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Book part
Publication date: 8 August 2022

Xingping Zhang, Feng Yang, Yaqin Hu and Zhimin Huang

For two-sided platforms, the utility of users on one side of the platform depends in part on the number of users on the other side of the platform, a phenomenon called…

Abstract

For two-sided platforms, the utility of users on one side of the platform depends in part on the number of users on the other side of the platform, a phenomenon called indirect network externalities. With the rapid development of two-sided platform and the popularity of platform membership, more and more two-sided platforms have launched joint membership through horizontal cooperation in order to take advantage of indirect network externalities to increase platform profits.

Our study explores the optimal bundling strategy for platform memberships under horizontal cooperation considering indirect network externalities. The main purpose of our study is to obtain the optimal pricing under different strategies (pure component, pure bundling, and mixed bundling) and contrast different strategies under different indirect network externalities.

Results suggest that the platform's optimal pricing for consumers and sellers depends on the indirect network externalities. Interestingly, the higher the indirect network externalities from consumers, the higher the price of the platform charges to sellers, and the platform might even subsidize sellers. Besides, when there are equal proportions of different types of consumers in the market, indirect network externalities that are too high, too low, or heavily lopsided may discourage the platforms from bundling their memberships. When the composition of consumers changes, the optimal strategy will also change. Our results can be employed in practical applications of bundling, which can help the platform increase profits.

Details

Applications of Management Science
Type: Book
ISBN: 978-1-80071-552-3

Keywords

Article
Publication date: 31 January 2022

Sarat Kumar Jena

Many e-commerce firms suffer from high returns because of inaccurate and incomplete product information. Omnichannel and bundling settings can help firms improve…

Abstract

Purpose

Many e-commerce firms suffer from high returns because of inaccurate and incomplete product information. Omnichannel and bundling settings can help firms improve operational efficiency and lower returns costs. However, no studies have been conducted on omnichannel supply chains considering bundling strategies. The purpose of this study is to examine the comparison between test-in-store-and-buy-online (TSBO) and online retail, comparing manufacturers’ bundling with retailers’ bundling.

Design/methodology/approach

The supply chain discussed here consists of two competitive manufacturers and one retailer. The retailer sells both manufacturers' products online and displays one manufacturer's product in a showroom who bears the display cost. Stackelberg game theory is used to develop mathematical models that help manufacturers and retailers make the most effective decisions. Here, the manufacturer is the Stackelberg leader, while the retailer is the follower. Using the backward induction approach, the authors determined the optimal values for selling price, wholesale price and service effort level.

Findings

The results show that the total TSBO retailing profit under manufacturer bundling is highest when the second manufacturer integrates with the online retailer. The result additionally establishes that when the bundling cost exceeds a certain threshold (1.5), the total profit is higher for the non-integrated type of supply chain channel as compared to the integrated retailer bundling-based configuration.

Practical implications

The operations and logistics manager will likely undertake the TSBO omnichannel strategy during manufacturers bundling and retailer bundling under the integrated strategy.

Originality/value

The main contribution of the study is to examine the effect of TSBO retailing on supply chains profit and individual decision-making under different bundling strategies. The authors developed different mathematical models in the TSBO retailing and bundling context and extended the earlier work in the area of integration frame.

Details

Journal of Business & Industrial Marketing, vol. 37 no. 12
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 19 July 2021

Misun Won and Stephen L. Shapiro

The purpose of this study is to examine consumer behaviors toward a bundle of tickets and lodging using two different message framing: (1) scarcity framing for a high…

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Abstract

Purpose

The purpose of this study is to examine consumer behaviors toward a bundle of tickets and lodging using two different message framing: (1) scarcity framing for a high demand event, the All-Star Game, and (2) discount framing for a lower demand event, an MLB mid-week game.

Design/methodology/approach

Data were collected through two online surveys of 836 sport consumers in total on Amazon Mechanical Turk (MTurk) and were analyzed using a mix of analysis of variances (ANOVAs) and analysis of covariance (ANCOVA).

