Incentivizing Healthy Food Choices Using Add-On Bundling: A Field Experiment

Problem definition : How can retailers incentivize customers to make healthier food choices? Price, convenience, and taste are known to be among the main drivers behind such choices. Unfortunately, healthier food options are often expensive and not adequately promoted. However, we are observing recent efforts to nudge customers toward healthier food. Methodology/results : In this paper, we conducted a field experiment with a global convenience store chain to better understand how different add-on bundle promotions influence healthy food choices. We considered three types of add-on bundles sequentially: (i) an unhealthy bundle (when customers purchased a coffee, they could add a pastry for $1), (ii) a healthy bundle (offering a healthy snack, such as fruit, vegetable, or protein, as a coffee add-on for $1), and (iii) a choice bundle (the option of either a pastry or a healthy snack as an add-on to coffee for $1). In addition to our field experiment, we conducted an online laboratory study to strengthen the validity of our results. Managerial implications : We found that offering healthy snacks as part of an add-on bundle significantly increased healthy purchases (and decreased unhealthy purchases). Surprisingly, this finding continued to hold for the choice bundle, that is, even when unhealthy snacks were concurrently on promotion. However, we did not observe a long-term stickiness effect, meaning that customers returned to their original (unhealthy) purchase patterns once the healthy or choice bundle was discontinued. Finally, we show that offering an add-on choice bundle is also beneficial for retailers, who can earn higher revenue and profit.