Theories for Product Bundling

Theories for Product Bundling RASHIDA ABDULHAMID WHY DO FIRM BUNDLE TWO PRODUCTS TOGETHER AND HOW IS IT LIKELY FOR THEM TO MAKE PROFIT? What is product bundling? Product bundling is simply means combining two or more goods together and selling them as on one combined product. It is mostly common in market with imperfect competitive product. It is a marketing strategy that joins products or services together in order to sell them as a single combined unit. Bundling allows customers to purchase two or several product at the convenient purchasing power from one company. The products and services are usually related, but they can also consist of dissimilar products which appeal to one group of customers. It based on consumer’s value the grouped package more than the individual items. Why do producer go into product bundling? Producers go into product bundling because of so many reasons, bundling of two products gives the producer to offer more affordable prices for their customer with also a better interest for them. Bundling enhances an organizations offering mix while at the same time minimizing cost of both production and selling. This is attractive to consumers who will benefit from a single, value-oriented purchase of complementary offerings. Bundling is attractive to producers by increasing efficiencies, such reducing marketing and distribution costs. It can also encourage customers to look to one single source to offer several solutions. Product bundling may also incorporate products from multi producers. Example of this is the palo alto software may include one of their business planning product with an accounting software package, or participate in a small business bundle† through a major computer manufacturer whose customers would have the opportunity to purchase with their new PC. In these situations, bundles may cost effectively open to new marketing channels. FACTORS CONSIDER WHEN BUNDLING INCLUDE VOLUME: bundling typically increases unit sales volume. MARGING: bundling can reduce margins. EXPPOSURE: bundling may offer new channel opportunities or exposure to new potential customers. RISK: if executed incorrectly, bundling may cannibalize more profitable sale, resulting in lower contribution margins and potential channel conflict. This last example has three important implications. First, the market outcome is not necessarily efficient, in the sense that a social planner with full information and no costs of imposing a solution could do better. That should not be surprising in light of the results in the product selection literature that the set of product offerings is not necessarily efficient. Second, while the model reveals a bias toward the offering of a bundle, the bias is primarily toward mixed bundling, not toward pure bundling or other forms of tying. Indeed, although the preceding example does not show it, the model can be interpreted to suggest a bias against pure bundling. In a companion paper, we show that the conditions for pure bundling to be the only sustainable outcome are stronger than the conditions for pure bundling to be the efficient outcome. The model does not rule out the possibility of inefficient tying. Tying can be. the predicted outcome when components selling is optimal, but there is no systematic reason for this to be the case. There is a tendency in the model for big groups to get the offering they want. But this effect holds equally when the biggest group wants just one component as when the biggest group wants the bundle. Third, in analyzing the welfare consequences of bundling discounts (under mixed bundling), it is important to distinguish between marginal cost savings and the effect of fixed costs. Both are potential sources of savings to the group that purchases the bundle, but only the marginal cost savings reflect welfare gains. In this example, there is a substantial bundle discount; the bundle price of 19 is 5 less than the sum of the components prices. Under pure components selling, they would pay a total of 20, which is also more than the bundle price under mixed bundling. Notwithstanding this private benefit, it is inefficient for the bundle to be offered. In contrast, if there were no fixed costs and the bundle discount reflected a marginal cost savings of 5, then mixed bundling would be efficient. . Which products are offered depends on the extent to which bundling lowers marginal cost, on the fixed costs of offering each product, and on demand. For a product to be offered in the kind of contestable market we describe here, three conditions must holdthese are known in the formal economics literature as sustainability conditions. First, no price can exceed average cost. Otherwise another firm could enter and provide the product to the same group of customers for less. Second, the price of each product must be low enough that the seller of a second existing product cannot profitably lower its price and attract the purchasers of the first. Third, prices must be low enough that entry with a product not offered is unprofitable. First, marginal cost savings are neither necessary nor sufficient for tying to occur in competitive markets. They are not necessary because, even without marginal cost savings, firms may not separately provide a product if there is not enough demand to cover the fixed cost of offering that product this result assumes that the firm is offering a bundle that attracts at least some consumers who want that product. They are not sufficient because, even with marginal cost savings, firms may find that there are enough consumers who want the products separately and do not value the other product they will therefore oiler the bundle to attract consumers who want both and separate products to attract consumers who only want one. Second, fixed costs are a necessary but not sufficient condition for tying to occur in competitive markets. Firms eliminate a product choice that some consumers want because it enables them to avoid the fixed costs of offering it separately. Or, to put it another way, firms cannot provide some products separately because there is not enough demand to cover the costs. Third, pure bundling can arise for two reasons which are worth distinguishing: (1) moderate fixed costs when many consumers demand all components and demand is low for at least one of the individual components; and (2) high fixed costs. Without fixed costs, our assumptions generally imply mixed bundling. Under mixed bundling, the bundle is available for those who want both goods and the separate products are available for those who want just one. With some fixed costs, however, pure bundling can result if many