Analysis of price bundling and framing: the impact of availability and discount messaging

PurposeThe purpose of this study is to examine consumer behaviors toward a bundle of tickets and lodging using two different message framing: (1) scarcity framing for a high demand event, the All-Star Game, and (2) discount framing for a lower demand event, an MLB mid-week game.Design/methodology/approachData were collected through two online surveys of 836 sport consumers in total on Amazon Mechanical Turk (MTurk) and were analyzed using a mix of analysis of variances (ANOVAs) and analysis of covariance (ANCOVA).FindingsConsumers are likely to buy products separately in a scarce situation. When discounts are offered as benefits of choosing a bundle, consumers with high willingness to pay (WTP) have higher purchase intentions (PI) and perceived value toward cumulative discounts.Originality/valueThis is the one of few studies that investigate (1) price bundling of products from two disparate industries where consumer demands fluctuate, (2) the effects of scarcity in a bundle, and (3) all possible discount messaging in a bundle.

Applications of Managerial Economics in Business Pricing Strategies

Pricing Strategies are crucial determinants of business success in terms of sales revenue and profitability. This article introduces some key concepts in managerial economics such as price bundling that have significant applications in sophisticated business pricing. The concepts are illustrated separately through detailed theory explanation with graphical analysis, and a real-life business case is briefly discussed for each of these concepts to demonstrate the practical applications of the theoretical ideas. It can be concluded that although some limitations have to be taken into account, these ideas still provide essential insights into the pricing process and can effectively improve firms’ profit conditions.

Pengaruh Price Bundling dan Product Bundling terhadap Niat Membeli yang Dimoderasi oleh Barang Komplementaritas

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.

How do complementarity and discount choices interact with latitude of price acceptance in price bundling?

Purpose This paper aims to examine three important questions: What would be the effects of pricing at the lower end of a wide vs narrow latitude of price acceptance (LPA) on consumer choice of the bundle? How would the nature of a bundle frame (i.e. discount on bundle vs discount on components) and discount frame (i.e. discount as absolute off vs discount as percentage off) influence the preference given to a price level that is at the wide or narrow end of the LPA? Would the effect be significantly different if the bundle components were complementary vs if they were non-complementary? Design/methodology/approach The authors carried out two studies using between-subject experimental design. In Study 1, the authors used 2 (LPA: wide/narrow) × 2 (complementarity: yes/no) × 2 (bundle frame: together/separate) design, and in Study 2, the authors replaced bundle frame with discount frame (i.e. absolute off/percentage off). Findings The authors find that the LPA effect is likely to outweigh the complementarity effect; however, a combined effect of complementarity and bundle frame is stronger than the LPA effect. Also, for a wide (narrow) LPA product bundle, absolute off (percentage off) discount frame is more attractive. Practical implications Managers should use bundling strategy with complementary products having wider LPA. In case of wide LPA and complementary products, both together and separate frame could be the best bundling strategy while in case of narrow LPA and complementary products, together frame could be the best bundling strategy. Originality/value The main contribution relates to the role LPA plays in consumer evaluation of a bundle offer and its interaction with complementarity and discount frame. The authors apply the range hypothesis principles (i.e. price-attractiveness judgments are based on a comparison of market prices to the endpoints of a range of evoked prices) in the bundling context and extend the earlier work in the area of complementarity and discount frame.

Estimating the price range and the effect of price bundling strategies

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.

Family versus couples: How travel goal influences evaluations of bundled travel packages

This research investigates how travel goal activates judgmental heuristics when choosing a travel package. Family travelers must consider the complex needs of all family members, whereas couples face simpler demands. Since motivations vary according to traveling companions, the decision-making processes are different by the travel goal. Pricing is a determinant of decisions for travel packages bundled with add-on items. When the decision process requires less mental effort, the availability heuristic operates when filtering products by travel goal, and the representativeness heuristic works when seeking consistency between add-on items and the travel goal. Dual processing theories suggest that goal influences the motivation to process information systematically or automatically when making choices. An experiment was conducted to examine how the decision-making process differs as a function of travel goal, price bundling, and the consistency between the travel goal and add-on item. The findings suggest that judgmental heuristics influence travel purchase decision when motivation to process information is low. Specifically, the current research supports the proposition that automatic processing influences couples’ travel decisions while systematic processing works for family travel decisions. The research suggests the use of an effective segmentation for vacation packages in the online purchase environment and highlights the importance of a travel goal in decision-making.