Findings

Consumers are likely to buy products separately in a scarce situation. When discounts are offered as benefits of choosing a bundle, consumers with high willingness to pay (WTP) have higher purchase intentions (PI) and perceived value toward cumulative discounts.

Originality/value

This is the one of few studies that investigate (1) price bundling of products from two disparate industries where consumer demands fluctuate, (2) the effects of scarcity in a bundle, and (3) all possible discount messaging in a bundle.

Details

Sport, Business and Management: An International Journal, vol. 11 no. 5
Type: Research Article
ISSN: 2042-678X

Keywords

Article
Publication date: 15 January 2018

Qingyun Xu, Bing Xu, Ping Wang and Yi He

This paper aims to address the following problems: What are the firms’ optimal pricing and quality policies under three scenarios (no bundling, pure bundling and mixed…

Abstract

Purpose

This paper aims to address the following problems: What are the firms’ optimal pricing and quality policies under three scenarios (no bundling, pure bundling and mixed bundling)? In what condition will one bundling strategy dominate the others? How does the degree of complementarity affect the firms’ decision?

Design/methodology/approach

Using the game theory, this study first establishes three models of bundling strategies: no bundling, pure bundling and mixed bundling and then obtains the optimal prices and quality decisions. This study uses numerical analysis to explore the relationships between the prices (demands and profits) and some key parameters and to obtain some valuable management complications.

Findings

Some interesting and valuable management implications are established: regardless of the degree of complementarity, adopting a pure bundling or mixed bundling strategy is better than separately selling an individual product; a high degree of complementarity leads to reduced profit in the no bundling and mixed bundling scenarios, whereas the condition in the pure bundling strategy is the opposite; and when the degree of complementarity is adequately large, choosing pure bundling strategy is more profitable.

Research limitations/implications

On the one hand, this study does not calculate the profit sharing ratio, and hence, the equilibrium profit sharing ratio can be explored in future work. On the other hand, marketing efforts (e.g. advertising and promotion) can be included in the study.

Practical implications

This study derives the necessary conditions for the most effective bundling strategy that maximizes firm’s profits, and these conclusions can provide a decision reference to the bundling decisions of firms.

Originality/value

First, the optimal bundling strategies in a horizontal supply chain consisting of two firms is considered. Under the pure and mixed bundling strategies, the two firms sell the bundled product by building a cooperative program. Second, both the pricing policies and quality decisions of supply chain members under the different bundling strategies are studied.

Details

Kybernetes, vol. 47 no. 6
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 6 December 2019

Tharun Dolla and Boeing Laishram

The performance of public–private partnership (PPP) projects depends on how the project has been structured. The traditional PPP option analysis for structuring project…

Abstract

Purpose

The performance of public–private partnership (PPP) projects depends on how the project has been structured. The traditional PPP option analysis for structuring project scope and size relating to the bundling of functions concerning a single component of the value chain will need to be extended to handle multi-component sectors such as municipal solid waste (MSW) in formulating the project scope. This analysis is currently missing in the extant literature. The paper aims to discuss these issues.

Design/methodology/approach

Through a comprehensive literature review as the methodological backbone, this study develops a testable holistic framework for the procurement of MSW PPP projects that examines how various factors of bundling affect the performance of the PPP projects.

Findings

Using transaction cost economics, agency and auction theories, the review identifies that innovation, maturity, quality specifiability, scope, competition, information asymmetries and transaction attributes have a significant influence on the performance and success of the PPP projects.

Research limitations/implications

Alternative supply chain management possibilities and firm-level organisational ways can be predicted using this framework to strategize the solutions for the municipal infrastructure. Based on this contribution, future research can test the framework to increase the knowledge of bundling theory about how to structure network infrastructure PPP projects.

Originality/value

Studies on how to bundle/unbundle the projects having components of the value chain are in a nascent stage. The present study attempts to extend the body of knowledge on PPP to the complexity of bundling both the functions and components of the value chain in structuring the PPP project scope.

