Divide and prosper? When partitioned prices make sense

Abstract

PurposeThis research seeks to investigate the relationship between product bundling strategies and brand value.Design/methodology/approachThree studies were conducted, two using student subject pools and another using data collected from online auctions. The impacts of brand and bundling strategy stimuli on the dependent variables product choice and price paid were measured.FindingsBundles offered by low‐tier brands are more attractive when they are offered in a combined price format than in a partitioned price format. Bundles offered by high‐tier brands are more attractive when they are offered in a partitioned price format than in a combined price format.Research limitations/implicationsThe cost of bundle elements to the firm, which may influence consumer reference prices, is not considered in this research. Also, the impacts of bundle pricing strategies are evaluated on the bundles only; the influence of a given strategy on a product portfolio is left for future research.Practical implicationsFirms should consider the status of its brand within its product category before deciding on a bundle pricing strategy.Originality/valueThis research has important implications regarding the pricing of product bundles. It also provides a new perspective on how consumers evaluate product bundles

Partitioned pricing, price fairness perceptions, and the moderating effects of brand relationships in SME business markets

“…While extant research typically examines two component prices (e.g., base plus surcharge, see Bambauer & Gierl, 2008;Burman & Biswas, 2007;Morwitz et al, 1998), the current research extends Carlson and Weathers (2008) research by examining six component prices and a total price. The findings of these two studies also build on Love's (2012) efforts to better understand combined partitioned pricing and branding effects. In particular, partitioning a price can lower negative affect toward the brand when a firm requires that employees use that brand and when the relationship between the firm and the brand is well-established.…”