Advantages and Disadvantages of Bundling

1571 words 7 pages
Bundling Products:
The Advantages and Disadvantages of Bundling Products

Willie Roy Ramsey, Jr.

PROC 5830: Pricing
Dr. Douglas Mowczko
May 5, 2012

The Advantages and Disadvantages of Bundling Products I. What is Product Bundling A. Examples of Business 1. Restaurants 2. Cellular services II. Advantages A. Lower prices B. Variety C. Older Products III. Disadvantages A. Flexibility B. Penalties C. Correlation

The Advantages and Disadvantages of Bundling Products
There are a variety of reasons why companies are transforming from the traditional way of selling products to bundling products. This paper will examine some of the reasons these decisions are made. The purpose of the
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Many companies give low rates on policies because of how long the customer has been with the same that company. If the customer decides to change insurance companies, they may have to pay penalties for breaking the contract.
Some additional dangers to bundling can be alienating customers with bad chosen bundle components or harsh conditions associated with the package. Companies need to consider the true reason behind the bundle: to provide customers with a deal. Providing a product to a customer while sparking the interest of that customer with added value is the goal. Also, thinking of the customer will keep companies abreast of what the customer really needs. Everything should not be bundled. Some customers will prefer to purchase an individual item. Take me for example. I already have Direct TV. AT&T tried to bundle my cell phone service with U-verse, a new cable provider to AT&T. I have been with Direct TV for seven years now. It has provided me with great programming and service. To attract more customers, companies need to have bundles and individual segments available to purchase at any given time.
As a competitive strategy, a marketer of a successful product may bundle a newer or less successful product with its stronger product as a means of edging its way into a new market. Perhaps the most famous example of this is Microsoft Corporation's bundling of various software


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