A study on the effects of reference price and pricing on product bundle preferences

Abstract

This study delves into consumer research in the local context – (1) the effects of an internal and external reference price on utility and (2) the impact of price discounts on the perceived value of a product bundle. We further aim to establish how the relationship between internal or external reference price and utility is moderated by Zumba experience in experiment 1. In experiment 2, value consciousness is used to moderate the relationship between reference price and utility in a product bundle.

6 items (perceived worth of the program, satisfaction level, happiness level, usefulness of the product, value for money and willingness to buy) were used to measure transaction utility, acquisition utility and purchase intention. 1-way and 2-way ANOVA tests showed that our 10 hypotheses were supported; results demonstrated that (1) internal reference price has a greater influence on utility for a product, (2) internal reference price also has an impact on consumers' product bundle preferences, (3) a bundle is perceived to be of higher value when a discount is allocated to a product in that bundle and (4) Zumba experience and value consciousness are moderating variables in the above relationships.

One possible concern which arose is that Zumba may be regarded as gender biased towards females, and could have therefore reduced the accuracy of our results. The selection of a more gender neutral activity could have yielded better results.

Our study provides WellnessXperts SG and marketers insights into the impact of reference price, product bundling and discount allocation on consumer utility and purchase intention, in the context of the health and fitness industry. With this knowledge, they can devise impressive marketing strategies to meet consumers’ needs and preferences.