定价策略 课件 Chpt 12 - Bundling；Chpt 13 - Subscriptions and Customer Lifetime Value；Chpt 14 - Yield Management

TimJ.SmithPricingStrategy:SettingPriceLevels,ManagingPriceDiscounts,&EstablishingPriceStructuresPowerPointbyTimJ.Smith,PhDManagingPrincipal,WiglafPricingAdjunctProfessorofMarketing&Economics,DePaulUniversity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter12BundlingDeliveringStrategicPriceBundlingDistinctlyfromStandardVolumeDiscountsandUncoveringItsPotentialtoImproveProfits©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AgendaWhatispricebundling?Howdoesthenatureofthedesiresofdifferentmarketsegmentsdeterminethesuccessofabundlingstrategy?Howshouldabundlebepricedrelativetostand-aloneproducts?Whatconditionsfavorpricebundlingoverotherpricingstrategies?Whatshouldinfluencethedesignofabundle?Howshouldbundlesbepositionedforcustomers?Arepromotionalbundlesmoreeffectivethandiscounts?Whenisbundlinglikelytobeillegal?Stretchquestion:Whatdistinguishesbundlingfromversioning?©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PriceBundlingDefinedPricebundling,asdiscussedhereanddefinedbymanyauthors,specificallydealswiththesaleoftwoormoredistinctproductsatasingle,bundledpriceBydistinct,bundlepricingassumestheproductscanbeusedinisolationorincombinationEitherproductinthebundledeliversvaluewithouttheuseoftheotherproductBothproductshavetheirownmarket,andTheproducts’individualmarketsoverlapGenerally,thebundlepriceisbelowthesumoftheindividualproductpricesStefanStremerschandGerardJTellis(2002)©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PriceBundlingisDifferentthanProductBundlingPricebundlingisnotthesameasproductfeaturebundlingExamples:iPhonewhichincludesthefeaturesofaportablemusicdevice,mobilephone,andwebbrowserinasingledevicePCwhichincludesaharddrive,operatingsystem,memory,andprocessorInproductbundling,additionalvalueiscreatedintheproductitselfbybundlingthedisparatefeaturesandbenefitsintoasinglepackageTheintegralarchitectureoftheproductbundlecreatesvalueTheproductbundleshouldbepricedaccordingtotheperceivedvalueconsumershaveontheproductbundle,notnecessarilyinaccordancewiththerulesofpricebundlingProductbundlingdiffersin,amongotherfactors,marginalcosts,consumerbehavior,competitivedynamics,andchallengestoimplementationIngeneral,ifmarginalcostsarereducedincreatingaproductbundle,firmswillprofitinproductbundlingoverindividualproductsales©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.HeterogeneityinDemandDifferentcustomers,orcustomersegments,valuedifferentitemsdifferentlydifferentwillingness-to-paydifferentreservationpricesdifferentutilityBundlingismostapplicablewhenheterogeneityindemandiscontrastingbetweenproductsThosecustomerswholoveproductAhavelessdesireforproductB,andthosewholoveproductBhavelessdesireforproductAt=01SAPB

UtilityFunctionConsumerUtilityConsumerTasteParameterPriceSBPA

©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ContrastingHeterogeneity

withaMcDonaldsValueMealBurgerLovers:SomecustomerswouldbesatisfiedwithjustaburgerFriesLovers:OtherswouldbesatisfiedwithjustfriesSellingbothburgerandfriesatabundlediscount,burgerloverswillenjoyfriestoo,whilefriesloverswillenjoyaburgertooCompanyreapsextrarevenuebyencouragingcustomerstobuymorethantheywouldintheabsenceofthebundle©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BundlingexploitscontrastingdemandwithinthemarketforthedifferentproductsSomecustomersvalueoneoftheproductsinthebundleveryhighlyandvaluetheotherproductsomewhatless,whileothercustomershaveapolaroppositeviewpointandvaluethefirstproductlittleandthesecondproducthighlyInasense,theproductswouldpartiallybebothsubstitutesandcomplementsforeachother

