Annotated Bibliography - Part 14

Annotated Bibliography

Foubert, B., & Gijsbrechts, E - Annotated Bibliography introduction. (2007, Nov.). Shopper Response to Bundle Promotions for Packaged Goods. Journal of Marketing Research, Vol. XLIV, p. 647-662.

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Summary: Two professors from the Netherlands, Foubert & Gijsbrechts (2007) have published a study on the impact of bundle promotions on the behavior of buyers.  The article, “Shopper Response to Bundle Promotions for Packaged Goods” published in the Journal of Marketing Research reports that bundle promotions of a range of consumer packaged goods tend to induce switching behavior, that is, consumers in general tend to switch to brands that offer bundle promotions of their products.  As an example, a bundle promotion granting a discount of fifty cents on the purchase of three bags of Lay’s chips can motivate a regular consumer of Kettle chips to switch to Lay’s, provided that he or she is willing to increase the volume that is purchased.  However, bundle promotions do not motivate consumers to buy products that they are usually not interested in purchasing anyhow.  Thus, there is a limit to the effectiveness of a bundle promotion as a sales boosting tool.

     After thorough quantitative research into the phenomenon of bundle promotions, the authors further report that there is a particular kind of bundle that marketers can design so as to maximize sales.  Consumers are typically attracted to discounts on bundle promotions even if they do not plan to purchase the entire range and quantity of goods that a bundle consists of.  But, if the quantity and range of goods in a bundle is not practicable for them to purchase, they tend to refuse the bundle altogether.  Hence, it is best for marketers to design bundle promotions that consist of three to four items only with shallow discounts.  Moreover, marketers need to decide on the focal item that a bundle is meant to boost the sales of.  If the marketer’s objective is to increase the sales of the entire product line, the bundle should consist of all products sold by the firm.  If, however, there is only one focal item in a bundle, it is useful to include some attractive items with the focal item in the bundle.

Critique: This article is highly useful for marketing managers as it explains the importance of bundle promotions while advising marketers to create effective bundles to boost sales.  The fact that consumers are generally attracted to discounts is well known.  All the same, it is equally essential for marketing managers to understand the kinds of discounts that actually result in increases in sales.  All bundles available in the market are obviously not attractive enough to motivate consumers to purchase them.  Then there are bundles that consumers would consider practical to purchase.  The authors describe such bundles as consisting of only a few articles.  Bundles that consist of too many consumer products may not be feasible to design and promote.  By describing this finding, the authors have saved marketing managers a great deal of time and resources that they may have spent on valueless bundles.

     Marketing managers must additionally bear in mind that bundle promotions have the power to induce switching behavior.  So as to build brand loyalty, therefore, bundle promotions should be considered highly important.  Although the article for the most part does not tackle the subject of bundle promotions for new products, it can be gathered that this form of promotion of a new product may turn out to be a breakthrough in the introduction of a product into the market.  As a matter of fact, bundle promotions may help new products in building brand loyalty from the very beginning.  The attractiveness of discounts cannot be overlooked, after all.  What is more, consumers are always searching for ‘good deals.’  Hence, all bundles that marketing managers spend their time and resources designing must appear as ‘good deals’ for the consumers.  All marketing managers are consumers, too.  Perhaps they should all test the value of a deal or bundle on themselves before putting it up as a bundle promotion.

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