a small but significant
improvement in post attitudes.
The influence of price bundling as well as the type of
discount on attitude towards using teeth whitening product
was tested using a nested design with type of discount nested
within the bundle. The effect of bundling was in the
borderline area at p ¼ 0:09, while the effect of the type of
discount was not significant. The mean attitude scores for
individual teeth whitening product was 6.29 and the mean
score for bundled items was 6.03.
Intentions
We measured two behavioral intentions, namely, intention to
use the product and also the intention to recommend the
product to friends. The intention to use the teeth whitening
product was measured using an eight-point scale with end
points as not likely and very likely. The influence of price
bundling and type of discount on intention was also tested
using the nested design with type of discount nested within
the bundle. The effect of bundle was significant at p ¼ 0:000
with the mean scores of 5.89 (individual items) and 5.08
(bundled items). The effect of the type of discount was
significant at p ¼ 0:04. The mean scores for the nested model
are shown in Figure 1.
Next we consider the intention to recommend teeth
whitening products to friends. This test was also based on a
nested model with type of discount nested within the bundle.
The effect of bundle was significant at p ¼ 0:03 with the mean
scores of 5.34 (individual items) and 4.32 (bundles items).
The effect of the type of discount was significant at p ¼ 0:00.
The mean scores for the nested mean scores are shown in
Figure 2.
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5. Value of bundled items
An important aspect in understanding the motivations to
purchase the bundled items rests on the value derived from
buying the bundle. Subjects were asked to rate the overall
value of the teeth whitening product(s) in the brochure. The
end points of the eight-point scale were poor value and
excellent value. The influence of price bundling and type of
discount on perceived value was tested using the nested
design with type of discount nested within the bundle. The
effect of bundle was in the borderline of significance at p ¼
0:09 with the mean scores of 5.27 (individual items) and 5.26
(bundles items). The effect of the type of discount was
significant at p ¼ 0:01. The mean scores for the nested mean
scores are shown in Figure 3.
Effect of knowledge (covariate)
As the market for teeth whitening product grows (matures) it
is expected that a larger percentage of consumers will become
more knowledgeable (smarter shoppers) about teeth
whitening products. This study explores the effect of
knowledge on attitudes and intentions. The study included
an eight-point semantic differential scaled question, “How
knowledgeable are you about teeth whitening products”? The
ends points were very (not very) knowledgeable. Knowledge is
used as a covariate in testing the influence of type of discount
and price bundling on attitudes and intentions. The analyses
revealed a significant effect of knowledge on attitudes and
intentions without any appreciable change in the influence of
type of discount and price bundling. Thus, the effect of price
bundling and form of discount is the same for novice segment
of consumers as well for expert segment of consumers. The p
values corresponding to the factors and covariate are shown in
Table I. The implications of these findings are discussed in the
next section.
Discussion and managerial implications
In formulating effective pricing strategies, marketers have the
option of pricing and selling these products on a stand-alone
basis, i.e. individual pricing, or they can use price bundling to
enhance value of the overall bundle. The assumption is that
the bundle priced items offer more value and are therefore
more attractive to the buyer. This paper investigates the
effectiveness of price bundling and form of discount on
changes in consumers’ attitudes and intentions. There are
three major implications for marketing managers.
First, should marketing managers price and promote these
items as a bundle or as individual items? While, there is
widespread belief that marketers can influence consumers to
choose bundled items through savings that come from
purchasing bundled items, the findings of our study suggests
caution in bundling frequently purchased items. The mean
scores for intention to use the teeth whitening products and
the intention to recommend these items to others is very
similar. The major differences are between intention scores
and the perceived value scores of these items. While the
subjects in this experiment see higher value by purchasing the
bundle, the intention scores do not support bundling. The
intention scores are higher towards unbundled teeth
whitening product as compared to the bundled versions.
Furthermore, we tested for statistical significance of the
main effects of bundling. This test compares the mean scores
of individual items with the overall mean score of all types of
discount under bundling. The Bonferroni test was significant
for both types of intention measures indicating a statistically
significant greater preference towards individual items.