customers want both goods and demand for the component does not justify the fixed cost of offering them separately. Pure bundling can also occur, however, even if no consumer wants both components. These will happen when fixed costs are very high, which in turn implies that pure bundling saves significant fixed costs over components selling. Fourth, firms may sell some but not all of the components separately from the bundle. This occurs when demand for the bundle and one of the separate components is substantial but demand for the other is not. In a separate welfare analysis we show that firms may not offer the optimal product variety (the standard result in the product variety literature) but that the tendency is to offer too much mixed bundling rather than to offer too much tying. Table 3 contains our first example. The size of each group of consumers is 100. The marginal costs of both goods ; and 2 are 8 while the marginal cost of the bundle is 14. Since the latter is less than the sum of the components prices, there are marginal cost savings from bundling. Fixed costs are 600 It follows that the prices of the components under mixed bundling are 14 while the price of the bundle is 20. As the next line in the Table indicates, the price of the bundle under pure bundling is 16. It is lower than the price of the bundle under mixed bundling because more customers share the fixed cost. Under components selling, the prices of the components are 11 each. As with pure bundling, the prices are lower than under mixed bundling becau se the fixed costs are shared with a larger group. Before turning to why mixed bundling is sustainable, let us consider why the other product configurations are not. Under pure bundling, the price of the bundle is 16. This price is susceptible to entry by, say, a producer of good 1 at a price of 14. This component price is less than the 16 that group 1 pays for the bundle under mixed bundling, and it is sufficient to cover costs even if only group 1 buys the bundle. A pure component selling, in which the price of each of the two goods is 11, is not sustainable either. Group B pays a total of 22 for the two components, so entry with the bundle at a price of 20 attracts group B and is profitable. When the bundle and just good 1 are offered, the price of the bundle is 17. Entry by a supplier of good 2 at a price of 11 is then profitable. For the same reason, it is not sustainable to offer just the bundle and good 2. Having seen how entry can prevent a set of offerings from being sustainable, we can now understand why mixed bundling is sustainable in this case. All possible products are offered in mixed bundling, so it is not possible to enter with a new product. We do, however, need to consider whether cutting the price of an existing product (or products) to attract an additional block of customers would be profitable. At these prices, it is not. For example, to sell the bundle at a price that is low enough to attract groups 1 and 2; one would still have to charge 16. But that would not be low enough to attract groups 1 and 2, which can purchase only the good they want under mixed bundling for 14. Similarly, cutting the price of the components to attract group B would not be profitable. If group B purchased the components, the prices would still have to be 11. Group B would then pay 22 for both goods, which is more than the 20 it pays for the bundle under mixed bundling. There are a number of factors that give rise to mixed bundling in this example. First, there are marginal cost savings from bundling. At the same time, the marginal cost of the bundle exceeds the marginal cost of just one of the components. So, putting fixed costs aside, there would be an advantage to having the separate components available to those who want just one of them. Also, the demand for each of the three possible products is substantial; and, while fixed costs are present, they are not so great as to preclude offering one of the goods. The results in Table 3 depend, of course, on the assumed values for each of the seven variables in the model. Small changes in each variable would affect prices, but mixed bundling would still be the qualitative outcome. With larger changes, however, the qualitative outcome would change as well. Since mixed bundling means that all three of the possible products are offered, any change would eliminate one or more of the products offered. For example, consider a reduction in the number of people who want just good 1. The fixed cost of offering good 1 would then have to be spread over a smaller customer base so the price of good 1 would have to increase. When the number of people who want only good 1 is sufficiently small, the price of good 1 would exceed the price of the bundle. Consumers who want just good 1 would then buy the bundle (anSd discard good 2). Good 1 would disappear from the market, leaving good 2 and the bundle as the only products offered. In that case, good 2 is tied to good 1. Just as a reduction in the number of people who want good 1 causes the price of good 1 to go up, an increase in X1 causes the price to drop. With a sufficiently large increase in the demand for good 1 alone, the price can drop enough that people who want both goods find it cheaper to buy them separately. The bundle disappears from the market. The result is pure components selling, which does not entail tying. Table 4 shows the change in product offerings that could result from sufficiently large increases and decreases of each of the seven variables in the model. (As we note, in some cases, even a large change will not alter the product offerings.) The first row of the table reports the results described above. The left half of that row says that with a sufficiently large decrease in X1, the set of products offered becomes the bundle and good 2 while good 1 is no longer offered. The right hand half of the first row shows that with a sufficiently large increase in the demand for good 1, the set of products offered are goods 1 and 2 while the bundle is no longer offered. As Table 4 indicates, there are two cases in which mixed bundling are the qualitative outcome no matter how much the variable change (in the given direction). One of these is a reduction in fixed costs. That result makes intuitive sense. Fixed costs in the model can cause a potential product not to be offered. Given the other assumed values in Table 4, fixed costs of 600 are low enough that all three of the possible products can be offered profitably. A reduction in the fixed cost of a product offering would only reinforce the possibility of providing for each group the product tailored to its particular demand.

