Price it High if it is Varied: Perceived Heterogeneity and the Effectiveness of Discount Framing Strategies for Travel Packages

Abstract

In recent years, consumers have been confronted with the proliferation of package bundling (i.e., marketing multiple products or services together in a single package at a discounted price) in the tourism industry. This paper aims to investigate how different discount framing strategies affect consumers’ purchase intention of a vacation package. Through four experimental studies, this paper reveals that the perceived heterogeneity of a component influences the effectiveness of different discount framing strategies. In particular, consumers prefer the vacation package in which the high-heterogeneity component is not discounted, while the low-heterogeneity component is discounted. The effect of perceived heterogeneity on purchase intention can be explained by the perceived quality of the component. Therefore, the effect is mitigated when quality assurance cues are present.