THE EFFECTS OF PRICE DISCOUNT AND PRODUCT COMPLEMENTARITY ON CONSUMER EVALUATIONS OF BUNDLE COMPONENTS

Existing research in bundling has primarily focused on consumer evaluations of a bundle as a whole. Drawing upon reference price theory and mental accounting theory, this paper investigates the effects of price discounts on consumer evaluations of the discounted product in a bundle. It examines how these effects interplay with complementarity of bundle components. The results of three experimental studies indicate that bundle price discounts hurt consumer evaluations of the discounted bundle component, and complementarity of bundle components attenuates these negative effects by altering a consumer's selection of mental accounts in the evaluation process.