An analysis of the purpose of bundling within business stratagems
Bundling involves selling multiple products together as a package. The theory of bundling suggests that adopting of the approach can increase revenue or profit. However, if bundling is to take place, there is a need for certain pre-conditions to exist. Within the desired market, arbitrage should be restricted, customers should exhibit a heterogeneous demand marginal costs (along with the costs of bundling) should be low. Having established the basic theoretical framework that underpins the concept of bundling this dissertation examines different types of bundling (mixed and pure) and evaluates not only the limitations that each approach may have for an organisation but also the manner in which market conditions can be manipulated so as to maximise the potential for successful bundling.
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