Divide and prosper? When partitioned prices make sense

Abstract

Purpose This research seeks to investigate the relationship between product bundling strategies and brand value. Design/methodology/approach Three 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. Findings Bundles 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/implications The 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 implications Firms should consider the status of its brand within its product category before deciding on a bundle pricing strategy. Originality/value This research has important implications regarding the pricing of product bundles. It also provides a new perspective on how consumers evaluate product bundles

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