Emerging Trends in Product Bundling: Investigating Consumer Choice and Firm Behavior

Abstract

Bundling is the practice of selling two or more products together, often at a discounted price. In this article, we extend the concept of bundling to a wide variety of choice settings. We argue that bundle choice covers consumer decision scenarios, which differ with respect to three key dimensions: the number of product categories in the bundle, the party in the distribution system who constructs the bundles, and the time frame of the bundle choice decision. These situational differences are important, from the standpoint of constructing an appropriate choice model and developing an appropriate framework for managerial decision-making. We describe five research perspectives prevalent in bundle choice research (i.e., economic, attribute-based, psychological, multi-category choice, and bundle dynamics). We provide detailed discussion of several areas of current interest: and identify unresolved issues in bundling research: understanding the multiple rationales behind bundling strategies, specification and calibration of bundle choice models, and impact of Big Data, and optimal bundle design. We conclude that bundle choice research provides rich opportunities for collaboration among economists, psychologists, and choice theory experts in marketing science.