The Structure and Underlining Meanings of Rapunzel by Jacob and Wilhelm

The Structure and Underlining Meanings of Rapunzel by Jacob and Wilhelm Grimm The story of Rapunzel, by the brothers Jacob and Wilhelm Grimm, has the same basic structure as all other fairy tales born from the oral tradition; what is commonly referred to as the opening, main part and ending, is the foundation of the tale. It is around this clearly defined three-part structure of the plot, that invisible layers of meaning exist – often very different for each reader. Between the clever design of the plot – which allows several stories to surface within a seeming individual tale – and multiple layers underneath the literal action, exists a limitless journey of personal exploration. A fairy tale such as Rapunzel has many possible functions in a child’s life and development – explaining the desire for the tale to be read time and time again by the eager young mind. The opening of the story establishes a number of things: the characters (with the exception of the prince), their dispositions, and the first task. The short introduction is also in itself a short story, with its own three-part structure. Rapunzel’s mother, also known as the wife, by persuading her husband to steal a head of lettuce from the witch, sends him on his journey. The husband’s acceptance of his task finalizes the opening of the introduction. The following two trips to the forbidden garden, and his encounter and, later, his deal with the witch, complete the main part of still only the beginning of the story of Rapunzel. When the witch appears during the heroine’s birth and takes her away, the story of Rapunzel’s mother and father is complete, and in turn, so is the introduction to the tale. The conversion from the introduction to the main pa... ... on a subconscious level due to complex interactions between the plot, characterization and symbols. Length and detail are not relevant in what a fairy tale like Rapunzel achieves; its accomplishments are made possible by the strict structure of the plot which holds within itself much potential and multiple features, as well as the communications that exist between author and reader likely without either one knowing it. Our favorite fairy tale has a reason for holding a special place in our heart whether we know it or not, as does the story we love to hate and continue to read and re-read. Like the human psyche, the fairy tale can be studied not only rewardingly but without an end. Works Cited Bettelheim, Bruno. The Uses of Enchantment. New York: Alfred Knopf, 1976. Hallett, Martin and Barbara Karasek, ed. Folk & Fairy Tales. Toronto: Broadview, 2002. The Structure and Underlining Meanings of Rapunzel by Jacob and Wilhelm The Structure and Underlining Meanings of Rapunzel by Jacob and Wilhelm Grimm The story of Rapunzel, by the brothers Jacob and Wilhelm Grimm, has the same basic structure as all other fairy tales born from the oral tradition; what is commonly referred to as the opening, main part and ending, is the foundation of the tale. It is around this clearly defined three-part structure of the plot, that invisible layers of meaning exist – often very different for each reader. Between the clever design of the plot – which allows several stories to surface within a seeming individual tale – and multiple layers underneath the literal action, exists a limitless journey of personal exploration. A fairy tale such as Rapunzel has many possible functions in a child’s life and development – explaining the desire for the tale to be read time and time again by the eager young mind. The opening of the story establishes a number of things: the characters (with the exception of the prince), their dispositions, and the first task. The short introduction is also in itself a short story, with its own three-part structure. Rapunzel’s mother, also known as the wife, by persuading her husband to steal a head of lettuce from the witch, sends him on his journey. The husband’s acceptance of his task finalizes the opening of the introduction. The following two trips to the forbidden garden, and his encounter and, later, his deal with the witch, complete the main part of still only the beginning of the story of Rapunzel. When the witch appears during the heroine’s birth and takes her away, the story of Rapunzel’s mother and father is complete, and in turn, so is the introduction to the tale. The conversion from the introduction to the main pa... ... on a subconscious level due to complex interactions between the plot, characterization and symbols. Length and detail are not relevant in what a fairy tale like Rapunzel achieves; its accomplishments are made possible by the strict structure of the plot which holds within itself much potential and multiple features, as well as the communications that exist between author and reader likely without either one knowing it. Our favorite fairy tale has a reason for holding a special place in our heart whether we know it or not, as does the story we love to hate and continue to read and re-read. Like the human psyche, the fairy tale can be studied not only rewardingly but without an end. Works Cited Bettelheim, Bruno. The Uses of Enchantment. New York: Alfred Knopf, 1976. Hallett, Martin and Barbara Karasek, ed. Folk & Fairy Tales. Toronto: Broadview, 2002.

