Seller beware: Bundling items can have unintended effects

Alice G. Walton | Apr 17, 2017

Bundling” is a classic sales trick: offer a group of items together instead of individually, and customers will be more likely to buy the whole set. But bundling can backfire, as it changes how people value the items, research suggests.

Chicago Booth’s Ayelet Fishbach and Booth PhD candidate Franklin Shaddy predicted that grouping items together creates a whole that is seen as greater than the sum of its parts. When a person has a group of items, taking one item from the group feels more significant to that person than taking the same item in isolation.

For example, in a study, the researchers offered participants energy bars, some bundled into a “chocolate variety pack.” They asked participants with packs of bars how much money they’d need in order to relinquish one bar. The answer: $2.45. The researchers asked the same of participants who had received individual bars, and their answer was $1.98. As predicted, people wanted more money for a bar if it had been part of a bundle.

How values vary
Study participants with three Clif Bar energy bars set a higher price for a single bar if it was designated part of a bundle, but participants who bought three Clif Bars paid more for them sold individually than sold bundled together.

But when a different group of participants had the opportunity to actually buy the same bars, they offered less money for the bundle ($2.45) than for the three bars individually ($3.58 in total).

Shaddy and Fishbach expanded on the results using Lindt truffles. Participants asked to sell a truffle from a four-pack set requested a higher price than people who’d been given an unbundled assortment of truffles. And when asked if they wanted to add a truffle to their bundled or unbundled group of three, those with bundles offered less money (28 cents) than those with the assortment (42 cents), suggesting that it’s as undesirable to disrupt a group by adding an item as it is to do so by taking an item away. The researchers tested other iterations of the setup—with greeting cards, luggage sets, and baseball cards—and arrived at similar results, with customers both paying less for and demanding more from groups of items.

The findings have implications for companies selling bundled items. Once a grouping is created, breaking it up can disappoint or even anger a customer. Write the researchers, “While the old adage caveat emptor (‘buyer beware’) is likely more familiar, for bundles, caveat venditor (‘seller beware’) might be more apt.”