In marketing, bundling products offer several products or services for sale as a combined product or service package. This is a common feature in many imperfect product and service markets. Industries involved in practice include telecommunications services, financial services, health care, information, and consumer electronics. The software package may include word processing, spreadsheets, and presentation programs into one office suite. The cable television industry often incorporates many TV channels and movies into one level or package. The fast food industry combines separate foods into "meal deals" or "eating values".
A product bundle can be called a packet deal , in a music recording, compilation or set of boxes, or in publishing, an anthology .
Most companies are multi-product or multi-service companies faced with the decision whether to sell products or services separately at individual prices or whether product combinations must be marketed in bundles of "bundled price". Price integration plays an increasingly important role in many industries (eg banking, insurance, software, automotive) and some companies even build their business strategies in bundling. In a price bundle, companies sell packages or sets of goods or services at a lower price than they would charge if customers bought everything separately. Pursuing a package pricing strategy allows you to increase your profits by giving customers a discount.
Video Product bundling
Rationale
Bundling works best when:
- There is an economical scale in production.
- There is a scope of economic scope in the distribution. This can be seen in consumer electronics bundles where large box electronics stores offer all the components for home theater settings (DVD players, flat-screen TVs, surround sound speakers, receivers, subwoofers) at a lower price than if each component has to be purchased separately. Large-box electronic stores can exploit their economic scope, as they distribute and sell a variety of home theater products.
- Low cost of bundling margins.
- The cost of setting up production is high.
- The cost of customer acquisition is high.
- Consumers appreciate the simplification resulting from purchasing decisions and the benefits of the combined performance of combined products or services. This is especially true when non-specialist consumers will have asymmetric information when trying to buy all components from home theater (speakers, cable connections, speaker cables). He will need to learn about all the product specifications and requirements for the accessories used with the main items. For example, with a Home Theater in a Box, consumers can be assured that all the supplied speakers have the correct impedance and power ratings and that all the included cables are the correct models.
Although many well-known examples of bundling are all products or services from the same store or provider, such as sports packages for cars or grocery store gift baskets, in some cases, cross-industry bundles are assembled and sold. For example, some travel agents have vacation tour packages that may include plane tickets, train tickets, rental cars, hotels, restaurants, museum tickets and tourist attractions, as well as live music event tickets. This bundle includes products and services from transportation, accommodation, tourism, food services, and the entertainment industry.
Consumers have heterogeneous demand and demand for different parts of the reverse correlated bundle product. For example, suppose consumer A evaluates word processing software at $ 100 and spreadsheet processor with $ 60, while consumer B appreciates a $ 60 word processor and spreadsheet for $ 100. The seller can generate a maximum income of only $ 240 by setting a price of $ 60 for each products - both consumers will buy both products. Revenue can not be increased without bundling because because the seller raises the price above $ 60 for one item, one customer will refuse to buy it. With bundling, the seller can generate $ 320 revenues by combining shared products and selling the bundle for $ 160.
The grouping of products is most appropriate for products with high volume and high margins (ie, low marginal cost). Research by Yannis Bakos and Erik Brynjolfsson found that bundling is very effective for digital information "goods" with virtually zero marginal cost, and can allow bundles with inferior product collections to push high quality items even out of the market.
Venkatesh and Mahajan reviewed research on design and price bundles in 2009. A 1997 study by Mercer Management Consulting, in Massachusetts stated that a good bundle has five elements: (1) packages worth more than "the number of parts" for consumers; (2) bundles bring order and simplicity to a set of confusing or boring choices; (3) the bundle solves the problem for the consumer; (4) the bundle is focused and leaning in an attempt to avoid carrying or including options, goods or services not used by consumers; and (5) bundles generate interest or even controversy. Number 1 can be read only that the bundle should cost less than buying each item separately; however, even though the bundle has the same cost in dollars, the bundle may still be a value proposition that appeals to consumers, as they do not have to pick each accessory and additional items (this is the 2nd and 3rd point).
Bundling is often considered primarily as a value-setting strategy, in bundles of products often costing less than if each item is purchased separately. However, bundling can also have other strategic advantages. For example, when a grocery store creates a gift basket, they can use a cart item list design as a way to promote new products or brands that may not be known to customers or as a way to liquidate merchandise that is not sold well. In addition, although many bundles are cheaper than all items if purchased separately, in some cases bundles are more expensive than if each item is purchased separately; this tactic is very effective in high-end retailers where ingredients of consumption and prestige prices are conspicuous come into play. High-end home theater enthusiasts with very high budgets may find an attractive $ 10,000 home theater package, although the price is slightly more expensive than buying each item separately, as this is an impressive total cost.
Maps Product bundling
Variety
- Pure substitution occurs when the consumer can only purchase the entire package or not at all
- Combined merge is a pure bundling subcategory where two products are offered together for a single pricing package
- Lead bundling is a pure bundling sub-category where leader products are offered for discount when purchased with non-leader products, accessories, or other items.
- Lead-mixed bundling is a variant of the leader's bundling with the added possibility of buying a leader's own product.
