Evaluation effects of bundle size and price presentation

Abstract

Purpose – Marketers often combine products in bundles to increase demand. Research has shown that itemizing the prices of the individual products in the bundle raises evaluations in some situations. The purpose of this paper is to investigate how bundle size influences the effect itemizing prices have on bundle evaluation. Design/methodology/approach – We conduct two experiments. In the first, we test the effects of price presentation formats (itemized vs consolidated) and bundle size on consumers’ evaluations of product bundles. In the second experiment, we test the proposed mechanism that itemizing the price leads to a more realistic price expectation which in turn enhances evaluation. We also test whether this effect is stronger for larger bundles. Findings – In Study 1,we find that large, but not small, bundles are evaluated more positive when presented with itemized prices. In Study 2 mediated moderation analysis supports the prediction that price expectation mediates the effect of the price presentation x bundle size interaction on bundle evaluations. The findings show that itemizing prices results in more realistic price expectations and that this effect is stronger for larger bundles. In turn, more realistic price expectations leads to higher evaluation. Research limitations/implications – The implication of this research is that by directing attention to individual items in the bundle, consumers are better able to assess bundle benefits. More research is needed to investigate other potential explanations for the findings in Study 1. Further research should also investigate whether the findings reported here holds in other settings, with other products, and with other types and size of bundles. Practical implications – Managers are recommended to itemize the prices of product bundles, particularly when bundles are large. Originality/value – This article extend our knowledge about the effect itemizing the prices of individual items in a bundle has on consumer evaluation by (1) demonstrating the moderating effect of bundle size, and (2) showing that more realistic price expectation explains these effects.