Bundling refers to a pricing strategy whereby the company sells two or more products together at a single price; in that sense, bundling can be seen as a form of discount.
Today, there are many options of companies that offer the concept of “triple play,” the package of services and audiovisual content that includes telephone, internet, and cable television.
If you are thinking of contracting any of these services but have not yet investigated whether this option is more convenient for you, this article will be of interest to you.
The first thing you need to know is that there can be different modalities, such as pure bundling, mixed bundling, and bundled sales.
This is the situation in which a company sells consumers a group of goods or services only as a package; in other words, consumers cannot purchase the goods separately and can only buy them in fixed proportions, for example, a local television contract, in which a set of packaged channels is offered.
Here, goods or services are offered as a package and are also available separately. For example, many companies provide bundles in the telecommunications industry that include two and three services such as local television, telephony, and Internet access.
Such as restricted television, fixed telephony, and fixed broadband. However, these services are also offered individually to consumers (mixed bundling). In addition, the company may provide integration of services that potentially benefits the user at no additional cost, for example, a combined bill or free calls between fixed and cell phones purchased together.
This is a situation where the sale of one good (anchor or tying) is conditioned to purchase another good (tied). Tied sales can be made in fixed or variable proportions. The former refers to the purchase of fixed quantities of consumption of both goods. Tied sales vary depending on the intensity of use of the tied good,26 for example, an electric toothbrush (anchor good) and its replacement (bound good). It is possible to purchase the goods separately, but it is cheaper for the consumer to purchase both goods from the same company. An excellent example of this is spectrum internet plans.
The practice of bundling these services is expected. The traditional bundling offer includes fixed telephony, internet, and pay-TV services; however, new services such as Over the Top (OTT) are offered through broadband.
The number of offers and the prices of fixed services available to a consumer varies and depends on the location where the consumer wishes to contract the service. The offer available in each state is different.
Companies package the goods or services they market for various reasons, including efficiency and strategy, the latter of which may be aimed at price discrimination, increasing their market power, and as a marketing tool.
Packaging actions can have both positive and negative effects on competitive conditions and consumer welfare. On the positive side are economies of scale and scope, improved quality of goods, reduced search for options, drop-in advertising costs, etc. On the negative side are comparability problems, high search costs, and lack of transparency, to name a few.
There are differences between package discounts and loyalty discounts. The former is equivalent to multi-product discounts, i.e., discounts for consumers who buy two or more goods or services together. The latter refers to discounts offered by companies to consumers who reach or exceed consumption goals to promote their loyalty.
We can say that it is much more convenient to contract “triple play” services such as spectrum internet plans since, in some cases, the cost of a single service is more than half the price. But, again, check fees and what they offer to decide which is the best.