Ifeachproductwaspricedindividuallytooptimizeitsownindependentprofitability,thentheoptimalpriceoftheindividualproductswouldbesettocapturetheindependentsegmentsthatvaluethatproductthemostInthiscase,thesegmentthatdoesn’tvalueoneoftheproductsveryhighlyonlypurchasesthespecificproducttheyvalueandignorestheothersInasense,bundlingisaselectivediscountgivenpreferentiallytocustomerswhovalueoneitemlessthantheother©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ExploitingContrastingDemandBundlingCreatesaPriceMenu©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Thepriceofthebundleshouldbe…andhigherthananyspecificproductpricewithinthebundletodiscouragecannibalizationlowerthanthesumpriceoftheindependentlypriceoptimizedproductstoencouragedisparatecustomerswithdisparateindependentproductvaluationstopurchaseallproductsinasinglebundlePAorPB≤PTotal≤PA+PBEXAMPLE Ifoneproductispricedat$5 andtheotherproductispricedat$3 thenthebundledofferingofbothproductswould bepricedsomewherebetween$5and$8 perhapsat$7©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PriceBundlingReducesDispersioninWillingness-to-Pay“Consumers’valuationforacollectionofgoodstypicallyhasaprobabilitydistributionwithalowervariance…comparedtothevaluationsforindividualgoods.Thelargerthenumberofgoodsbundled,thegreaterthetypicalreductioninvariance.Becauseuncertaintyaboutconsumervaluationsistheenemyofeffectivepricingandefficienttransactions,[the]‘predictivevalueofbundling’canbevaryvaluable.”YanisBakos&ErikBrynjolfsson(1999)©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BundlingcanReduce

ReservationPriceDisparityProductAandBarelistpricedat$5eachBLUEcustomerdesiresproductAat$5andProductBat$2REDcustomerdesiresproductBat$5andProductAat$2Abundlepriceat$7selectivelygivesBLUEa$3discountonproductB,butnottoREDWhilethatsamebundlepriceat$7selectivelygivesREDa$3discountonproductA,butnottoBLUETheBundlereducesdispersioninwillingnesstopayTheBundlePriceactsasapricesegmentationhedgebetweenthedifferentmarketsegmentsgivingselectivediscounts©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.NeuroeconomicsofProspectTheoryPeopleplacemoreweighton“pain”than“gain”The

absolutevalueofmonetarygainatAisequaltotheabsolutevalueofmonetarylossatB

TheabsolutevalueoftheperceivedvaluepeoplegivetothegainatAislessthantheabsolutevalueoftheperceivedvaluepeoplegivetothelossatB©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.LossesB

Value-Value+GainsA

ValueFunctionProspectTheory:BundlePain,UnbundleGainNormativePrescriptionBundlePainUnbundleGainAdditionalgainsinbenefitscanbemadeexplicitinbothIndividualandBundlingstructuresAdditionalpainsfrompricearemadeexplicitinIndividualPricing,yetaresubsumedinanewtotalpriceforBundles©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.LossesB

Value-Value+GainsA

ValueFunctionIndependentProductsPAorPBor(PA+PB)BundlesPA,PBorPTotal<(PA+PB)DiscountsarePerceivedasExtraGainBypricingthebundlelessthanthesumpriceoftheindividualproducts,consumershaveanextraGaininthatthepriceofthebundleislessthantheywouldexpecttopayinabsenceofthebundleConsumerBehaviorChallengeIsthegainassociatedwiththemoredesiredproduct,lessdesiredproduct,orthebundleoverall?Implications:bundledesign,expectationpriceresetting,bundleframing,etc.WillbeexaminedinConsumerMentalArithmeticsection©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.P(A+B)=PA+PBAdd-onPriceStructureP(A+B)<PA+PBBundlingStrategyA,PAProductA,PriceAB,PBProductB,PriceB(A+B),P(A+B)ProductAandB,PriceofAandB©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Yes,But…

IsBundlingjustaDiscountinahiddenform?Standardvolumehurdles,createdbyexaminingtherequiredincreaseinvolumetomakeapricepromotionmoreprofitablethaninitsabsence,aredesignedforsingleproductsWithpricebundling,weneedanewBundleVolumeHurdleBeforewegetthere,letslookatstrategicbundlingUseconsumerresearchtoshowordenycontrastingdemandinthemarketORCreateforecastmodelsofexpectedperformancewithandwithoutthebundle,andtrackactualperformanceagainstexpectationstodetecttheprofitimpact©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BundlingModel

