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G-2025-21

Bundling or discounting? Field experiments for healthy and unhealthy food

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Retailers routinely face the strategic decision of how to promote their products. Two of the most common promotion strategies are bundling and discounting. Determining which of these strategies is more effective, and how their effectiveness varies across product categories, is an open question in the world of retail. To address this, we conducted a multi-store field experiment with a global convenience store chain that regularly uses bundle promotions (particularly for certain unhealthy snacks). Our study focused on healthy and unhealthy food categories to understand how these promotions influence consumer behavior and financial outcomes. Specifically, we tested these strategies —discounts and bundles— applied to (i) healthy snacks, (ii) unhealthy snacks, and (iii) both categories simultaneously. For healthy snacks, we found that while discounting was more effective at boosting sales, bundling was more effective at increasing revenue and profit. Additionally, both promotion strategies for healthy snacks increased the sales of other unhealthy items, as consumers may engage in moral licensing, using their healthy purchase as justification to indulge in less healthy options. In contrast, for unhealthy snacks, neither promotion strategy had an effect on sales. Based on this surprising finding, we convinced the retailer to conduct a follow-up experiment to investigate the impact of discontinuing a long-standing bundle promotion on unhealthy snacks. The results of this second experiment revealed no change in sales but an increase in revenue and profit, confirming our initial conclusion. These insights provide valuable guidance for retailers seeking to optimize promotion strategies for different product categories.

, 38 pages

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