The Effect of Bundling on Customer Evaluation of New Products

Abstract

Firms increasingly rely on new products for their long-term survival. Yet, new products continuously fail at launch. Customers associate new products with a risk. The perceived risk is formed by among others the lack of knowledge of quality and usage situations. Bundling might reduce the risk consumers would associate with a new product. This is because the reputation of the existing product would serve as a guarantee for the new product. This paper introduces bundling as a strategy for increasing the evaluation of new products. Additionally, it is argued that the proposed effect is contingent on the level of perceived risk of the new product and the brand equity of the product bundled with. The hypotheses are tested in an experimental study of the evaluation of a new product. However, the results indicated that the hypotheses were not supported. The insignificant results might be caused by some methodological challenges. Further research is needed on the subject of bundling new products, where the limitations of this study are addressed.