Details

International Journal of Productivity and Performance Management, vol. 69 no. 6
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 9 May 2016

Sérgio Dominique-Ferreira, Helder Vasconcelos and João F. Proença

Consumer price sensitivity has become a major issue over the past few decades. This paper aims to investigate the importance that insurance customers give to premiums…

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Abstract

Purpose

Consumer price sensitivity has become a major issue over the past few decades. This paper aims to investigate the importance that insurance customers give to premiums, insurers, intermediary recommendations and bundling strategies. The relationship between attributes and consumer price sensitivity is also studied.

Design/methodology/approach

To calculate the importance of attributes and part-worth utilities, a Conjoint Analysis with Full Profile was performed. To segment the market, a two-stage cluster analysis was performed. The traditional formula for estimating price elasticity of demand was also used.

Findings

Price sensitivity is affected by the level of purchase involvement, bundled discounts and brand loyalty. Also, brand loyalty has a strong influence on customer acceptance of bundled discounts. Price bundling increases a firm’s revenues and profits.

Research limitations/implications

The size of the sample of the second stage of the research could be higher.

It would also be interesting to have the collaboration of an actuary to carry out more precise analysis of premium estimation of bundling strategies and to study the ideal number of products that would compose the bundling strategy. Moreover, it could be relevant to consider life insurance products as part of the bundling strategy. It would also be interesting to study whether there is any benefit in applying the bundle discount to the anchor product instead of applying it to the accessory product.

Practical implications

Insurers and intermediaries can benefit from price bundling strategies to increase sales and profit.

Originality/value

The study contributes to the service marketing literature and marketing of the insurance sector by providing empirical evidence of the impact of price bundling on insurance customer sensitivity, with the use of a methodological and experimental approach.

Details

Journal of Services Marketing, vol. 30 no. 3
Type: Research Article
ISSN: 0887-6045

Keywords

Article
Publication date: 1 March 2015

Max V. Kidalov

Despite Congressional and Presidential emphasis on reducing bundling and consolidation of defense contracts, recent studies cast doubt on whether such practices are…

Abstract

Despite Congressional and Presidential emphasis on reducing bundling and consolidation of defense contracts, recent studies cast doubt on whether such practices are problematic for small contractors or the defense acquisition system. Those studies proposed that bundling and consolidation are generally positive tools to procure best value. This paper tests these propositions by examining relevant U.S. Department of the Navy (DON) contracts for Fiscal Year 2010, when Congress reported record bundling and consolidation in U.S. defense contracting. Specifically, the paper looks to performance of Navy and Marine Corps buying commands in meeting small business goals and other good-government objectives such as competition, performance-based acquisitions, preference for commercial suppliers, and support for the U.S. defense industrial base. The paper recommends improvements in targeted good-government practices as measures to reduce bundling and consolidation.

Details

Journal of Public Procurement, vol. 15 no. 1
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 4 April 2016

Runping Guo, Li Cai and Weiyong Zhang

Research on new internet venture growth is lacking. The purpose of this paper is to address the gap by developing and testing a theoretical model that links venturing…

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Abstract

Purpose

Research on new internet venture growth is lacking. The purpose of this paper is to address the gap by developing and testing a theoretical model that links venturing principles (effectuation or causation) to new internet venture growth through resource bundling (pioneering or stabilizing).

Design/methodology/approach

The proposed theoretical model is developed upon the entrepreneurship literature and resource-based view. Empirical data are collected from entrepreneurs and top executives in China via a survey. The Baron and Kenny (1986) mediation model assessment procedure is used to analyze the data.

Findings

Both effectuation and causation are positively associated with new internet venture growth. Effectuation leads to pioneering resource bundling, which in turn contributes to new internet venture growth. Causation also contributes to new internet venture growth, but through stabilizing resource bundling.

Research limitations/implications

This research helps link the theory of effectuation to resource-based theory by revealing resource bundling as the mediator between effectuation, causation, and new venture growth. Moreover, the authors provide empirical evidence of the importance of resource bundling with entrepreneurial strategic decision logics to the growth of new internet ventures in transitional economies.

