Digital Services Bundled Offerings Best Practices
Delivered August 27, 2019. Contributor: Emmanuel A.
Goals
To understand bundled price/offer best practices and how it affects consumers purchase intent in order to evaluate strategy recommendation in a client report.
Early Findings
- A study by Kumar and Derdenger on the effect of bundling on the portable video game market revealed that "bundling did lead to the cannibalization of over half a million consoles—that is, the introduction of bundles led to a loss in sales of about 500,000 plain consoles. But the overall effect was an increase in hardware sales and revenue."
- Also, the study revealed that "bundling also had the unanticipated effect of goading some consumers into making a purchase earlier than they otherwise would have."
- Although price bundling has been shown to improve sales speed and volume, recent research has also shown that "the purchase quantity requirement in traditional bundling deters non-buyers from becoming buyers."
- Itemizing the price of the items in the bundle can help improve sales, especially when the bundle is large. According to researchers, "large, but not small, bundles are evaluated more positive when presented with itemized prices."
- The researchers' 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 lead to higher evaluation.
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- Researchers have also found that "social bundling outperforms traditional bundling in driving intention to purchase in bundles.
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Proposed next steps:
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