Consumer perceptions of bundles and time-limited promotion deals: Do contracts matter?

Marketers use various types of deals to positively influence consumers' product evaluations. Across two experiments, we manipulated print advertisements to examine whether the commonly used deal content of both bundling and time-limited promotions affect consumers' perceived confusion, risk and value. In study 1, the influence of this content was tested in the context of a 2-year telecommunications (telco) contract. Here, consumers associated a three-item bundle with greater perceived value than a single item, but perceived value was reduced and risk heightened when it was only available for a limited time. We speculate that this is because of the long-term nature of the contract. Study 2 removed the contract restriction, examining the bundling of a video game console and game(s), again with a time-limited promotion. However, in this context, we failed to locate any interaction effects. It appears that consumers further appraise the drawbacks of a long-term telco contract when accompanied by a time-limited promotion and may perceive the switching costs for study 1 three-item telco bundle to be particularly risky. Our studies represent the first empirical investigation of the effect on consumers' perceptions of offering a bundle in conjunction with a time-limited promotion. Testing these effects in contract and no contract conditions adds to the contribution of our studies by delineating a boundary condition. From a managerial perspective, our findings are thought-provoking in respect to information integration, or how consumers process different deal content together.