Consumer Response to Price Presentation Formats: Implications For Partitioned Pricing and Transaction Bundling

Session Chair: Rebecca Hamilton, University of Maryland
Discussion Leader: Eric Greenleaf, New York University

Consumer Response to Price Presentation Formats:

Implications for Partitioned Pricing and Transaction Bundling

 

 

1. Consumer Reactions to Partitioned Prices: Variations in Price Sensitivity Across Components

            Rebecca Hamilton, University of Maryland

            Joydeep Srivastava, University of Maryland

 

Prices are often partitioned into two or more components that the consumer must purchase together, such as an auto part and the labor to install it, or a book purchased online plus shipping and handling. When both components are mandatory, sellers can choose to allocate more or less of the total price to each component. Controlling for the total price, we show that consumers have systematic preferences for offers based on the relative sizes of price components such as parts, shipping and labor.

 

2. How Attributions and the Product’s Price Impact the Effectiveness of Price Partitioning

            Anne Roggeveen, Babson College

            Lan Xia, Bentley College

            Kent Monroe, University of Illinois

 

This research examines how price format (i.e., bundled vs. partitioned price) impacts purchase and return intentions as a function of attributions regarding shipping charges and the price of the product. When consumers believe shipping is a profit center for the company, purchase intentions are lower with partitioned (vs. bundled) prices, but only for inexpensive products. For expensive products, partitioning increases purchase intentions. Price format has no impact when shipping is believed not to be a profit center. Post-purchase, for inexpensive products when shipping was bundled (vs. partitioned), consumers believe they will be refunded more money and are more likely to return the product. Price format has no impact for expensive products. 

 

 

3. Transaction Bundling: Effect of Price Presentation on Consumer Perceptions

            Joydeep Srivastava, University of Maryland

            Dipankar Chakravarti, University of Colorado

 

This research examines transactions that are naturally related or occur together in time. For example, new car purchases are often made in conjunction with the trade-in of an older car. In this transaction, a car dealer can choose to provide a good deal on the new car but a poor deal on the trade-in, a good deal on the trade-in and a poor deal on the new car, or moderately good deals on both the new car and the trade-in, while maintaining the same net dollar amount for the overall transaction. The findings from two studies show systematic variations in consumer perceptions as a function of how the transaction bundle prices are presented. We discuss the implications of our findings and suggest future research directions.
[ to cite ]:
Session Chair: Rebecca Hamilton and Discussion Leader: Eric Greenleaf (2006) ,"Consumer Response to Price Presentation Formats: Implications For Partitioned Pricing and Transaction Bundling", in NA - Advances in Consumer Research Volume 33, eds. Connie Pechmann and Linda Price, Duluth, MN : Association for Consumer Research, Pages: 181-183.