The second question is the following: Which form of
discount is most effective? Although it is common to see
products advertised as “buy one, get one free,” the marketing
literature offers limited help as to the relative effectiveness of
Figure 1 Mean values for intention to purchase teeth-whitening
products
Figure 2 Mean values for intention to recommend teeth-whitening
products
Figure 3 Mean scores for value of teeth-whitening products
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6. various forms of discount. The results indicate that the effect
of form of bundling is significant on intentions. Figures 1-3
reveal that free gifts are preferred over other forms of
discount, followed by gift cards. Bonferroni pairwise test was
used to determine significant differences within all possible
pairs of bundled items. The findings show a significant
difference between instant savings and free items on
intention measure (Figure 1). With respect to intention to
recommend (Figure 2), the findings show a significant
difference between free items and no discount conditions
and between gift card and no discount. These tests reveal
that free items are preferred over gift cards. The least
preferred option is of course the no discount condition and
instant discount. Nevertheless, regardless of the form of
discount, the individual items are preferred or at least equal
to the free items condition. This is notable especially in view
of the findings that subjects perceive higher value from a
bundle.
While the quantitative findings are important, they do not
reveal the important question of why one form of discount is
preferred over other discounts or individual items. This is the
subject that is explored via in-depth interviews. The
qualitative portion is described after the next issue.
The third question addressed in the study is that of the
effect of knowledge of consumers. As the market for teeth
whitening product matures, consumers are expected to
become more knowledgeable about the products. Thus, it is
conceivable that novice consumers might respond
differentially to promotional efforts than expert consumers.
This issue is investigated using the knowledge of teeth
whitening products as a covariate. The p-values for various
dependent variables are shown in Table I. The effect of the
covariate is significant in all cases. The table also reveals that
the pattern of significance for price bundling and form of
discount does not change by adding the covariate. Thus,
although the influence of knowledge is significant, the major
findings are unchanged and subjects still prefer individual
items over bundled items.
Qualitative insights
The findings from the nested experimental design indicate
that subjects reveal a preference for purchasing unbundled
items and within the bundle option there is a greater
preference towards free items. The important question is
why do subjects exhibit these preferences? The in-depth
interviews appear to answer this question. The first issue
deals with trying to get some additional insights into buying
a bundle versus unbundled items. The major motivation for
this group lies in price discount. They will purchase the
bundle primarily because of a large price discount in some
form or another. Some of the statements they expressed are
shown as follows:
I like to buy bundled products if the price is really low.
Yeah, I think that is one downfall to these bundled packages. A lot of the
time I only want one of the products, not both. So if this is the case, there is
really no reason to buy the bundle. I would rather just buy the one product
that I want individually.
I prefer the discount on all items in the bundle. I think that would affect my
decision, I would like to know exactly what percent I am saving on each item.
I would think the bundle packaged together might seem a little more
appealing because it’s all together and it’s one price. You can just see that
price. You don’t have to think about “well, if I buy this and then get this for
50 percent off” It’s a quicker decision because it’s all together and you don’t
have to think about it as much.
The second issue discussed here is the influence of gift cards.
There were several subjects who expressed a desire for
receiving gift cards with a purchase. Some of the responses are
shown below:
Now we’re talking. I would be much more interested in that. I think gift
cards are the best. I would prefer a gift card because I could use it on
anything I wanted. I haven’t ever really seen a package deal at the store that
comes with a gift card though. That seems like a pretty innovative idea. I
wish more things came with gifts cards. Some subjects responded by
comparing their preference for a gift card with some other form of discount;
these sentiments are also shown below.
I prefer instant savings better so the gift card would have to also offer me a
greater amount of cost savings than if I had just received the savings
immediately.
I would purchase the bundle if I could use the gift card immediately and if I
could apply it to something I was already going to buy.
I like gift cards. I always like that better than a coupon.
