Product Bundling (Case Study) Essay

The group is presenting on the topic of product development and product bundling are significant factors influencing market demand in telecommunication. Product development involved modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer wants or market niche.

There are two parallel paths involved in the product development process, one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new product within the overall strategic process of product life cycle management used to maintain or grow their market share. Product bundling is a marketing strategy that involves offering several products for sale as one combined product.

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This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite), in the cable television industry (for example, basic cable in the United States generally offers many channels at one price), and in the fast food industry in which multiple items are combined into a complete meal. A bundle of products is sometimes referred to as a package deal or a compilation or an anthology. Product bundling is most suitable for high volume and high margin (i. e. , low marginal cost) products.

Research by Yannis Bakos and Erik Brynjolfsson found that bundling was particularly effective for digital “information goods” with close to zero marginal cost, and could enable a bundler with an inferior collection of products to drive even superior quality goods out of the market place. As an example of product bundling is that McDonald’s value meal, phone-internet-cable combos, and all-inclusive vacation packages. In the business-to-business environment, contracts often contain solutions-oriented bundles, example a combination of products and services that are customized to solve specific customer problems.

The emergence of new technologies such as cloud computing and fixed mobile convergence continues to transform Malaysia’s telecommunication industry. This has increasingly required service providers to differentiate their products and services in order to stay ahead of competition. DISCUSSION The presentation is about product development and product bundling are factors influencing the right shift of the curve demand in telecommunication. It focuses on what is product bundling really are and how Telecommunication Company in Malaysia achieved the product bundling and cater to demand of Malaysian.

Several qualities influence the product bundling. According to a 1997 study by Mercer Management Consulting, Lexington, Massachusetts, good bundles have five qualities: 1. The package is worth more than the sum of its parts; 2. The bundle brings order and simplicity to a set of confusing or tedious choices; 3. The bundle solves a problem for the consumer; 4. The bundle is focused and lean in an effort to avoid carrying options the consumer has no use. 5. The bundle generates interest or even controversy

Telecommunication in Malaysia, they focus on system that more products produce more profit. The presentation focuses on smartphones as what companies in Malaysia are doing the product bundling system. Not to say that non-smartphone are not being market as product bundling, but the trend in Malaysia population normally youngsters and adult aged between 19 – 35, they focuses on acquiring the latest smartphones with the latest specifications. This product is targeted to technology savvy individual that follows trends and latest released items that started in the USA or China.

For example, the highlighted items that been discussed in the presentation were the Iphone’s and S3 that currently being bundled with all sorts of extra items and charges. The telecommunication example Maxis, Celcom and Digi has their own sets of prices and range of services that they will provide if the customers are willing to buy the product. The customers need to compare between the 3 big companies to cater for their own budget and requirements. Usually for the phones product bundling, the phone itself will be charged half the price f current market price and the customer will have to sign minimum 24 months contract with certain amount of price. However, this is not included the charges for sms and calling out. Therefore, usually this product bundling for phones is quite sneaky in terms of their marketing because in the end, the monthly price that customer pay will be equal or more with the phone market price. This is resulting of their terms and condition, that binds the customer to pay for 24 months and this not included charges incur if we are using the services.

However, with this emergence of product bundling, the shift for demand in communication has increased drastically. This maybe because it provides customer of terms that they can pay in monthly installment and not need to provide a large sum of cash to purchase the phone. This attracts new, young customers that did not have large sum of savings to purchase the phone in their market price. The question occurs is “How does the company cater to demand? As in, how do they know that this phone will be marketable or saleable? ”.

In the presentation, explanation been given is that the demand comes from customer wanted the items due to trends and exposure from social media. However, to focus more on why the company chooses certain products over others may be due the economic, social and physiological perspectives. The economic perspective of customer behaviour focuses on the price of products, advertisement and also the income levels of buyers, the sociological point of view focuses on reference groups and culture and finally the psychological perspective focuses on the decision making process and motivation theory.

A fall in the price of a product will result to an increase in the quantity of a product purchased, however these depends on the price elasticity of a product. If a product is price elastic and this means that the price elasticity of the good is more than one, then the products demand will rise at a greater proportion than the rise in price. If the price elasticity of a product is less than one then the demand for the product will not rise at a greater proportion than the price. Income is also another major factor that nfluence the buying decisions of consumers, the consumers disposable income play a major role in determining what to buy and in what quantities, however this depends on the income elasticity of a certain product, if the consumers disposable income increases and that the income elasticity of demand for that good is greater than one then the proportional rise in the demand for that product is greater than the rise in income levels. Depending on the type of need a product is designed to satisfy it highly influences the consumers decision, consumers will tend to satisfy the lower needs then move on to the next level of needs.

The motivational theory is a break through to the explanation of decisions made by consumers regarding satisfaction of need of certain products, however certain products design are designed to satisfy more than one. Certain products evoke such feelings such as fun, pride and pleasure, when consumers attach certain emotions to a product then this will influence their buying decisions, a good example is the rejection of the new coca cola brand in 1985 despite its preferred taste people still preferred the old brand because they had already certain attached emotions to the old brand.

Advertisements also act as an influence to the buyer’s decision to buy; adverts are means by which the availability and the quality of products are notified to consumers. Also they act as ways in which confidentiality is increased to the buyers of a product, a good example is where vehicle manufacturing firms continue to advertise products and owners of such products will always check these adverts for the reassurance of the quality of the products they already bought.

Therefore adverts are a major influencing factor to buyers when they decide what to buy, they are persuasive in nature and also they provide information about a product including quality, offers and price cuts, availability of a product and the price of the product and this aids the consumers to make quick decisions about purchasing a product. The adverts also aid in building brand preferences and loyalty through their constant and consistent campaigns. Overall, the communication company in Malaysia provides high demand of products by influencing the demand with their promotions of their own product bundling.