Product Bundling and Optimal Selling Strategies for a Two-product Firm PDF Download
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Author: Owen R. Phillips
Publisher:
ISBN:
Category : Pricing
Languages : en
Pages : 334
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Book Description
Author: Owen R. Phillips
Publisher:
ISBN:
Category : Pricing
Languages : en
Pages : 334
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Book Description
Author: Owen Richard Phillips
Publisher:
ISBN:
Category : Marketing
Languages : en
Pages : 362
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Book Description
Author: Ralph Fuerderer
Publisher: Springer Science & Business Media
ISBN: 3662091194
Category : Business & Economics
Languages : en
Pages : 221
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Book Description
Scientific knowledge and practical advice are combined in this book. Leading scientists present their latest research results in the area of product and price bundling, with respect to optimization as well as to behavioral bundling approaches. In addition the reader will learn how to implement bundling strategies and how to set up a bundling concept. He will find a thorough explanation of the value that bundling has for improving a company`s profit and sales.
Author: Qianbo Yin
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Bundling can change consumers' choice set and affect their purchase decision. It is well-documented that consumers' preferences depend on the bundling context. In this paper, we investigate the effects of consumers' context-dependent preferences (CDPs) on the firm's optimal bundling strategy in various competitive situations. We consider a market where a monopolist firm in product category A also sells a product in product category B. We analyze three scenarios in category B: (1) an independent firm selling a higher-quality product, (2) two independent firms selling the higher-quality product, and (3) the monopolist in category A is also a monopolist in category B. We find that CDPs can indeed change the firm's optimal bundling strategy. When the firm has a competitive disadvantage in category B, CDPs encourage the firm to offer the bundle (by either pure bundling or mixed bundling). Furthermore, if the category B market is so competitive that the firm possesses negligible market power, mixed bundling can be strictly more effective at increasing the firm's profit than pure bundling since mixed bundling can better take advantage of CDPs. In contrast, if the firm has monopoly power in both categories, CDPs discourage the introduction of the bundle, and pure-component selling is optimal.
Author: Lawrence J. Gitman
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 1455
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Book Description
Introduction to Business covers the scope and sequence of most introductory business courses. The book provides detailed explanations in the context of core themes such as customer satisfaction, ethics, entrepreneurship, global business, and managing change. Introduction to Business includes hundreds of current business examples from a range of industries and geographic locations, which feature a variety of individuals. The outcome is a balanced approach to the theory and application of business concepts, with attention to the knowledge and skills necessary for student success in this course and beyond. This is an adaptation of Introduction to Business by OpenStax. You can access the textbook as pdf for free at openstax.org. Minor editorial changes were made to ensure a better ebook reading experience. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution 4.0 International License.
Author: Zhou Shu
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
We evaluate the impact of bundling on firms' product and pricing strategies by developing and solving a multi-stage game theoretic model to represent strategic interactions between two competing firms. Each firm is able to produce two homogeneous products and can opt to bundle them together, which may have the dual benefits of providing added value to consumers and reducing marginal costs for manufacturers. One firm (the leader) determines the products offered to sell before the other (the follower), and both then simultaneously set the prices for their products. We demonstrate the existence and uniqueness of the Nash equilibrium for this game, and show that the option to bundle can benefit all competitors simultaneously. When mixed bundling is not an option, we characterize and quantify the leader's advantage in terms of profitability. However, when mixed bundling is an option, the follower may reverse his or her disadvantage in profit by using it as a potential threat. Furthermore, we perform an extensive numerical study to examine the impact of value addition and cost reduction brought by bundling on firms' equilibrium product and pricing strategies and the resulting profits.
Author: Kyonghwa Jeong
Publisher:
ISBN:
Category : Consumers' preferences
Languages : en
Pages : 252
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Book Description
Author: Rafi Mohammed
Publisher: Harper Collins
ISBN: 0061985279
Category : Business & Economics
Languages : en
Pages : 262
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Book Description
Leading pricing expert Rafi Mohammed shows businesses how to reap a financial windfall and foster growth using the underutilized and often overlooked strategy of setting prices. The 1% Windfall reveals how modest incremental changes to an everyday business practice—pricing—can yield significant rewards. Illustrating the power of pricing, a study of the Global 1200 found that if companies raised prices by just 1%, their average operating profits would increase by 11%. Using a 1% increase in price, some companies would see even more growth in percentage of profit: Sears, 155%; McKesson, 100%; Tyson, 81%; Land O'Lakes, 58%; and Whirlpool, 35%. The good news is that better pricing is more than simply raising prices. Instead, the key is to offer customers a variety of pricing options. This strategy is win-win: profits to companies and choices for consumers. But how do executives and managers set the right price? Underpinned by sound empirical research and real-life anecdotes, The 1% Windfall addresses this fundamental question. This book offers guidelines that any company—whether a multinational conglomerate, a small business, or even a nonprofit—can follow to create a comprehensive pricing strategy for any product or service. In addition, these versatile techniques and tools provide solutions to avert a slump in a recession, offset the impact of inflation, or battle a new competitor. The result is a mind-opening, clear blueprint for com-panies to price for profit and growth.