Same as the coupon deal, I’m not interested. I don’t want the hassle of
keeping track of the coupon or the gift card; I want the discount
immediately.
The next issue is the use of free items. This was one of the
preferred options. Typical responses are shown below:
The word “free” on a bundled package would definitely catch my eye more.
It would definitely matter what came free with the teeth whitener. I wouldn’t
buy the bundled package if I wasn’t going to use both the items.
I would prefer the one that had free mouthwash with the purchase of the
whitener. A fixed discount is good and would probably still catch my
attention, but I think the word free would just make it seem like a walked
away the winner.
I like this option. It is easy to understand, and doesn’t try to trick the
customer from understanding what the amount of savings will actually be.
If I am going to buy the teeth whitener, and now I would be getting free stuff
that would be an easy option so that would be fine with me.
That would be a good choice. It makes me feel like I am receiving a free
award for purchasing the teeth whitener.
From the responses shown above, one explanation that
emerges is the enticement by the use of the word “free.” The
word free is just that, something with no cost. Consumers do
not need to calculate the utility of a discount – it is totally
free.
Table I P values for main effects and covariate (knowledge)
Bundling Form of discount Knowledge
Dependent variable n p value without the covariate n p value without the covariate n
Attitude 0.24 0.09 0.80 0.46 0.00
Intention 0.01 0.00 0.13 0.04 0.00
Recommend 0.12 0.03 0.00 0.00 0.00
Value 0.03 0.09 0.03 0.01 0.00
Bundling or unbundling frequently purchased products
Raj Arora
Journal of Consumer Marketing
Volume 28 · Number 1 · 2011 · 67–75
72

7. Thus, in conclusion, the findings suggest caution in the
generalized use of price bundling. It is suggested that a
product bundle should have complementary items that are
likely to have similar usage pattern so as to provide similar
utility over the life of the product. For items that may have
dissimilar usage such as those included in this study,
consumers may prefer the option of buying individual items.
Furthermore, in terms of promoting the bundle, it is
suggested that that free items have greater appeal. Lastly, it
is suggested that this study be replicated for other products,
especially consumer durables.
References
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Further reading
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Vol. 23 No. 4, pp. 199-207.
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Bundling or unbundling frequently purchased products
Raj Arora
Journal of Consumer Marketing
Volume 28 · Number 1 · 2011 · 67–75
73

8. About the author
Raj Arora (PhD Claremont University) is Schutte Professor of
Marketing at University of Missouri-Kansas City. His
research and publications are in the areas of consumer
behavior (consumption emotions, involvement, framing, and
credibility) and services marketing (service quality levels,
consumer choice in health care). Raj Arora can be contacted
at: Profarora@gmail.com
Executive summary and implications for
managers and executive readers
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit of the
material present.
The practice of bundling items together in order to create
value for the customer is used by many marketers. In general,
the bundle includes extra items that supplement the main
product that the customer is purchasing. Several forms of
price bundling are commonly deployed. Included are:
.
Pure component pricing where each individual item is priced
and offered separately.
.
Pure bundling – his variant involves the offer of a bundle of
goods at a specified price.
.
Mixed bundling that allows the consumer to choose either
of the above options.
Price bundling is commonly deployed by computer retailers
who might include goods like printers, monitors and software
with the computer in the same bundle. The practice is
likewise evident among automobile manufacturers and
dealers.
The attraction to buyers is that purchasing all the goods
separately would typically prove more expensive. Evidence
indicates that consumers expect to pay less when the goods
they buy are bundled together. According to one study,
purchasing a bundle can prove around 8 percent cheaper.
Marketers consider this strategy more preferable than simply
offering a discount on the main product as a price reduction
might negatively impact on its perceived quality.
That perceived quality can be a somewhat complex issue is
noted by certain scholars. One example cited is the purchase
of season tickets for such as a series of sporting events. The
suggestion here is that consumer perception of value might
make them more inclined to not use their tickets on certain
occasions during the series. Bundle value diminishes
accordingly when this occurs. In contrast, it is claimed that
people become much likelier to use tickets when they are
bought for a single event rather than a whole series.
