product bundling

[swatiraohnlu]

The basic nature of product bundling involves the willingness of a supplier or vendor to provide two or more services to a customer for basic rate. This rate normally provides significant savings over purchasing the products individually. For example, a communications company may choose to offer a cable TV bundle that allows the subscriber to enjoy cable television, local telephone service, and Internet access as a single product offering, rather than having to purchase three different services at a cumulative higher rate. Bundling in political economy is a type of product bundling in which the product is a candidate in an election who markets his bundle of attributes and positions to the voters.

Pure bundling occurs when a consumer can only purchase the entire bundle or nothing, mixed bundling occurs when consumers are offered a choice between the purchasing the entire bundle or one of the separate parts of the bundle.

 

[swatiraohnlu]

Bundling is most successful when:

* There are economies of scale in production,
* There are economies of scope in distribution,
* Marginal costs of bundling are low.
* production set-up costs are high,
* Customer acquisition costs are high.
* Consumers appreciate the resulting simplification of the purchase decision and benefit from the joint performance of the combined product.
* Consumers have heterogeneous demands and such demands for different parts of the bundle product are inversely correlated.