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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

Content available
Article
Publication date: 27 August 2019

Sérgio Dominique-Ferreira and Cristina Antunes

The purpose of this paper is to investigate and identify the price sensitivity of consumers of three- and five-star hotels and to determine the impact of bundling

Abstract

Purpose

The purpose of this paper is to investigate and identify the price sensitivity of consumers of three- and five-star hotels and to determine the impact of bundling strategies on consumers’ price sensitivity.

Design/methodology/approach

To calculate price sensitivity, authors apply the van Westendorp’s price sensitivity meter (PSM). To understand the impact of bundling strategies, univariate and bivariate techniques are applied.

Findings

PSM results reveal the optimal prices and the range of acceptable prices for three- and five-star hotel. The bundling strategy results reveal that five-star customers are less sensitive to mixed-leader bundling. Regarding mixed-joint bundling, managers could improve sales through bundling strategies if they selected an attractive service (e.g. restaurants).

Practical implications

Findings assist hotel managers to understand the different price sensitivities, according to the hotel typology. Managers can manage prices without the risk of losing market share or revenue. The results help managers in deciding which bundling strategies they can create, as well as the services to be included to achieve highest profitability.

Originality/value

No research to date to the best of the authors’ knowledge has attempted to understand and compare the role of bundling strategies in three- and five-stars hotels. Moreover, no research has attempted to measure and compare customers’ price sensitivity of three- and five-stars hotels.

Details

European Journal of Management and Business Economics, vol. 29 no. 2
Type: Research Article
ISSN: 2444-8494

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Article
Publication date: 4 June 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

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Article
Publication date: 26 July 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…

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

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Article
Publication date: 11 November 2020

Teddy Laksmana, Himanshu Shee and Vinh V. Thai

Building on the resource-based view (RBV) perspective of common resources, the objective of this paper is to empirically examine the impact of container terminals' common…

Abstract

Purpose

Building on the resource-based view (RBV) perspective of common resources, the objective of this paper is to empirically examine the impact of container terminals' common resources (i.e. government support and terminal resources) on resource bundling strategies and subsequent effect on service performance.

Design/methodology/approach

Using cross-sectional survey data collected from a sample of 216 respondents of Indonesia's container terminals, this study used structural equation modeling (SEM) to test the hypothesised relationships between common resources, resource bundling strategies and service performance.

Findings

Government support and terminal resources (personnel and physical), both as sources of common resources when bundled effectively, are found to have positive and significant effect on terminal service performance. The resource bundling strategies fully mediate the relationship between container terminals' common resources and service performance.

Practical implications

The study introduces the notion of common resources to container terminal managers in contrast to the valuable, rare, inimitable and non-substitutable (VRIN) types. It is recommended that appropriate resource bundling strategies can turn the common resources into VRIN resources that can be used to obtain desired service performance.

Originality/value

RBV theorists suggest that resources that are VRIN types can be the source of competitive advantage. However, the resources can also be common, basic and valuable, a fact that is rarely investigated in the literature. These common resources can be bundled judiciously with other pre-existing resources to create VRIN resources. This research enriches the RBV by empirically validating that VRIN resources are embedded within various common resources bundling strategies.

Details

International Journal of Physical Distribution & Logistics Management, vol. 50 no. 9/10
Type: Research Article
ISSN: 0960-0035

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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…

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

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Article
Publication date: 21 June 2011

Fredrik Nordin, Daniel Kindström, Christian Kowalkowski and Jakob Rehme

The purpose of this paper is to examine the risks for manufacturing companies of extending their traditional goods offerings by the addition of different kinds of services.

Abstract

Purpose

The purpose of this paper is to examine the risks for manufacturing companies of extending their traditional goods offerings by the addition of different kinds of services.

Design/methodology/approach

The study develops a conceptual framework of nine propositions (and corresponding diagrammatic representations) of the relationships between: three kinds of risk (operational, strategic, and financial); and three strategies for the provision of added service (customisation, bundling, and broadening the range of offerings). This conceptual framework is examined empirically by qualitative analysis of data gathered in a three‐year longitudinal study of managerial representatives from nine multinational manufacturing firms engaged in the addition of services to their traditional goods offerings.

Findings

It was found that eight of the nine propositions are fully supported, and one receives equivocal support. In addition, several contextual factors are identified as moderating influences on the relationships between the three categories of service offering and the three classes of risk.

