TOPIC 3: Pricing
PROMPT: Describe the concept of price bundling. Why might a company initiate this pricing strategy? Give an example of a company that implements price bundling and how the combined pricing strategy affects customer behavior. (Think about the telecommunications industry, restaurants, software, etc)
Week 7 Discussion: Pricing
Price bundling is the price strategy in which the company package the separate product together and offer them at a single. Price bundling (product bundling or product-bundle pricing) is a marketing strategy that combines two or more products to sell them at a lower price than if the same products were sold individually. The buddle price technique is very much popular in the retail and the new commerce business. Because it offers more value for its price. This building technique is used because it helps to boost product sales and also helps to build customer loyalty as well.
The company which uses price bundling is McDonald’s. McDonald’s is a fast-food chain restaurant and they occasionally bundle their products and sell that product. They named it the happy hours where they combined several products into a single item (Dominique-Ferreira & Antunes, 2019, p.5). The reason for doing this is to increase the shares of the restaurant and more customers will attract to the particular restaurant as well. It encourages the customer to purchase more products. The company implements this so that they can sell more products and the timing or day is chosen in which this happy hour is done so that more sales can take place.
It is believed that pricing has a significant effect on the buying behavior of consumers because the higher a product is priced, the fewer units are sold. By contrast, products selling at prices lower than the market rate are assumed to sell at a higher volume. A combined pricing strategy affects customer behavior in various ways and some of which are stated below-
Increased sales– Due to the bundling of the product, it is majorly seen that an increase in sales has taken place. Many customers like bundling and due to this, the customer purchases more products during happy hours as they are getting a various variety of products at less price or the same price. Customers like the bundling of the product as it helps them to taste the barrio’s product in the same unit and that is the reason that in this period the sales of the product also increased and the more customer get involved to purchase the product in this hour as with the less price, they are getting the variety of the product to enjoy.
Customer sometimes rejects those bundling– Though we have seen that customer like the bundle product as they get to taste a variety of product in one meal there is also various customer who always try to escape such happy hours for the bundle meals (JAUHARI, 2020, p.5). The reasons they provide that in that period the companies offer the wanted product or the cheap quality of the product which is not good for the health so they try to escape the happy meal or the bundle product. According to them, the company uses this strategy to increase sales, and the expired product is also offered in that so that it can also be got sold as well.
References
Dominique-Ferreira, S., & Antunes, C. (2019). Estimating the price range and the effect of price bundling strategies: An application to the hotel sector. European Journal of Management and Business Economics.
JAUHARI, D. S. (2020). A STUDY ON THE IMPACT OF PROMOTIONAL STRATEGIES BY BRANDED FAST FOOD INDUSTRY ON CONSUMERS. PalArch’s Journal of Archaeology of Egypt/Egyptology, 17(7), 7009-7020.
