Bundling for consumers? : Understanding complementarity and its effect on consumers' preferences and satisfaction

Abstract: It is a common market practice to offer two products in a package, so called bundling. While much research investigate how companies can use bundling to increase sales and profit, less is known about how bundling can be beneficial for consumers. There are many advantages with bundling for consumers, as bundles often are offered at a reduced price and provide convenience and reduced risk. But there are also major drawbacks, for example reduced freedom of choice and increased risk of over-consumption. In the present study, the general aim is to increase the understanding of how consumers’ perceive bundle value. To achieve this, focus is turned to bundle composition, more specifically the complementarity between bundle products, as a source of value for consumers. By exploring what complementarity is, how it influences consumer preferences for and satisfaction with bundles and how it interacts with bundle discount insights about the overall value of bundles for consumers is gained. In five scenario-based experiments, the influence of different kinds and different degrees of complementarity on consumers’ perceptions of bundle value is studied and compared to evaluations of separate products. The results show that bundles generally are not preferred over separate products and that they only exceptionally provide more satisfaction. However, the results also highlight the influence of bundle composition on consumer evaluations. Generally, bundle complementarity has a positive effect on preferences and satisfaction, especially when combined with a discount. The results also illustrates that complementarity is a multifaceted concept. Many kinds of relations between bundle products are considered complementary and the degree of complementarity may vary within and between different types of complementarity. Based on the results it is suggested that the notion of complementarity is closely related to consumers’ everyday practices and the value bundles provides in use. When consumers understand the value that bundle products provide in use, the perceived complementarity increases and preferences and satisfaction is positively influenced. It is suggested that bundling can be used as a strategic tool by companies to increase value for customers. By considering their customers’ needs and practices companies can compose bundles that are perceived as complementary and offer value-in-use.