Determinants of willingness to pay for traditional bundles: a study from India

Abstract

PurposeThe present research aims to identify critical antecedents of willingness to pay (WTP) for traditional bundles (those comprising only goods or services) in an emerging market context. Further, it differentiates the relative importance of the determinants of customers' WTP according to the bundle type.Design/methodology/approachData were collected from Indian customers. The paper uses conjoint analysis with an orthogonal design. The experimental conditions were manipulated using vignettes.FindingsThe results indicated that purchase autonomy was considered the most important driver for customer's WTP in the case of traditional bundles. Quality variability, overall bundle quality and complementarity followed autonomy in the order of importance. Moreover, the interaction effects of autonomy and complementarity with bundle type significantly influenced the customer's WTP. Customers had a higher WTP for services bundle in high autonomy and goods bundle in high complementarity situations.Practical implicationsRetailers should allow customers to buy either the entire bundle or its components separately, irrespective of the type of traditional bundle. They should try to make bundles whose perceived quality varies significantly in the target customers. Retailers should try to keep complementary components in the goods-only bundle.Originality/valueThe present study extends the relationship of the WTP with its antecedents to traditional bundles. Earlier studies have only studied these relationships for hybrid (combination of goods and services) bundles. With the current study results, retailers can bundle traditional bundles (goods only and services only).