Author: Araz Khodabakhshian
Publisher:
ISBN:
Category :
Languages : en
Pages : 179
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Book Description
In many markets, bundling, or the offering of two or more products in a package for a single price is a common practice. While most markets are competitive, the majority of research work around bundling has focused on monopolistic markets, which are more tractable for analysis. From a monopolist's perspective, bundling has many benefits such as economies of scope, price discrimination, and expansion of demand. However, competition adds an important dimension to bundling decisions and their results. In this dissertation, the aim is to study the implications of competition for firms' product offering, pricing, and bundle design decisions. In the first chapter, we study bundling in a duopoly under price competition and show that bundling can serve as a product differentiation tool and moderate competition even when firms are perfectly identical and offer undifferentiated products. In equilibrium, firms have an asymmetric bundling strategy, i.e., if one firm bundles the other does not. The bundling decision depends on the valuations of customer groups for the two products in the market. However, the firm offering the bundle earns a higher profit. This suggests an inherent first-mover advantage to bundling. There are two factors predicting the success of bundling in a price-competition setting. One is being ahead of the competitor in offering the bundle, and the other is the degree of correlation or its lack in customer valuations of bundle components. In the next chapter, we utilize a quantity competition (Cournot) framework to study the implications of bundling with entry. This model enables the analysis to go beyond duopoly to an oligopolistic market with fixed costs of entry, where firms enter as long as they can recover the fixed cost. We investigate firms' production quantity decisions and profits in equilibrium to determine the number of firms that enter each market. In a two-component setting, we consider examples with two types of offers: a single product, and the product bundled with the other. Then we consider the case of three markets consisting respectively of the first product, the second product, and a matched-quantity bundle of both products. We find that there may not be a unique equilibrium for the number of firms in each market. Moreover, we show that it is possible to construct settings where the number of equilibria can be arbitrarily large. We identify two factors for the success of bundles: one on the demand side and one on the supply side. On the demand side, customers buy bundles as long as both components within the bundle add relatively comparable values to them. On the supply side, firms enter the bundle market if the fixed-cost of entry for the bundle market is lower than the sum of fixed-costs of entry for all components within the bundle by at least a certain amount. We show that these results hold for a single customer group, as well as multiple customer groups. In the last chapter, we study bundle design, which does not seem to be addressed in the literature. We relax the quantity matching assumption common to most bundling research, and allow the firm to choose the ratio of component quantities within the bundle, i.e. \textit{bundle proportion}, so as to maximize profits. We study four market settings: a monopolist with one type of bundle and one customer group, a monopolist with one type of bundle and two customer groups, two bundling firms with the same bundle design and with multiple customer groups, and two bundling firms in competition with potentially different bundling proportions. We conclude that for a monopolist bundler the optimal bundle proportion depends on the satiation consumption levels of the customer. When there is just one customer group in the market, the bundle proportion has a unique global maximum. However, with two customer groups the profit function can have two local maxima and it is possible, though unlikely, to have two optimal bundle proportions. When two bundlers offer potentially independent bundles, in equilibrium, the bundle proportion choices converge. The bundling proportions ratio is a function of the aggregate satiation consumption levels of all customers and is the same for simultaneous as well as sequential entry.
Author: Daniel F Spulber
Publisher: World Scientific Publishing Company
ISBN: 9814365297
Category : Science
Languages : en
Pages : 521
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Book Description
This book provides a comprehensive and integrated approach to management strategy that is based on economics. A basic introductory strategy text that integrates economic analysis with management strategy, it takes into account global competition and high-tech (Internet) developments, and recognizes that companies today can no longer expect to sustain competitive advantage but must rely on innovation (of products, processes, and transactions). Although many of the principles are illustrated with numerical examples, the text does not require a background course in economics or mathematics, and does not contain technical graphs or equations. Thus, the book is suitable for undergraduate managerial economics and strategy courses, as well as for introductory MBA courses in business strategy and as a companion to case studies.