A study of Compensation Management Essay

In spite of the multiple benefits and advantages of compensation management and its impact on employee’s performance, it cannot still be said that having compensation management policy is a panacea for success in appraising, and managing employee’s performance. It is therefore the duty of all managers to ensure that the use of compensating policy meets employee’s expectation in order to have good and effective performance. The first basic requirement for effective and functional performance system is to have a common understanding of the standards of performance required from each job holder, performance required from each job holder and compensation management should be in relation with organizational goals and objectives. One of the primary responsibilities of management is to make compensation policy a veritable tool for optimizing the potentials of employees and human resources manager or practitioners should be in the driving seat in ensuring that the system is run in line with the principles of fairness and equity. SUMMARY The study was aimed at examining the impacts of compensation management practices on employees’ performance at the Nigeria Port Authority, Apapa. Questionnaires were administered to selected staff of Nigeria ports Authority, Apapa. The entire population was estimated at 340 people comprising of senior and junior staff and out of this population a sample of 100 respondents were randomly selected for intensive study and analyzed. The responses obtained from the questionnaire that was personally administered and the test of hypothesis Using chi square (x2 distribution) statistical method of analysis form the basis of the finding of this research survey. Some of the findings are, 1. That the Nigeria ports authority (NPA) has a well-organized and efficient compensation management system which is applicable to all the employees. 2. That compensation management system has a great impact on employee’s efficiency and performance at the Nigeria ports authority (NPA). 3. There is a relationship between compensation management policy and employee’s performance and that compensation management will lead to positive impact on employee’s performance. 4. That employee’s performance can also be determined through the use of some factors which are not monetary inclined like motivation, leadership, communication, objective, control, sense of belonging and decision making in relation to compensation management practices. 5. That despite the significant impact of compensation management system, performance of some employees is not up to the set standard of the organization.

Christmas Tongue Twisters Alliteration Lesson Plan

Everyone knows the popular tongue twister She sells seashells on the sea shore. This Christmas, teach your students about alliteration and let them try and create a few fun holiday tongue twisters of their own. Heres how. Explaining Alliteration Start your lesson by saying the popular tongue twister mentioned above. Then, ask students if they have ever heard of this saying before. Discuss that this play on words is called alliteration, which is a literary element. Ask them if they can guess from your example what alliteration might mean. Try and get students to work towards a definition like this: Alliteration is defined as the repetition of consonants at the beginning of words in any piece of writing. Make sure that students understand that alliterative words do not have to start with same letter or letters but it can be like ( i.e. chilly and silly). You can give students the example below. The pots and pans were Peters prized possessions. Next, have students try and brainstorm some words. Write the letter H on the front board and ask students to try and think of names, place, animals, or food that begins with the same sound of that letter. Let them try and come up with at least five words for each category. Then, as a class try and come up with a tongue twister using the words from the categories. Tongue Twisters Once they have gotten the hang of what alliteration is and how it works, then you can let them loose to try and create festive tongue twisters on their own. Extend the lesson by asking your students to illustrate a tongue twister or two. Let them use a dictionary and/or thesaurus to kick their twisters up to the next level of complexity. Here are a few Christmas tongue twisters to get you started: Crazy kids clamor for candy canes and Christmas cookies.Toy trains travel and toot along the track.Hal had happy holiday holly.Prancer presents pumpkin pies and presents.Chilly children cheer and chant on chilly nights.Santa sings silly songs about sleighs slipping supper fast in the sun.Tiny Tim trims the tallest tree with tons of terrific tinsel.Red-nosed Rudolph romps readily round ruby wreaths.Blitzer bobbles a billion brilliant bells.Santas super sleigh slips so swiftly through the snow.Shiny stars sparkle on silver sleighs.Ten tiny toy soldiers tinker with twenty toy trains.Santas stuffed sack sags and slumps. Edited by: Janelle Cox