Bundling Strategy in the IDM Marketplace

Bundling Strategy in the IDM Marketplace

Goh Kok Min, Kelvin Tan Yuean Soo, Wang Geng
Copyright: © 2012 |Pages: 14
DOI: 10.4018/978-1-61350-147-4.ch007
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Abstract

In recent years, many local telecommunication firms are selling their interactive digital media (IDM) services such as broadband and Pay Television in the form of a bundle to their customers. On the other hand, many IDM firms (e.g. Apple iTunes) have chosen to sell their IDM services to customers in an unbundled manner. This chapter studies the effect of bundling and unbundling of any type of information goods which can be digitized. We will discuss the four factors which encourage IDM firms to choose either bundling or unbundling strategy in their marketing of digital goods. The four factors are customer, environmental, firm, and product. This chapter concludes by emphasising that bundling or unbundling might not be necessarily good or bad. The choice boils down to the market segment – the value that customers perceive from the products. It is also important to take into account the overall marketing strategy that the firm is embarking on and to also consider the market situation at the point in time.
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Background

Bundling has been adopted by many enterprises for a long time, but there have been no consensus among scholars on the definition of bundling. Literatures reviewed in this area had revealed that bundling have two types, namely broad, and narrow. Broad bundling refers to two or more products or services being sold together. For example, earlier studies on bundling done by Adams and Yellen (1976) defined bundling as ‘goods sold in the form of the number of packages’. Guiltinan (1987) defined bundling as ‘special pricing to the overall sales of two and more products and services ‘. Yadav and Monroe (1993) defined bundling as ‘selling two or more products or services at one price’.

Narrow bundling on the other hand is two or more different products or services are sold together in one price. For example, Stremersch and Tellis (2002) defined bundling as “the combine sales of two or more independent products” and “Independent Product” is defined as “each individual product has existence in the market “.

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