When Do Bundled Products Compensate or Spill Over? Examining Consumer Inferences Based on Product Type

This research investigates how bundling substitutes versus complements affects consumer evaluations of individual products. Prior studies have observed spillover effects in bundles of complementary products whereby the valuation of a known product transfers to an unknown one. The current study explores whether this effect holds for substitutes and suggests that bundling an unknown product with a substitute may attenuate or even reverse spillover effects. This occurs because consumers, guided by market efficiency intuition, may infer that firms offset deficiencies in one product by excelling in another. Across four experiments, results indicate that bundling an unknown product with a poorly performing substitute increases its perceived effectiveness, whereas bundling with a poorly performing complement decreases it (Study 1). Bundling with a well‐performing substitute decreases the unknown product's perceived effectiveness (Study 2). The effect is moderated by price information (Study 3) and purchase stage (Study 4), which alter consumers' beliefs about market efficiency, in turn impacting their inferences about unknown products. Together, these findings suggest that bundling strategies should consider the nature of the products and consumer market beliefs, offering important theoretical and managerial implications.