Sage Journals: Discover world-class research

Abstract

Packaging travel products on the Internet is increasing in prevalence, yet limited research exists on how consumers evaluate and purchase vacation packages online. Research on product bundling is plentiful but has been conducted primarily in non-Internet purchase settings. The current research seeks to fill the void in both areas by investigating consumer choices of Internet vacation packages. In this study, an online panel of research subjects chose between 12 pairs of Las Vegas vacation packages that varied as a function of rate transparency, savings, and price. The findings suggest that transparent pricing, that is, itemization of individual package components and discounts, is preferred if it reduces uncertainty or simplifies the decision process. Nontransparent pricing is more effective if savings are not shown or the price is higher than the alternative, in which case the itemized components complicate the decision process without providing useful information.

Keywords

bundling online purchasing pricing travel packages tourism marketing

Get full access to this article

View all access options for this article.

References

Agarwal

Chatterjee

(2003). “Complexity, Uniqueness, and Similarity in between-Bundle Choice.” Journal of Product and Brand Management, 12 (6): 358-76.

Bellman

Lohse

Johnson

(1999). “Predictors of Online Buying Behavior.” Communications of the ACM, 42 (12): 32-38.

Calhoun

(2009). Top U.S. Tourist Attractions. www.associatedcontent.com (accessed October 10, 2009).

Carroll

Sigauw

(2003). “The Evolution of Electronic Distribution: Effects on Hotel Intermediaries.” Cornell Hotel and Restaurant Administration Quarterly, 44 (4): 38-50.

Carroll

W. J.

Kwortnick

R. J.

Rose

N. L.

(2007). “Travel Packaging: An Internet Frontier.” Cornell Hospitality Reports 17 (7): 4-16.

Chernev

(2003). “Reverse Pricing and Online Price Elicitation Strategies in Consumer Choice.” Journal of Consumer Psychology, 13 (1): 51-62.

Constantinides

(2004). “Influencing the Online Consumer’s Behavior: The Web Experience.” Internet Research 14 (2): 111-26.

Dodds

W. B.

Monroe

K. B.

Grewal

(1991). “Effects of Price, Brand and Store Information on Buyer’s Product Evaluation.” Journal of Marketing Research, 28 (3): 307-19.

Eppen

G. D.

Hanson

W. A.

Martin

R. K.

(1991). “Bundling—New Products, New Markets, Low Risk.” Sloan Management Review, 32 (4): 7-14.

10.

Fiske

S. T.

Taylor

S. E.

(1991). Social Cognition. 2nd edition. New York: McGraw-Hill.

11.

Gao

Koufaris

Ducoffe

R. H.

(2004). “An Experimental Study of the Effects of Promotional Techniques in Web-based Commerce.” Journal of Electronic Commerce in Organizations, 2 (3): 45-63.

12.

Granados

N. F.

Gupta

Kauffman

R. J.

(2006). “The Impact of IT on Market Information and Transparency: A Unified Theoretical Framework.” Journal of the Association for Information Systems, 7 (3): 148-78.

13.

Grewal

Hardesty

D. M.

Iyer

G. R.

(2004). “The Effects of Buyer Identification and Purchase Timing on Consumers’ Perceptions of Trust, Price Fairness, and Repurchase Intentions.” Journal of Interactive Marketing, 18 (4): 87-98.

14.

Grewal

Iyer

G. R.

Krishnan

Sharma

(2003). “The Internet and the Price-Value-Loyalty Chain.” Journal of Business Research, 56 (5): 391-98.

15.

Grewal

Marmorstein

Sharma

(1996). “Communicating Price Information through Semantic Cues: The Moderating Effects of Situation and Discount Size.” Journal of Consumer Research, 23 (2): 148-55.

16.

Grewal

Monroe

Krishnan

(1998). “The Effects of Price-Comparison Advertising on Buyers’ Perceptions of Acquisition Value, Transaction Value, and Behavioral Intentions.” Journal of Marketing, 62 (2): 46-59.

17.

Guiltinan

J. P.

(1987). “The Price Bundling of Services: A Normative Framework.” Journal of Marketing, 51 (2): 74-85.

18.

Hardesty

D. M.

Bearden

W. O.

(2003). “Consumer Evaluations of Different Promotion Types and Price Presentations: The Moderating Role of Benefit Level.” Journal of Retailing, 79 (1): 17-25.

19.

Harris

Blair

E. A.

(2006a). “Consumer Preference for Product Bundles: The Role of Reduced Search Costs.” Journal of the Academy of Marketing Science, 34 (4): 506-13.

20.

Harris

Blair

E. A.

(2006b). “Functional Compatibility Risk and Consumer Preference for Product Bundles.” Journal of the Academy of Marketing Science, 34 (1): 19-26.

21.

Heeler

R. M.

Nguyen

Buff

(2007). “Bundles = discount? Revisiting Complex Theories of Bundle Effects.” Journal of Product & Brand Management, 16 (7): 492-500.

22.

Hosmer

D. W.

Lemeshow

(1989). Applied Logistic Regression. New York: John Wiley.

23.

Jaccard

(2001). Interaction Effects in Logistic Regression. Thousand Oaks, CA: SAGE.

24.

Jacoby

Speller

D. E.

Kohn

C. A.

(1974). “Brand Choice Behavior as a Function of Information Load.” Journal of Marketing Research, 11 (1): 63-69.

25.