Example:OperaWolfgangAmadeusMozart’sDonGiovanni

and

AntonínDvořák’sRusalkaBothpremièredinPrague,CzechRepublic,andareperiodicallyperformedattheEstatesTheaterneartheOldTownSquaresection.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.NegligibleMarginalCostAssumethemarginalcostoffillingaseatatatheatreisnegligibleSittingonemorepatrondoesnotrequirefurtherstafforfurtherworkfromtheperformersOnceatheaterisbuilt,thenumberofseatsissetandsittingonemorecustomerisvirtuallycostlessaslongastheperformanceisnotsold-outPerhapstheonlymarginalcostsfacedbythetheaterarethoseassociatedwithwear-and-tearonthefacilityorwashroomusage,bothofwhichshouldbeminimalTheconditioncaneasilyberelaxedandmarginalcostscanbeincludedinthemodel,butasafirstorderforayintobundling,westrivetokeepitsimple©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Willingness-to-PayMarketSegmentDonGiovanniRusalkaComedyLovers1500CZK700CZKTragedyLovers700CZK1500CZKDemandforRusalkaDemandforDonGiovanniComedyLoversTragedyLovers1500CZK1500CZK700CZK700CZK©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SymmetricallyContrasting

DemandHeterogeneityMarketSegmentDonGiovanniRusalkaBundleComedyLovers1500CZK+700CZK=2200CZKTragedyLovers700CZK+1500CZK=2200CZKDemandforRusalkaDemandforDonGiovanni1500CZK1500CZK700CZK700CZKBundledPatrons©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BundleOfferInthistwosegmentcasewithampleseatsforallpotentialcustomers,revenueismaximized,regardlessofthesizeofindividualsegments,byofferingthebundleat2200CZKratherthanofferingeitheroperaatitsindividualprofitmaximizingpriceThe2200CZKbundlepricetagarisesfromconsideringthecrosssegmentwillingness-to-payforbothoperasAt2200CZK,bothsegmentswillattendbothoperas.Iftheindividualoperaswereofferedat1500CZKandnobundleexisted,patronswouldattendonlyoneofthetwooperas,andtheoperahousewouldforgopotentialvolumeAlternatively,pricingat700CZKwouldattractbothsegmentsbutataloweroverallprice,andtheoperahousewouldforgopotentialprofitmarginsThebundlepriceof2200CZKisadiscountfromthesumofthehigherindividualpricesat3000CZK,butisapremiumincomparisontothesumofthelowerindividualpricesat1400CZKThebundleat2200CZKisattractivetobothsegmentsthuscapturesthevolumethatwouldbelostifpricedatthehighersumpriceandwouldbegainedatthelowersumpriceHence,thebundlepriceimprovesvolumesalesincomparisontothesumhigherpricebutcapturesahigheroverallpriceincomparisontothesumlowerprice©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.RevenueisMaximizedWithPureBundlingWithOnly2SegmentsExampleCalculationwith2SegmentsReservationPrices

Offering

MarketSize1000

MarketSegmentDonGiovanniRusalka

MarketShare

ComedyLoversCZK1,500CZK700

50%

TragedyLoversCZK700CZK1,500

50%

MarketModels

MixedBundlePricing

Unbundled

BundlePriceCZK2,200

DonGiovanniCZK1,500

IndividualPriceCZK1,500

Rusalka

CZK1,500

ConsumerSurplus

ConsumerSurplus

DonGiovanniRusulkaBundle

DonGiovanniRusulkaComedyLoversCZK-CZK(800)CZK-

CZK-CZK(800)TragedyLoversCZK(800)CZK-CZK-

CZK(800)CZK-

RevenueDonGiovanniRusulka

DonGiovanniRusulkaComedyLoversCZK-CZK-CZK1,100,000

CZK750,000CZK-TragedyLoversCZK-CZK-CZK1,100,000

CZK-CZK750,000

TotalRevenueCZK2,200,000

CZK1,500,000

©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.MarketSegmentDonGiovanniRusalkaComedyLovers1500CZK700CZKTragedyLovers700CZK1500CZKMozartDevotee1600CZK100CZKDvorakDevotee100CZK1600CZKLetusexpandourexampletoincludetwoadditionalsegmentsinordertodemonstratethevalueofmixedbundlingincomparisontoeitherpurebundlingoranunbundledonlyofferingAssumethatthetragicandcomedicoperasegmentsstillexistFurtherassumethatwehavetwoadditionalsegments,onedevotedtoMozartandtheotherdevotedtoDvořák©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FurtherHeterogeneitywithContrastingDemandContrastingDemandHeterogeneityDemandforRusalkaDemandforDonGiovanniComedyLoversTragedyLovers1500CZK1500CZK700CZK700CZKDvořák