Research limitations/implications

The study provides an original conceptual framework and nine research propositions that represent a useful starting point for the development of a formal theory of the risks of providing services.

Practical implications

The conceptual framework provides guidance for managers' assessments of the risks accompanying the infusion of added services to the traditional goods offerings of manufacturing companies.

Originality/value

The paper provides a novel conceptualisation of service innovation and attendant risk.

Details

Journal of Service Management, vol. 22 no. 3
Type: Research Article
ISSN: 1757-5818

Keywords

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Article
Publication date: 8 November 2019

Tharun Dolla and Boeing Laishram

Bundled mode of public–private partnership (PPP) procurement has been a widely advocated governance structure of infrastructure delivery. The purpose of this paper is to…

Abstract

Purpose

Bundled mode of public–private partnership (PPP) procurement has been a widely advocated governance structure of infrastructure delivery. The purpose of this paper is to identify the various aspects of how this bundling phenomenon has to be played out in practice and examines the implications of such decisions.

Design/methodology/approach

A longitudinal case study with an Indian municipal solid waste (MSW) PPP project provides the necessary evidence on the identification of constructs which are deemed important in the decision making of bundling in PPP MSW projects. Transaction cost economics theory, agency theory and auction theory informed the development of theoretical constructs. The longitudinal case study used interviews, observations and documents analysis.

Findings

This study has highlighted the complexity inherent in bundling decision, arising out of the relatively scanty rationale by which stakeholders first developed. Not only they are very different from the practice, but also many assumptions are proved otherwise. Poor sectoral developments, hindrances arguably caused to innovation, increase in transaction cost and a decrease in the competition along with ex post characteristics such as unfavourable transaction attributes made bundling a too early proposition to Guwahati MSW project. This study suggests that strong liability of the bundling phenomenon was the above the rationale of typical PPP bundling benefits envisaged in the extant literature. It also shows that poor practice and decision making by immature clients would lead to project failure.

Research limitations/implications

A cognitive map emerged from the study on the failure of Guwahati project. An empirical generalisation can be attempted using multiple contrasting case studies to make the theory more acceptable.

Practical implications

The case illustrated why naïve clients should not try PPPs in a bundled model. Accordingly, the developed framework would help the governments to create the right projects catalysing the bundling benefits and harness the full potential of private sector participation in future PPP projects.

Originality/value

The current study would be novel in advancing the theory of bundling in PPP projects. This would be of interest to academia and to industrial practice and policy.

Details

International Journal of Managing Projects in Business, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8378

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Article
Publication date: 1 May 1999

Irene C.L. Ng, Jochen Wirtz and Khai Sheang Lee

Services are by nature perishable. As such, managing a service firm’s capacity to match supply and demand has been touted as one of the key problems of services marketing…

Abstract

Services are by nature perishable. As such, managing a service firm’s capacity to match supply and demand has been touted as one of the key problems of services marketing and management practice. This paper advances an alternative perspective of unused service capacity. Based on a review of current literature and an exploratory study, this paper employs a theory‐in‐use methodology to map out a set of capacity strategy propositions. These propositions show a divergence between what literature suggests and what service firms actually practise with regard to reducing the occurrence of unused service capacity. The paper also demonstrates that capacity can be employed as a resource to achieve a series of strategic objectives that serve to improve the performance of the firm. Service firms should therefore approach capacity management not only from the standpoint of operations management, but also from that of marketing.

Details

International Journal of Service Industry Management, vol. 10 no. 2
Type: Research Article
ISSN: 0956-4233

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Article
Publication date: 1 August 1998

Yuehong Yuan, Jonathan P. Caulkins and Stephen Roehrig

Explores the question of whether the traditional practice of bundling advertisements with content will prevail or become less common on the Internet. Given that revenue…

Abstract

Explores the question of whether the traditional practice of bundling advertisements with content will prevail or become less common on the Internet. Given that revenue from advertisers is desirable to content providers, the answer mainly depends on whether advertisers will choose to deliver their advertisements by bundling. The decision to bundle in turn depends on the response of customers to bundling and to other advertising strategies. In particular, the relationship between advertising and content provision on the Internet may be affected by this medium’s distinctive characteristics, which affect the choices of advertisers and the response of customers. Thus, one needs to investigate the choices of advertisers, the behavior of customers, and their dependence on the distinctive technological features of the Internet.

Details

European Journal of Marketing, vol. 32 no. 7/8
Type: Research Article
ISSN: 0309-0566

Keywords

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