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MarketingNotes06 - 97 Bundle the Two Products and Sell at...

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97 Bundle the Two Products and Sell at One Price 98 If Sell a Package of Both for $6: (Example: Charge $6 for a Beer and Give the Pretzels for Free) Sell: • 2 beers (both segments) for $6.00 • 2 bowls of pretzels (to both) for free ($0) • "popcorn free!" • Net profit: 2($6.00 - $1.00) + 2($0 - $.50 = • $9.00 99
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Price Bundling A Special Form of Segmenting the Market for Better Pricing 100 Price Bundling Three forms of bundling 1. Pure price bundling can buy 2 products only as a bundle (one price for all products together) Gator football season tickets Cruises Tool kit Honda Odyssey: Regular version: $25,510 Bundled upgrade IwUhpowerla,lgale.powerpedalS. trl- zonecllmale.andleatherseals). $9,500 more 101 Example: Honda Generators Ad ~ "Home Backup Power" ~UI000i EU3000s EU6500sx IN STOCKNOW REALVALUE BUILTTOLAST $719.95 $1799.99 $2899.99 1000 watts (8.3 A) 3000 watts (25 A) 6500 watts (54.1/27.1 A) 120V ACPower 120V ACPower 120V ACPower SuperQuiet SuperQuiet SpecialMufflerfor Quieter (53-59 dB) (49-58 dB) Operation SuperLightweight ConvenientElectric Operates11.1hoursat (lessthan 29 pounds) Starting) 50% load(6.6 gal. of OilAlert ® Overload EcoThroltle'" fuel) Alarmand Runsupto 20 hoursVoltageSeleelorSwitch EcoThroltle'" on 3.4 gal.of fuel 120/2'1OV Operation} I Galnesv'''' Sun. Sop! I. 2005. P 38. I
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:l Bundling (e~'dl 2. Mixed price bundling can buy either as a bundle or separately Must buy another product in order to get the first --- at a better price then if bought separately) Example' tool kit vs, buy tools separately (Special case: Tie-In sales) Camera and film pack or sold separate 3. Unbundled prices . Can buy only a separate prices 10] Customer Maximum Prices ($ per montft) Group Voice Mail Hot Line 1 9.00 1.50 2 8.00 5.00 3 4.50 8.50 '4 2.50 9.00 :1" Maximum Prices for Voice Mail and Hot Line Services ----- What Prices Maximize Revenues? • If price services individually • (no bundling)? • If price as available only in the package • (pure bundle)? • If price as available either way --- as individual items OR as a package • (mixed bundle)? Package price is lJsually lower than the sum of the IndiVidual Item prices 105
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i Separate price: Voice Mail ;price at $2.50, get all 4 segments to buy: 4 X $2.50 = $10.00 If price at $4.50, get 3 segments to buy: 3 X $4.50 = $13.50 If price at $8.00, get 2 segments to buy: 2 X $8.00 = $16.00 If price at $9.00, get 1 segment to buy: 1 X 59.00 = $9.00 106 Separate price: ,,~ Hot Line Service Price at $8.50, get 2 segments: 2 X$8.50 = $17.00 (better than any other single price) Total revenue from two optimal separate prices = Voice Mail @ $16 and Hotline @ $17 +1 $331 107 Maximum Bundle Prices for Voice Mail and Hot Line Services Voice Mail Mot Line Hot 9.00 1.50 10.50 8.00 5.00 4.50 8.50 2.50 9.00
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f, Bundle P . M -Jr VCJ Maximum Prices ($ per month) Customer Bundle of Group Voice Mail Hotline Voice Mail + HotLine 1 9.00 1.50 10.50 - 2 8.00 5.00 13.00 3 4.50 8.50 13.00 •• 2.50 9.00 Maximum Bundle Prices for ~ Vo Maximum Prices ($ per month) Customer Bundle of Group Voice Mail Hotline Voice Mail + Hotline 1 9.00 1.50 10.50 2" 8.00 5.00 13.00 3, 4.50 8.50 13.00 4 2.50 9.00 11.50 Pure Bundle for Both Services • Minimum price that all four segments are willing to pay = $10.50 • 4 x $10.50 = $42.00 • Best single price higher revenues than any other combination pnce (e.g ..
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