Does size matter? : disentangling consumers' bundling preferences

Previous marketing literature has focused to a large extent on the effect of bundle characteristics on a consumer's decision to buy a (fixed) bundle in a non-competitive setting. This study extends this narrow focus in four major ways. First, the authors address bundles that are customizable. Second, they distinguish between a consumer's decision of whether to bundle (bundle choice) and the decision of how many goods or services to include in a bundle (bundle size). Third, they extend the focus on bundle characteristics towards the impact of consumer and supplier characteristics on both bundle choice and bundle size. Fourth, they do so in a competitive context. They find that bundle, consumer and supplier characteristics differentially influence bundle choice and bundle size decisions. For instance, consumer socio-demographics were found to significantly affect the decision to obtain a bundle, but had no significant effect on the preferred size of the bundle. Further it was found that heavy users prefer to bundle fewer services compared to light users. This study has important managerial implications towards a successful bundling strategy. Strategies to encourage consumers to bundle should focus on different segments than strategies to encourage consumers to buy larger bundles.