Cross-Category Add-On Bundling: Impact of the Consumption Nature of Bundled Products on Discount Framing Effectiveness

Abstract

In a series of three studies, we explore the effectiveness of two types of discount frames—add-on discount frame (ADF) and bundle discount frame (BDF)—in driving consumers’ purchase intentions for cross-category, add-on travel bundles. Consistent with the analytical mindset induced by a utilitarian core product, we found that an ADF is most effective in driving purchase intentions for utilitarian core-hedonic add-on bundles due to the heightened sense of savings and ease of justification (Study 1). Conversely, consumers tend to adopt a heuristic mindset when evaluating a hedonic core product. Hence, heightened perceptions of attractiveness associated with a BDF (vs. ADF) yield higher purchase intentions for hedonic core-utilitarian add-on bundles (Study 2). Study 3 provides process evidence for the hypothesized effects.

When will consumers splurge on travel? Effective add-on selling strategies

“…On the contrary, the unexpected discount did not significantly increase their choice of utilitarian items (H2). This finding is consistent with previous research that an unexpected discount provides a justification for purchasing hedonic products (Kim and Tanford, 2021; Song et al , 2021). This research further showed that justification for hedonic product purchases is more critical for analytic thinkers than holistic thinkers.…”

“…This research extends research on cross-selling by including consumers' psychological and external factors, which interplay with each other. Hospitality research on cross-selling focuses on bundling or packaging, which are planned purchases (Kwon and Jang, 2011; Song et al , 2021; Tanford et al , 2012). This research is differentiated from previous research by examining the effects of key factors in a sequential purchase decision associated with planned and unplanned purchases.…”

“…When it comes to discount information, providing itemized saving information for bundled packages positively influences consumers' purchase decisions (Kwon and Jang, 2011; Tanford et al , 2012). Research has compared the effectiveness of add-on and bundling frames based on the combination of core and add-on/bundle product types in air travel booking (Song et al , 2021). However, most hospitality research on cross-selling centers around pricing bundling (e.g.…”

“…Because analytic thinkers are inflexible with norms, it is more challenging to justify hedonic consumption than utilitarian consumption. However, an unexpected gain from discounts will justify hedonic consumption (Mishra and Mishra, 2011; Song et al , 2021). Therefore, when analytic thinkers receive an unexpected gain, their intentions to purchase hedonic products will increase.…”