- Mixed merger occurs when the consumer is offered the choice between buying an entire bundle or one of the separate sections of the bundle.
Bundling in political economy is a type of product bundling in which "product" is a candidate in elections that markets its attribute bundle and political position to voters. For example, a political candidate can market himself as a centrist candidate by ensuring he has a social, economic, and centric law enforcement position.
Software
In the computer industry, packaged software is distributed with other products such as computer hardware or other electronic devices, or a group of shared software packages. Preinstalled software on the new computer is an example of packaged software. For example, by 2017, most desktop, laptop, and mobile computers are purchased with various software and software applications ("apps"). Game pack-in is a bundled form of software.
Early microcomputer companies varied in their decisions to bundle software. BYTE in 1984 observed that "Kaypro apparently has tremendous purchasing power and bargaining", notes that Kaypro 10 comes with WordStar and Perfect Writer, plus "two spell checkers, two spreadsheets, two programs communication and three versions of BASIC ". Compaq, on the other hand, does not bundle the software, stating that "you remove the freedom from the dealer for really merchandise when you bundle software... Why should you be limited to using software that comes with hardware? hampering sales in the long run. "MacWrite's inclusion with early Macintosh computers made developers reluctant to make other word processing software for computers. Many companies sell multimedia enhancements - CD-ROM drives, sound cards, speakers, and "one full load of bundled software" - during the mid-1990s.
Home Theater in a Box
In the 1990s and in the 2000s (decades) and 2010s, many consumer electronics companies designed bundles of home theater supplies, known as Home Theater in a Box (HTIB). For customers who already have a TV, and in some cases, DVD players or other sources to play movies, HTIB packages provide all the electronic hardware, speakers, and cables necessary to manage home cinema. There are three levels of the HTIB bundle: an economic bundle, aimed at the lowest price point; mid-tier bundle, the most common type; and a higher-cost HTIB bundle created by BOSE and other high-end manufacturers. In the HTIB economy class package, customers are given basic home theater settings, with a simple sound quality and relatively few options to adjust the sound. Mid-tier and upper-tier packages offer better performance and more setting options. The three levels of HTIB, have the same value proposition to buyers: the HTIB package ensures that all speakers have the correct power impedance and handling capability, the cables have the correct type, and other crossover and technical points. details have been made by the manufacturer.
The most serious home theater enthusiasts usually do not buy the HTIB bundle, as they are a more sophisticated target market. Thus, the most serious home cinema usually buys each component (power amplifiers, speakers, subwoofer cabinets, speaker cables) separately, so they can choose which items meet the purpose of watching their specific film. For example, serious home theater enthusiasts may want to have large subwoofer cabinets with heavy bracing, subwoofer type and cabinet sizes that will not be found in any HTIB bundle because of their large size and high cost. In addition, serious home theater enthusiasts may want to have powered subwoofers with user-customizable crossovers, "subsonic" filters and other advanced high-cost features.
Strength and market competitiveness
In oligopolistic and monopolistic industries, product bundling can be seen as the use of unfair market forces because it limits the choices available to consumers. In this case it is usually called product binding. Some forms of product bundling have been subject to litigation regarding the misuse of market share.
United States v. Microsof t
United States v. Microsoft is a series of civil actions filed against Microsoft Corporation in accordance with the Sherman Antitrust Act of 1890 Part 1 and 2 on May 18, 1998 by the US Department of Justice (DOJ) and 20 states. Joel I. Klein is the chief prosecutor. The plaintiffs allege that Microsoft is abusing monopoly power on Intel-based personal computers in handling the sale of operating systems and the sale of web browsers. The main problem for this case is whether Microsoft is allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft's victory in browser war because every Windows user has a copy of Internet Explorer.
Further reading
- "Bundle Up, Electrician." Public Utilities Two Nights 137, no. 2 (1999): 62.
- "Bundling Survey Assessing Consumer Interest." Distribution of Security and Marketing 29, no. 1 (1999): 30.
- "Business Unbundled: Microsoft." The Economist 374, 8407 (2005): 48.
- Fuerderer, R., A. Herrmann, and G. Wuebker, eds. Optimal Bundling: Marketing Strategies to Improve Economic Performance . New York: Springer, 1999.
- Janiszewski, C., and M. Chuha, Jr. "The Influence of Discounted Price Framework on Product Package Evaluations." The Journal of Consumer Research 30, no. 4 (2004): 534-547.
- Mannes, G. "The Impulse to Unpack." Quick Company 91 (2005): 23-24.
- Ovans, Andrea. "Create a Bundle Bundling." Harvard Business Review 75, no. 6 (1997): 18-20. 1999, S4-S11.
- Salinger, Michael A. "Graphic Analysis Bundling." Business Journal 68, no. 1 (1995): 85-98.
- Solomon, Howard. "Corel Inks Office Suite Bundling Deal with PC Chips." Canadian Computing 25, no. 15 (1999): 15-17.
- "Utilities Cause Threats to Bundling." Utility Business , February 28, 1999, 72.
See also
References
Source of the article : Wikipedia
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