An empirical study of variety and bundling effects on choice and satisfaction : new telecommunication and media services

The purpose of this report is twofold; 1) to review consumer behavior literature on how assortment variety and bundling influence choice related variables, and 2) to present results from an empirical study investigating effects of assortment variety and bundling on choice related variables for TV and Triple play services. Literature related to the characteristics of assortment/bundle, perception of the assortment/bundle, perception of the choice situation, choice, perception of the choice, and experience with the chosen option is reviewed with focus on assortment and bundling. The review is based on an open literature search using keywords as “assortment size”, “assortment variety”, “bundling” and “unbundling” in databases as ISI and Ebsco. In addition, manual reviews of references used in the articles revealed from the databases have also been used to make sure we cover as many relevant articles as possible. The empirical study included five manipulations. First, service categories chosen are TV and Triple play services. Second, the services were offered both “a la carte” and bundled value proposition. Third, the assortments were presented in large and small size. Four, prices were also manipulated as high and low, and finally, five, lock in (subscription) were manipulated as no binding and 12 months binding. Effects of the manipulations were studied on variables such as perceived freedom of choice, choice versus no choice, satisfaction with choice, perceived regret, etc. A sample of 1509 people was recruited from a Norstat Internet panel, representing the population of Internet users in Norway. The results indicate several main effects of assortment size, price, and bundling versus “a la carte”. Some main effects were revealed for service category (TV versus Triple play) while only one main effect (on choice) was found for binding. In addition, several situational and individual factors were found to moderate the main effects. The report is closed with a summary and discussion of the results. Additionally, potentially implications of the results are proposed, pointing in particular to the importance of developing a more holistic model including mediating and moderating effects of individual and situational factors when explaining the main effects reported here