Researchers have discovered that the appeal of a bundle
depends on what items are included. This factor can
significantly influence consumer perception. In one survey,
how well any additional items complemented the main
product in the package was considered especially important.
The example of bundling a dryer with a washing machine was
used to indicate “high complementarity”. It was found that
combining this condition with a low price discount had the
most positive effect on perceived bundle quality. The impact
was negative when a larger price discount was offered.
It is also proposed that bundling items helps reduce
consumer perception of the risk involved in making a
purchase. The notion is that credibility and the price
discount help in this respect. Scholars also believe that the
impact on consumer decision making might vary by the type
of discount, which could also be in the shape of alternatives
like vouchers or gift cards to be redeemed later.
Arora explores these issues in a quantitative survey of
students from an urban Midwestern university in the USA.
Over half of the 431 subjects were female and 67 percent were
aged 34 years or below. For the qualitative part of the study
that followed, 45 respondents were chosen.
Participants were exposed to brochures showing different
combinations of price bundle and discount options. Items
bundled with the main teeth whitener product included
toothpaste, toothbrush, mouthwash and dental floss. They
were then asked to indicate preferences and to answer various
questions about their attitude towards and intention to
purchase teeth whitening products. This product was selected
because teeth whitening has become more mainstream over
recent years and the variety of available products has
increased accordingly. Market growth has also seen a sharp
rise in the number of distributors.
Given these recent developments, it is assumed that some
consumers will be more knowledgeable about teeth whitening
products than will others. One aim of the current research is
to ascertain whether or not knowledge level has any bearing
on consumer attitude toward price bundles and the type of
discount that they prefer.
It is widely believed that choosing a bundle of items helps
the consumer save money. A related assumption is that
marketers are able to persuade consumers to choose the
bundled option. However, participant response to questions
about purchase intention indicated a stronger preference
towards buying the study items individually. This is despite
their acknowledgment that bundles offer greater value.
Differences between “novice” and more informed
consumers were anticipated. Although results indicated the
importance of knowledge, respondents still expressed a
preference for the individual items rather than a bundle. In
terms of discount types, free items were most desired, with
gift cards second. No discount at all was the least favored
option. Yet purchasing the items individually was again
considered at least equal to receiving free gifts.
The qualitative part of the study helped offer greater insight
into consumer decision making. Answers revealed that:
.
Low price can make a bundled option more appealing.
.
Bundles are less attractive when including items the
consumer does not need or want.
.
Discount on every item in a bundle allows the consumer
to know what savings are being made on each product.
.
A fixed-price bundle saves the customer time and effort in
calculating any potential savings from buying products
individually.
.
Gift cards are attractive because consumers can choose
what purchases to redeem them against.
.
Instant discounts are more preferable because the option
removes the hassle of keeping track of a gift card or
voucher.
.
Including free items in the bundle makes customers
perceive they are being rewarded for purchasing the main
product.
Bundling or unbundling frequently purchased products
Raj Arora
Journal of Consumer Marketing
Volume 28 · Number 1 · 2011 · 67–75
74

9. .
Offering a free item is more transparent because the
consumer can more readily understand what the savings
will be.
.
Free items would only appeal if the consumer intended to
use them.
In the light of this research, Arora advises a more cautious
approach when offering price bundles. Additional items in a
bundle should complement the main product and be broadly
comparable in usage pattern. When products are dissimilar,
consumers may become more inclined to prefer buying the
items individually. The author also implies that free items
might appeal most as a discount option. Replicating the study
in other product categories, especially consumer durables, is
recommended.
(A pre´cis of the article “Bundling or unbundling frequently
purchased products: a mixed method approach”. Supplied by
Marketing Consultants for Emerald.)
Bundling or unbundling frequently purchased products
Raj Arora
Journal of Consumer Marketing
Volume 28 · Number 1 · 2011 · 67–75
75
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