Persuasive Advertising - J. Scott Armstrong [42]
The addition of a product that is not attractive to all might harm a product’s image. For example, the addition of late-night X-rated movies might damage the image of a TV channel that primarily targets families.
The opportunities for bundling prices often evolve over the product life cycle. For example, in the early twentieth century, people had to pay extra for automobile accessories, such as bumpers and headlights. Cars now have many features bundled into the initial selling price. Of course, much of this is due to economics; it is often less expensive for the product to include the features that almost all people want.
Sometimes, as with a concert series, an offer is initially made only in a bundle, which some customers purchase to ensure that they gain access to the most popular events.
To many, bundling implies a better deal. However, this is not always the case. For example, in 2009, when customers selected a book on Amazon.com, the site suggested another book in a bundled offer. However, the bundled price was simply the addition of the two prices; there was no reduction. Given that Amazon uses odd prices, it might take a bit of thought for customers to realize that they have not been given special pricing.
Evidence on bundling popular features or complements
Consider the problem posed at the lead-in to this principle. A lab experiment showed that the addition of a feature that appealed to few people led to reduced intentions to purchase for a CD player, calculator, dental plan, VCR—and the wrist watch mentioned above. For these high-involvement products, the subjects’ purchase intentions were 46 percent for the products that had no unnecessary features; in contrast, they were only 30 percent when the product also included a feature that most people viewed as unnecessary. It apparently seemed wasteful (Simonson, Carmon, and O’Curry 1994).
The following experiments supported this principle for bundled prices:
Bundling of complementary products led to higher purchase intentions in a study on durable goods. A lab experiment involving 83 subjects and ten products—five durables and five non-durables—found that intentions were 17 percent higher when complements (e.g., TV and VCR) were bundled than when they were sold separately. This worked whether the ad said, “Buy X and Y together at $___” or “Buy X at $___ and get Y for free” (Harlam et al. 1995.)
Customers considering a car purchase were more likely to purchase when offered “bundled prices.” In a field experiment, offers were made to 360 owners of a particular German automobile on the purchase of a newer model. The customers were split into 12 groups; members of each group received an offer that differed from group to group only in the extent to which prices for 12 features (e.g., air conditioning, radio, and sun roof) were bundled. The options ranged from no bundling to extensive bundling. Those presented with bundled prices reported that they were more satisfied with the offer, more likely to recommend it to others, and more likely to repurchase the brand (Johnson, Herrmann, and Bauer 1999).
“Sears Carpet Cleaning: $14 a room … 2 rooms: $28! … 6 rooms only $84!” Was this newspaper ad effective?
1.4.15. Advertise multi-unit purchases for frequently purchased low-involvement products if it is also in the consumers’ interest
When customers shop for low-involvement products, they try to simplify their purchase decisions. For example, they might decide how much to buy based on purchases from previous shopping trips. A customer who has purchased two or three cans of soup on previous trips will, without giving much thought, probably do about the