Bundled Benefits ofRetail Membershipsin Mexico CONTENTS Executive Summary...........................................................................................2Literature Review..............................................................................................5A.Retailer Benefits of Bundling............................................................................................ 5B.Consumer Price Savings from Bundles............................................................................. 7C.Consumer Perception of Bundles..................................................................................... 8Bundling Strategies Used by Retailers.............................................................10Consumer Survey............................................................................................15A.Membership and Multi-homing ..................................................................................... 16B.Importance of Product Features to Customers’ Purchase Decisions............................. 19C.Consumers’ Willingness to Pay for Membership Attributes.......................................... 20D.Consumer Preferences ................................................................................................... 23E.Frequency of Use............................................................................................................ 32Conclusion ......................................................................................................38: Survey Methodology........................................................................39: Additional Survey Results.................................................................40 Executive Summary123 Customer benefit programs are gaining notable traction in Mexico, reflecting a global trend towardsretailers offering a variety of customer benefits to compete in the highly competitive retail space,including subscription-based models that package multiple attributes. With an appreciating currency,decreasing unemployment, and increasing availability of internet access,4the Mexican consumer ispoised more than ever to take advantage of customer benefit programs that leverage technology tobring consumers value. This paper examines retail memberships the ways retailers are packaging collections of benefits in theMexican market today, presenting findings from a survey assessing Mexican consumers’ reactions tothe attributes and features of customer benefit programs. Our research follows an analogous study ofthe US market (“US Bundling Study”).5We find that although the range of features included in retailmembership in Mexico is less diverse than in the US market, Mexican consumers enjoy the availablefeatures and would be eager to see bundled offerings expand. Bundled6goods and services have the potential to benefit both consumers and sellers. Retailersbenefit from offering bundled goods, for instance via cost and efficiency savings, reduced customerattrition, mitigation of demand uncertainty, increased revenue generation, and productdifferentiation.7Retailers may offer bundles including items from partner brands, synergisticallybenefitting both brands. Retailers’ cost savings may be passed through to consumers via lower prices.Academic studies have estimated bundled price savings across a variety of product markets, with several studies documenting typical savings of approximately 10%.8However, the literature alsoprovides examples of product bundles costing more than the individual components purchasedseparately.9This suggests that in some cases, bundles may pose a challenge to consumers in assessingthe total price and value of the bundle. Aside from pricing considerations, bundles have the potential to enhance customer satisfaction byhelping simplify purchase decisions.10Bundles can also provide customers with features they may nothave purchased on a standalone basis, and they may benefit from the availability of these options.However, bundles can also reduce customer flexibility if components are not sold on a standalonebasis. Bundled packages may not cater to individual preferences, as they are often designed to appealto a broad audience. Consumers may feel that they have to compromise on their specific needs, inparticular if they feel constrained by provider choice limitations (for example, feeling that they areforced to purchase a bundle that offers free Disney+, when they would really prefer Netflix). To assess consumer reaction to bundled elements, we conducted a consumer survey, collectingresponses from 1,001 participants. The survey assessed consumers’ current membership subscriptions,their attitudes towards the features included with each membership, their frequency of use of suchfeatures, and the trade-offs consumers make when choosing between different memberships withdifferent attributes. To assess these elements, we administered a survey questionnaire focusing onpaid memberships at