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Consumer Evaluation of Co-branded Services: the Importance of Bundling Effect
Authors: Chia-Lin Lee (National Taiwan University of Science and Technology)
Numerous types of co-branded services exist in the business world. Global examples of co-branded services include, among others, the Barnes & Noble bookstores that accommodate Starbucks and the Uniqlo and Bic Camera shopping mall in Tokyo. Many marketing scholars have attempted to provide rules for distinguishing different types of co-branding service alliances, and one important rule is the level of integration.
Existing co-branding studies show that, when the level of integration is low, consumers can easily identify which brand in a co-branded service alliance to praise or criticize; thus the value of one brand is not influenced by the other partner. However, previous studies have totally neglected the “bundling” effect. This research bridges this critical gap.
This research utilizes the analytical modeling approach to prove three theory-driven propositions for highlighting the importance of the “bundle-as-a-whole” effect and the concept-combination impact. First, in a highly-integrated co-branded service, the post-alliance value of one brand can influence that of the other. Second, in a lowly-integrated co-branded service, the value of one brand is very likely to be not affected by that of the other, when consumers consider the services provided by each of the brands to be a bundle. Thirdly, in a lowly-integrated scenario, if consumers do not consider the co-branded service as a bundle, the post-alliance equity of the partnering brands will not influence one another.
To the best of our knowledge, this research is the first to identify the bundling effect in the co-branded service context. Practical implications are provided as well.