DevoteeMozartDevotee©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.MarketSegmentDonGiovanniRusalkaSelfSelectionComedyLovers1500CZK+700CZKBundle@2200CZKTragedyLovers700CZK+1500CZKBundle@2200CZKMozartDevotee1600CZKNOT100CZKMozart@1600CZKDvořák

DevoteeNOT100CZK1600CZKDvořák@1600CZKInthisfoursegmentcasewithampleseatsforallpotentialcustomers,revenueismaximizedbyofferingthebundleofbothDonGiovanniandRusalkaat2200CZKwhileofferingtheindividualoperasat1600CZKeach,unlessanoverwhelmingmajorityofthepatronsareMozartorDvorakDevoteesAt2200CZKforthebundle,bothComedyandTragedyLoverswillbeenticedtolistentobothDonGiovanniandRusalkaasthisbundlepriceisattheirsumindividualreservationpriceMeanwhile,2200CZKisabovethesumreservationpriceofbothMozartandDvorakDevoteestoenticethemtolistentobothoperas.However,theindividualpriceof1600CZKforasingleoperaissufficientlylowenoughtoenticethemtolistentothespecificoperatheydesire©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FurtherHeterogeneitywithContrastingDemandContrastingDemandHeterogeneityDemandforRusalkaDemandforDonGiovanniComedyandTragedyLoversbuyBundle1500CZK1500CZK700CZK700CZKDvorakDevoteeMozartDevotee©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ReservationPrices

Offering

MarketSize1000MarketSegmentDonGiovanniRusalka

MarketShare

ComedyLoversCZK1,500CZK700

30%

TragedyLoversCZK700CZK1,500

30%

MozartDevoteeCZK1,600CZK100

20%

DvorakDevoteeCZK100CZK1,600

20%

Pricing

BundlePriceCZK2,200

IndividualPriceCZK1,600

ConsumerSurplus

DonGiovanniRusulkaBundle

ComedyLoversCZK(100)CZK(900)CZK-

TragedyLoversCZK(900)CZK(100)CZK-

MozartDevoteeCZK

-CZK(1,500)CZK(500)

DvorakDevoteeCZK(1,500)CZK

-CZK(500)

RevenueDonGiovanniRusulkaBundle

ComedyLoversCZK

-CZK-CZK660,000

TragedyLoversCZK

-CZK-CZK660,000

MozartDevoteeCZK320,000CZK-CZK-

DvorakDevoteeCZK

-CZK320,000CZK-

TotalRevenueCZK1,960,000

©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PracticeFavorsMixedBundlingEveninatwosegmentmarket,wherethewillingness-to-payisnotevenlycontrastingandmarketsharesareunequal,apurebundlecanfailtobemoreprofitablethaneitheranunbundledormixedbundlepricingstructureBundlingwithAsymmetricDemandAtwo-segmentmarketwithasmallTragedyLoversegmentwilling-to-pay300CZKforDonGiovanniand1700CZKforRusalkaandaComedyLoversegmentasdescribedinthepriorexampleItcanbeshownthatthemostprofitablepricingstructureistoofferthebundleofDonGiovanniandRusalkaat2200CZKfortheComedyLoversegment,andRusalkastandaloneticketsat1700CZKfortheTragedyLoversegment.ThisinstanceeffectivelyrevertstoaversioningstrategyInpractice,mixedbundlingisfavoredunderthefollowingconditions:EachproductinthebundlehasanindependentmarketThemarketsforeachproductoverlapTheconsumptionofoneproductdoesnotsubtractfromthevalueinconsuminganotherproductThedistributionofreservationpricesbetweencustomersisbroadandcontrasting,foratleastsomesegments,withrespecttotheirdesireforspecificproductsThemarginalcoststoproducetheproductsarelow©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ModelingtheProfitImpactofBundlingMarketSegmentInputMarketSegmentSizesMarketSegmentReservationPricesNeedtodesignconjointtoaccuratelyidentifythisdataPriceMenuTrial&ErrorDifferentIndividualProductPricesDifferentBundlePricesCalculateConsumersurplusforeachmarketsegmentAssumeself-selectionofofferthatdelivershighestsurplusforeachsegmentAssume(1)thatcustomersindifferentbetweenpurchasingandnotpurchasing,purchase,and(2)thatcustomersindifferentbetweenabundleandanindividualproduct,bundleRevenue&ProfitPredictionsBasedonsegmentsizeandsegmentchoicegivenaparticularpricemenuAndbasedonpricelessmarginalcostCalculateoverallrevenueforentiremixofproductsSelectPricesChooseindividualandbundlepricethatoptimizesprofitsRobustTestTestresultsagainstvariationinmarketsegmentsizesandreservationprices©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ReservationPrices

