Assignment:
Bundling refers to an approach to marketing goods and services in which they are combined as one product. Mostly, bundling combines goods and services that relate to one another though sometimes it can join the products that are not similar. The paper seeks to discuss bundling as well its advantages and disadvantages.
Most of the organizations are multi-service companies where they get to decides whether to sell their products at a price per person or bundle price (Lanjouw, 2016). Nowadays, bundling plays the significant role in many institutions for example insurance, software, automotive, banks, among others. Companies make pricing schedule of selling the bundles at the lower price, and this will be the cheaper way than charging products individually.
Bundling has advantages on both sides that is the customers and the companies. Firstly, companies' increases their volume sales since they combine products as the unit with lower price thus more customers find easier in buying their products to these companies (Lanjouw, 2016). Also, companies make huge profits by letting customers buy everything they need in one organization.
Secondly, customers save their time since they will buy their goods from one company which has combined their services as one thus they will not move from one company to another. On top of that, bundled services help in saving customers' money. For instance, if a person has more than insurance policies which are at separate companies he or she can able to combine both insurances in one company which will reduce the monthly payment.
Despite having benefits, bundling has limitation. For example, bundling allows customers to buy goods and services that might be unnecessary to them. Also, companies may give discounts to the bundle products that lead to the loss of revenue to the company.
Reference
Lanjouw, J. O. (2016). How to count patents and value intellectual property: The uses of patent renewal and application data. The Journal of Industrial Economics, 46(4), 405-432.
As mentioned, "bundling allows customers to buy goods and services that might be unnecessary to them" but still adds value to the package well as to most customers. For example, cable services bundling t.v. internet, and land-line phones. Most people don't need landline phones as every family member may own and use celluler phones. But if the landline is taken off the bundling package, the price remains the same while losing the value of a landline phone that could still be used for facisimile purposes or when natural disaster interrupt satellite services the landline may still be available if underground cable installed.
What is not attractive is the early termination of contract fee that charges customers $400 or so with limited conditions eligible for waiver. Bundling service can also be applicable to cable packages like sports, kids channels, and premium movies., despite customized selections that can add to the cost of total bundling cost that increases the monthly payment. Good post,.
What is the gamble on companies offering bundling? Can it bankrupt the company?
I like the way you put the bundling practice in other markets other than the transport service. To relate bundling to logistics side, which caters to the need of the customers. What are some things that companies looking to switch to this practice should consider? Would bundling be a smart move for a smaller company, who doesn't have resources? There are challenges involved with any bundling practice, I think one think that comes to mind is the market share, and how can they be profitable.
A company I Found was interesting was Greenway Logistic, they distinguish themselves by offering joint methods in the field of logistic, by transporting goods globally with one goal in mind "cost saving, and sustainability." Greenway Logistic created a notion that bundling at source location to collaborate their shipment, to their individual stores would not only save cost, but fuel and provide less CO2 in their environment. They take the approach of improving superiority in deliveries for supplier and retailers and present an ideal way of combining their goods not just domestically but internationally.
Reference
Pebbler, D. (Trans.). (2018). Bundling.