Bundle Utility, Discount Hedonism

Researchers at Stanford University and Yale University noted the growing popularity of retailers selling bundles. Auto dealerships offer theft-deterrent systems bundled with paint protection products. International vacation frivolity is paired with continuing education courses by cruise lines and with surgical procedures by medical care retailers. The clothing store packages a fun outfit with a work uniform.
     An appeal of bundles to the retailer is that more money is collected during the single transaction, even though the price of the bundle is less than the total of the prices usually charged for the component items. In addition, consumers can be encouraged to try out new products or services they would not otherwise select. And less popular items can be combined with more popular ones to clear inventory.
     Of these advantages for the retailer, the one the shopper is likely to say is of most interest is the price discount. However, other research indicates that, at least subconsciously, the shopper also is attracted to combining serious with fun.
     The Stanford/Yale research team found that the way in which the bundle pricing is presented influences the bundle’s salability. Specifically, it’s best to emphasize the discount on the hedonic—the pleasure-oriented—parts. The cruise line and the medical care retailer should compare the usual cost for the vacation frivolity with what the consumer pays when it’s part of the package. The clothing store should feature the savings on the fun outfit.
     For this to work, the shopper must recognize value in having all the items in the bundle. He must see a need for the utilitarian item and must be seeking the pleasure the hedonic item promises. Emphasizing the discount on the hedonic portions gives the consumer permission to purchase them, too, and that sells the bundle.
     How does this advice apply to the auto dealer’s combo package of theft deterrence with paint protection? Here, the researchers say, clarify the hedonic benefits of one of the components. Talk about the theft deterrence as a practical purchase and the paint protection as ensuring joyful exhibitionism.
     When purchasing a gift, the shopper could see it as hedonic—bringing the pleasure of giving—or as utilitarian—satisfying an obligation. To attract those with the second mindset, create a package which has a clearly hedonic bait. “Your package includes a dozen roses in a gift bouquet and an arrangement of six lilies for your home or office.”

For your profitability: Sell Well: What Really Moves Your Shoppers

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