A Product and a Price Bundle in an Efficient Choice Set: How Do Choice Framing and Goal Orientation Influence Preferences?

Abstract

Product and price bundling are two distinct strategies, but both involve the sale of two or more products in a single package. They differ on their underlying economic rationales and customer value propositions. Extant literature has studied the optimality of the strategies based almost exclusively on economic criteria. This study complements the literature by investigating optimality based on consumers' subjective evaluations. Two factorial experiments are conducted to study how marketers can influence consumers' preferences between a product and price bundle in an efficient choice set by manipulating the choice context. Results suggest that reference and price framing shift preferences in favor of the product bundle, and the two framing effects interact synergistically. Individual goal orientation (prevention versus promotion) moderates framing effects. Findings also suggest that product bundling can be an optimum strategy in a far larger set of marketing contexts than what extant literature suggests.