Offering

MarketSize1000MarketSegmentDonGiovanniRusalka

MarketShare

ComedyLoversCZK1,500CZK700

30%

TragedyLoversCZK700CZK1,500

30%

MozartDevoteeCZK1,600CZK100

20%

DvorakDevoteeCZK100CZK1,600

20%

Pricing

BundlePriceCZK2,200

IndividualPriceCZK1,600

ConsumerSurplus

DonGiovanniRusulkaBundle

ComedyLoversCZK(100)CZK(900)CZK-

TragedyLoversCZK(900)CZK(100)CZK-

MozartDevoteeCZK

-CZK(1,500)CZK(500)

DvorakDevoteeCZK(1,500)CZK

-CZK(500)

RevenueDonGiovanniRusulkaBundle

ComedyLoversCZK

-CZK-CZK660,000

TragedyLoversCZK

-CZK-CZK660,000

MozartDevoteeCZK320,000CZK-CZK-

DvorakDevoteeCZK

-CZK320,000CZK-

TotalRevenueCZK1,960,000

©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.WiththeapproachtooptimalbundlepricinglistedItisbesttoworkforwardusingconjointanalysisandmarketsegmentationdataItispossibletoworkbackwardsusingsalesdatafrompromotionalbundlesPromotionalbundlingdatayieldsPricesofferedSalesDataonBundlevs.IndividualItemsCanmodelminimumreservationpricesonmarketsegmentsRepeatedwithdifferentpromotionalbundleprices,canimproveonmarketsegmentestimatesandoptimalbundleprices©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.OptimalBundlePricingfromPromotionalTrialsVolumeHurdleofSimplePriceBundleWhatistherequiredincreaseinvolumesalesgeneratedfromsellingabundleatadiscount…incomparisontosellingindividualitems?QuantifiablequestionOccursduringpromotionalbundlingAssumenochangeinvariablecoststhebundleisasimplepricebundleoftwoproductsitisnotaproductbundleinwhichmarginalcostsarereduced©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ProfitwithoutBundleThebundlewilltakesalesfrombothproductAandB,andwillencouragenewcustomers,thatotherwisewouldnothavepurchasedanyitem,topurchasethebundleSomebundlecustomerswouldhaveboughtAandnotB(upgradefromAalonetoBundleA+B)SomebundlecustomerswouldhaveboughtBandnotA(upgradefromBalonetoBundleA+B)SomebundlecustomerswouldhaveboughtneitherAnorB(newcustomers)SomebundlecustomerswouldhaveboughtAandB(purediscount)©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ProfitwithBundledPisthepricediscountoftheBundleincomparisontothesumpriceoftheindividualitemsProfitfromAProfitfromBProfitfromBundle©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ProfitImprovementConditionDesiretheprofitwiththebundletobegreaterthanthatwithoutthebundleDefinecontributionmarginsforproductsAandBtomakeanalysissimplerFind..©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BundleVolumeHurdle(almost)GaininbundlesalesCannibalizationofproductAsalesCannibalizationofproductBsalesDefineGaininbundlesalesCannibalizationofproductAsalesCannibalizationofproductBsales©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeo