Digital bundling |
| |
Authors: | M Tolga Akçura Kemal Altınkemer |
| |
Affiliation: | (1) Long Island University, Brookville, NY 11548, USA;(2) Purdue University, West Lafayette, IN 47907-1310, USA |
| |
Abstract: | Increasingly, we see that firms offer many items on information-intensive channels and the Internet. Especially with low-marginal-cost
digital goods, bundling may be a beneficial strategy. Different bundles may help customers become more discriminating and
maximize profits. However, the marketplace evidence provides mixed observation of bundling rigorously pursued. In this study,
we provide a general framework to analyze when and how bundling may be beneficial. We compare and contrast the firm and customer
characteristics on bundling strategy. We analyze when individual sales can be beneficial. We find that when costs do not increase
relative to the bundle valuation, firms find it beneficial to limit the number of bundles offered in the market. A low (zero)
marginal cost firm benefits from offering just one big bundle. Such a firm obtains a higher profit compared to a firm that
offers many bundles. With high marginal costs, the number of bundles increases with increasing customer valuation and/or heterogeneity.
When a firm offers all the bundles, prices and profit increase as customer heterogeneity and valuation increase. When the
number of offered items is high, individual sale (unbundling) may be preferred over bundling and bundling becomes an inferior
strategy. Interestingly, a firm may benefit from unbundling the items when customers have higher valuations. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|