Practical implications

Entrepreneurs and managers of new internet ventures should leverage both venturing principles to support growth. Internet ventures generally are creative and innovative in nature, hence favor effectuation. But it will be unwise to ignore causation, which also leads to growth.

Originality/value

This is an original empirical research guided by theories. It is a novel insight to identify the mediating effect of resource bundling. This study likely will inspire more scholarly research on the subject. It also lays a solid foundation for further inquiry such as complementarities between effectuation and causation.

Details

Internet Research, vol. 26 no. 2
Type: Research Article
ISSN: 1066-2243

Keywords

Article
Publication date: 2 March 2020

Yong Liu, Xiaoying Wang and Wenwen Ren

This paper attempts to analyze the relationship between the complementarity degrees of imperfect complementary products and sales strategies and give appropriate sales…

Abstract

Purpose

This paper attempts to analyze the relationship between the complementarity degrees of imperfect complementary products and sales strategies and give appropriate sales strategies for a two-stage supply chain.

Design/methodology/approach

With respect to two-stage supply chain consisting of two manufacturers who produce imperfect complementary products and one retailer who sells the products, aiming at bundling sales strategy, the authors define complementarity elasticity of products and use it to measure the degree of complementary between two products. Based on Stackelberg game and cooperation, the authors analyze the relationship between the complementarity degrees of imperfect complementary products and appropriate sales strategies.

Findings

As the impact of complementarity degree on sales strategy decision-making is better, the authors can pinpoint out which sales decision-making is optimal and which bundling sales strategy is the best for a two-stage supply chain. Considering that the degree of complementarity has a significant impact on the product sales strategy, the authors can point out which sales decision-making is optimal, that is, which bundled sales strategy is the optimal in the secondary supply chain of selling complementary products.

Practical implications

An innovative bundling can expand the sales of existing products and new products. It helps a retailer transcend and defeat competitors by reducing marketing expenses while increasing profits. Proper use of bundling can improve consumers utility and create an overall positive effect for both the enterprises and consumer.

Originality/value

The research can help some retailers to make many appropriate bundling sales strategies.

Details

Journal of Business & Industrial Marketing, vol. 35 no. 6
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 29 August 2019

Xiong Zhang, Wei T. Yue and Wendy Hui

The emergence of internet-enabled technology has led to the software service model in which the software firm, instead of the consumer, maintains software ownership. This…

315

Abstract

Purpose

The emergence of internet-enabled technology has led to the software service model in which the software firm, instead of the consumer, maintains software ownership. This model can curtail software piracy more effectively than the traditional on-premises software model. However, software firms are not abandoning traditional on-premises software but embracing both models simultaneously. In this study, the authors consider a firm’s software bundling decision in combination with its piracy deterrence strategy. The paper aims to discuss these issues.

Design/methodology/approach

The authors build three stylized models to analytically compare the bundling strategies under three scenarios: no piracy, piracy is present and piracy is present while the firm applies digital rights management (DRM).

Findings

The authors find pure bundling (PB) to be the optimal strategy due to the combination of competition and cannibalization effects in mixed bundling (MB). Simultaneously, consumers may enjoy greater surplus in PB than in MB, making PB the preferred strategy for both the firm and consumers. Interestingly, the win-win outcome coexists with some degree of piracy in the market.

Originality/value

The results provide important insights for firms and policy-makers and contribute to the literature on piracy and product bundling. First, the authors show piracy could be another driver for product bundling, which has never been discussed in prior literature. Second, the authors suggest an alternative perspective; that PB may be a desirable outcome for both firms and consumers when considering piracy and DRM. More surprisingly, this desirable outcome occurs with some level of piracy in the market. The presence of piracy leads to competition and cannibalization effects in MB, which eventually results in the win-win outcome in the software market for both the firm and the consumers.

Details

Internet Research, vol. 30 no. 1
Type: Research Article
ISSN: 1066-2243

Keywords

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