Bundling of Services

‘Bundling’ has emerged as an important aspect of ‘ consumer pricing ? Discuss this with special reference to the telecom sector?

Everyone must have come across campaigns of the following kind. “Buy one, get the second at half-price.” A camera is sold in a box with a free film; a hotel room often comes with accompanying breakfast. These are examples of bundling. Bundling is the practice of selling two more separate. Products together for a single price i.e bundling takes place when goods or services which could be sold separately are sold as a package. A codification of bundling practices and definitions of selling strategies is;

Pure bundling : Products are sold only as bundles;

Mixed bundling : Products are sold both separately and as a bundle, and

Tying : The purchase of the main product ( tying product) requires

The purchase of another product( tied product ) which is generally an additional complementary products.

This is not an exhaustive list but covers the most frequently encountered cases. Pure bundling involves selling two products only as a package and not separately.

Pure Bundling

Bundling Product

Product

Product

Example of Telecom:-

Reliance WLL- Cell phone instrument (handset) and connection are only available together and not available separately. Microsoft’s bundle of windows and Internet Explorer could be considered a pure bundle. Also Cable TV Channels are an example of pure bundling. In North America it is not possible to get only Disney Channel has it is always bundled with other premium Channels. In India, the prospective CAS (Conditional Access System) also similar channel packages where some of the channels can’t be purchases separately like Zee TV , would only be available with other, Zee channels.

Bundling can be good for consumers it can reduce “ search costs” as well as the producer ‘X’ distribution costs. There are lower “ transaction costs”. And the producer may be a more efficient bundler than the...