Johnson

M. D.

Hermann

Bauer

H. H.

(1999). “The Effects of Price Bundling on Consumer Evaluations of Product Offerings.” International Journal of Research in Marketing, 16 (2): 129-42.

26.

Kahneman

Slovic

Tversky

, eds. (1982). Judgment under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press.

27.

Kahneman

Tversky

(1979). “Prospect Theory: An Analysis of Decisions under Risk.” Econometrica, 47 (2): 263-91.

28.

Kaicker

Bearden

W. O.

Manning

K. C.

(1995). “Component versus Bundle Pricing: The Role of Selling Price Deviations from Price Expectations.” Journal of Business Research, 33 (3): 231-39.

29.

Kim

Bojanic

D. C.

Warnick

R. B.

(2009). “Price Bundling and Travel Product Pricing Practices Used by Online Channels of Distribution.” Journal of Travel Research, 47 (4): 403-12.

30.

Kraus

S. J.

(1995). “Attitudes and the Prediction of Behavior: A Meta-analysis of the Empirical Literature.” Personality and Social Psychology Bulletin, 21 (1): 58-75.

31.

Kumar

Lang

K. R.

Peng

(2004). “Consumer Search Behavior in Online Shopping Environments.” E-Service Journal, 3 (3): 87-102.

32.

Lee

(2004). “The Effect of Information Overload on Consumer Choice Quality in an On-line Environment.” Psychology & Marketing, 21 (3): 159-83.

33.

Liu

(2005). “Reading Behavior in the Digital Environment.” Journal of Documentation, 61 (6): 700-11.

34.

Lynch

J. G.

Jr. Ariely

(2000). “Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution.” Marketing Science, 19 (1): 83-103.

35.

Matovic

McCleary

K. W.

(2003). “Marketing in the Next Decade: A Qualitative Study of the U.S. Hotel Industry.” Journal of Travel and Tourism Marketing, 14 (2): 47-65.

36.

Menard

(1995). Applied Logistic Regression Analysis. Thousand Oaks, CA: SAGE.

37.

Miao

Mattila

A. S.

(2007). “How and How Much to Reveal? The Effects of Price Transparency on Consumers’ Price Perceptions.” Journal of Hospitality and Tourism Research, 31 (4): 530-45.

38.

Mohammed

(2005). The Art of Pricing. New York: Crown.

39.

Moskalyuk

(2008). Demographic Profile of Online Shoppers. http://blogs.zdnet.com/ITFacts (accessed March 9, 2009).

40.

Myung

McCool

A. C.

Feinstein

A. H.

(2008). “Understanding Attributes Affecting Meal Choice Decisions in a Bundling Context.” International Journal of Hospitality Management, 27 (1): 119-25.

41.

Naylor

Frank

K. E.

(2001). “The Effect of Price Bundling on Consumer Perceptions of Value.” Journal of Services Marketing, 15 (4): 270-81.

42.

Noone

B. M.

Mattila

A. S.

(2009). “Hotel Revenue Management and the Internet: The Effect of Price Presentation Strategies on Customers’ Willingness to Book.” International Journal of Hospitality Management, 28 (2): 272-79.

43.

PhoCusWright, Inc. (2009). Tours & Packaged Travel Represent an $18B Market. www.4hoteliers.com (accessed October 6, 2009).

44.

Rewtrakunphaiboon

Oppewal

(2008). “Effects of Package Holiday Information Presentation on Destination Choice.” Journal of Travel Research, 47 (2): 127-36.

45.

Rohlfs

K. V.

Kimes

S. E.

(2007). “Customers’ Perceptions of Best Available Hotel Rates.” Cornell Hotel and Restaurant Administration Quarterly, 48 (2): 151-62.

46.

Sheng

Parker

A. M.

Nakamoto

(2007). “The Effects of Price Discount and Product Complementarity on Consumer Evaluations of Bundle Components.” Journal of Marketing Theory and Practice, 15 (1): 53-64.

47.

Stremersch

Tellis

G. J.

(2002). “Strategic Bundling of Products and Prices: A New Synthesis for Marketing.” Journal of Marketing, 66 (1): 55-72.

48.

Tanford

Erdem

Baloglu

(forthcoming). “Price Transparency of Bundled Vacation Packages.” Journal of Hospitality and Tourism Research.

49.

Thaler

(1985). “Mental Accounting and Consumer Choice.” Marketing Science, 4 (3): 199-214.

50.

The Travelers Zone. (2008). The Top 25 Most Visited Tourist Destinations in America. www.thetravelerszone.com (accessed October 1, 2009).

51.

USA Today 2009. “Travel Gurus Predict Trends for 2010.” www.usatoday.com/travel/news/2009-12-30-trend-predictions (accessed December 21, 2010).

52.

Voelckner

(2006). “An Empirical Comparison of Methods for Measuring Customers’ Willingness to Pay.” Marketing Letters, 17 (2): 137-49.

53.

Yadav

M. S.

Monroe

K. B.

(1993). “How Buyers Perceive Savings in a Bundle Price: An Examination of a Bundle’s Transaction Value.” Journal of Marketing Research, 30 (3): 350-58.

54.

Zeithaml

V. A.

(1988). “Consumer Perceptions of Price, Quality and Value: A Means-End Model and Synthesis of Evidence.” Journal of Marketing, 52 (3): 2-22.

55.

Zhu

(2002). “Information Transparency in Electronic Marketplaces: Why Data Transparency May Hinder the Adoption of B2B Exchanges.” Electronic Markets, 12 (2): 92-99.