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Journal of the Academy of Marketing Science

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03.06.2017 | Original Empirical Research

Pricing hybrid bundles by understanding the drivers of willingness to pay

verfasst von: Jeffrey Meyer, Venkatesh Shankar, Leonard L. Berry

Erschienen in: Journal of the Academy of Marketing Science | Ausgabe 3/2018

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Abstract

Many companies are increasingly selling hybrid bundles, which comprise one or more goods and one or more services. Hybrid bundle pricing depends on understanding consumer willingness to pay (WTP) for the bundle, which rests on trade-offs among the benefits from four key drivers: service autonomy, complementarity, service quality variability, and overall bundle quality (basic vs. premium). The effects of these drivers and their interactions on the WTP of hybrid bundles are unknown. The authors develop hypotheses and test them rigorously using incentive-aligned choice-based conjoint and hierarchical Bayesian analysis. The results offer important guidelines for developing appropriate hybrid bundles. If a typical firm under budget constraint has to offer either of two hybrid bundles, one with high complementarity or one with service autonomy, the results suggest that it should offer the bundle with high complementarity. Furthermore, contrary to the conventional wisdom of minimizing service quality variability for premium quality bundles relative to basic quality bundles, the results recommend lowering service quality variability for basic quality bundles but maintaining it for premium bundles.

Vorheriger Artikel Retail space invaders: when employees’ invasion of customer space increases purchase intentions

Nächster Artikel Do life events always lead to change in purchase? The mediating role of change in consumer innovativeness, the variety seeking tendency, and price consciousness

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For expositional ease, we use the terms “customer” and “consumer” interchangeably throughout the paper.

In hybrid bundles, goods are almost always autonomous from the service. Therefore, the major managerial decision, and our focus, is on the autonomy of service from the good.

We focus on service quality variability, not the service level, which are different. A firm’s service level depends on its objectives and capabilities and may affect hybrid bundle quality (i.e., premium vs. basic). In contrast, service quality variability refers to variation in the actual service quality an individual consumer receives. It could be high or low regardless of the service level.

We do not examine the effect of autonomy of the good from the service or of its interaction with any other driver of WTP on WTP as we do not have any theoretical reason to expect an effect.

In this paper, we use the terms “willingness to pay” and “reservation price” interchangeably.

For this study and Study 2, the correlations among the drivers were either zero (for drivers that were orthogonal by design) or low (.06–.11 for those measured by consumers’ responses), allowing us to accurately estimate the effects of all drivers. Furthermore, in this study, we do not formally test the effect of service quality variability on WTP but use the corresponding result as a pretest for Study 2.

For the low (high) service quality variability condition, the calibration hit-rate is 87.7s (88.2%).

In this study, we use complementarity as a control variable as we have already tested Hypothesis 1 (relating to complementarity) in Study 1.

For the low (high) service quality variability condition, the calibration hit-rate is 82.7% (88.2%).

It is not uncommon to see WTP estimates higher than the tested prices in the conjoint (e.g., Jedidi and Zhang 2002; Iyengar and Jedidi 2012).

Technically, Θ represents a consumer’s degree of contingency, where Θ > 0 is complementarity and Θ < 0 is substitutability. However, by definition, hybrid bundles only have complementarity. Therefore, we use Θ to represent only complementarity.

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Titel: Pricing hybrid bundles by understanding the drivers of willingness to pay
verfasst von: Jeffrey Meyer
Venkatesh Shankar
Leonard L. Berry
Publikationsdatum: 03.06.2017
Verlag: Springer US
Erschienen in: Journal of the Academy of Marketing Science / Ausgabe 3/2018
Print ISSN: 0092-0703
Elektronische ISSN: 1552-7824
DOI: https://doi.org/10.1007/s11747-017-0546-5

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