COMPONENT VERSUS BUNDLE PRICING - THE ROLE OF SELLING PRICE DEVIATIONS FROM PRICE EXPECTATIONS

The objective of this article was to investigate the effects of discrepancies between price expectations and selling prices on consumer preference for purchasing products priced separately or together. Five gain/loss conditions (i.e., multiple gains, mixed gains, mixed losses-net loss low, mixed losses-net loss high, and multiple losses), in which prices for two complementary products were presented using component and bundle pricing strategies, were investigated. Predictions regarding consumers' pricing strategy preferences were derived from prospect theory. Findings suggested that study participants derived greater value from component pricing than bundle pricing when confronted with multiple gain and mixed losses-net loss high outcomes. In contrast, mixed gains and mixed losses-net loss low conditions resulted in a preference for bundled pricing over component pricing. Contrary to predictions, subjects preferred component pricing when faced with multiple losses.