Report Summarizes Information Systems Study Findings from M.T. Akcura and Co-Researchers.(Report)

"Increasingly, we see that firms offer many items on information-intensive channels and the Internet. Especially with low-marginal-cost digital goods, bundling may be a beneficial strategy," scientists writing in the journal Information Systems and E - Business Management report.

"Different bundles may help customers become more discriminating and maximize profits. However, the marketplace evidence provides mixed observation of bundling rigorously pursued. In this study, we provide a general framework to analyze when and how bundling may be beneficial. We compare and contrast the firm and customer characteristics on bundling strategy. We analyze when individual sales can be beneficial. We find that when costs do not increase relative to the bundle valuation, firms find it beneficial to limit the number of bundles offered in the market. A low ( zero) marginal cost firm benefits from offering just one big bundle. Such a firm obtains a higher profit compared to a firm that offers many bundles. With high marginal costs, the number of bundles increases with increasing customer valuation and/or heterogeneity. When a firm offers all the bundles, prices and profit increase as customer heterogeneity and valuation increase. When the number of offered items is high, individual sale (unbundling) may be preferred over bundling and bundling becomes an inferior strategy," wrote M.T. Akcura and colleagues.

The researchers concluded: "Interestingly, a firm may benefit from unbundling the items when customers have higher valuations."

Akcura and colleagues published their study in Information Systems and E - Business Management (Digital bundling. Information Systems and E - Business Management, 2010;8(4 Sp. Iss.):337-355).

Additional information can be obtained by contacting M.T. Akcura, Long Isl University, Brookville, NY 11548, United States..

The publisher of the journal Information Systems and E - Business Management can be contacted at: Springer Heidelberg, Tiergartenstrasse 17, D-69121 Heidelberg, Germany.

Keywords: City:Brookville, State:New York, Country:United States, Information Systems, Information Technology, Information and Data Systems

This article was prepared by Information Technology Newsweekly editors from staff and other reports. Copyright 2011, Information Technology Newsweekly via VerticalNews.com.