Bundling's Impact on Profits

By: Tim Smith, PhD

Hotels bundle Saturday brunch with a Friday-night stay-over. Microsoft bundles Word with Excel in Office. O2 bundles ADSL with Mobile. Restaurants bundle a three course meal into a price fixed offering. Business customers ask for “the entire bundle, but at a discount.”

Has bundling become silver-bullet pricing tool for all pricing and selling problems or is it a pernicious value destroying discount disguised as a rose?

Clearly, it lies somewhere in the middle, and pricing professionals need to know where.

Bundling’s Impact on Profits reveals the power of bundling to improve profits as well as its limitations and potential pitfalls using case studies, economics, financial analysis, and marketing strategy.

Key Learning Points:

  • Distinguish between Mixed Bundling and Pure Bundling
  • Identify situations where Mixed Bundling may improve profitability 
  • Construct analytical models to demonstrate the financial value of mixed bundling 
  • Inform market research inquiries to identify the optimal price points in a mixed bundling strategy 
  • Understand how bundling deployed on a tactical or promotional basis influences consumer behavior and perceptions
 
 


Tim Smith, PhD, Wiglaf Pricing

Tim Smith, PhD is the Managing Principal at Wiglaf Pricing, Adjunct Professor of Marketing and Economics at DePaul University, and Academic Advisor to the PPS Certified Pricing Professional program. Smith focuses on the use of quantitative and qualitative research to enable firms to drive profitable top-line revenue. He began his career as a research scientist in quantum mechanics before his interest in transferring technological advances to societal implementations led to pursuits in business strategy.

Smith holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.
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