Strategic Bundling of Products and Prices: A New Synthesis for Marketing

Abstract

i\\/lariceting Bundling is pervasive in today's markets. However, the bundling literature contains inconsistencies in the use of temis and ambiguity about basic principles underlying the phenomenon. The literature aiso iacits an encompass-ing dassification of the various strategies, dear ruies to evaiuate the legaiity of each strategy, and a unifying frame-work to indicate when each is optimal. Based on a review of the marketing, economics, and iaw iiterature, this arti-de deveiops a new synthesis of the fieki of bundiing, which provides three important benefits. First, the articie clearly and consistentiy defines bundiing terms and identifies two key dimensions that enabie a comprehensive ciassification of bundiing strategies. Second, it fbrmuiates ciear ruies for evaiuating the legaiity of each of these strategies. Third, it proposes a framework of 12 propositions that suggest whk:h bundiing strategy is optimai in var-ious contexts. The synthesis provides managers with a framework with which to understand and choose bundiing strategies, it aiso provides researchers with promising avenues for further research. Bundiing is the sale of two or more separate productsin a package. This strategy is pervasive in marketstoday in one form or another. In the past decade, bundling has received growing attention in the marketing lit-erature. However, the published studies are fuzzy about some basic terms and principles, do not discuss the legality