‘Bundling’ has emerged as an important aspect of ‘ consumer pricing ?

‘Bundling’ has emerged as an important aspect of ‘ consumer pricing ? Discuss this with special reference to the telecom sector?


Everyone must have come across campaigns of the following kind. “Buy one, get the second at half-price.” A camera is sold in a box with a free film; a hotel room often comes with accompanying breakfast. These are examples of bundling. Bundling is the practice of selling two more separate. Products together for a single price i.e bundling takes place when goods or services which could be sold separately are sold as a package. A codification of bundling practices and definitions of selling strategies is;

Pure bundling : Products are sold only as bundles;
Mixed bundling : Products are sold both separately and as a bundle, and
Tying : The purchase of the main product ( tying product) requires
The purchase of another product( tied product ) which is generally an additional complementary products.

This is not an exhaustive list but covers the most frequently encountered cases. Pure bundling involves selling two products only as a package and not separately.

Pure Bundling


Bundling Product


Product


Product




Example of Telecom:-

Reliance WLL- Cell phone instrument (handset) and connection are only available together and not available separately. Microsoft’s bundle of windows and Internet Explorer could be considered a pure bundle. Also Cable TV Channels are an example of pure bundling. In North America it is not possible to get only Disney Channel has it is always bundled with other premium Channels. In India, the prospective CAS (Conditional Access System) also similar channel packages where some of the channels can’t be purchases separately like Zee TV , would only be available with other, Zee channels.

Bundling can be good for consumers it can reduce “ search costs” as well as the producer ‘X’ distribution costs. There are lower “ transaction costs”. And the producer may be a more efficient bundler than the customer. Few of us choose, after all, to buy the individual parts of a computer to assemble them over selves.

In perfectly competitive markets, bundling should happen only if it is more efficient than selling the products separately. Where there is less than perfect competition that is, most markets-economic models suggest that bundling sometimes benefits consumers and sometimes producers. When firm have a measure of market power, they can engage in price discrimination, charging different prices to different customers, bundling can play a part in price discrimination, as different bundles of goods and prices may appeal to different customer.

Bundling of services in Telecom sector:-

There is an investing change in this sector. Which is the multiple licenses owned by a single company. India has issued separate licenses for basic, cellular, NLD, ILD,ISP, services. In view of the fact that a single operator has acquired multiple licenses and can thus offer multiple services, one of the innovations that has occurred relates to bundled offers. The ability to offer bundles, however, does not depend upon possession of multiple licenses, but allows an integrated operator to design more boundless and innovative schemes compared to a stand-alone operator. Some of the bundled offers are described below.

(1) CUG (Closed User Group):- Forming a group of customers where the colls within group are either not charged or are charged very low and the colls made outside the group are charged higher.

(2) Fuends & Family:- Unlimited free talk time to a selected number for a cost a fixed monthly charge.

(3) Free VAS (Value Added Services) :- Such as SMS,CUP Free with certain tariff plans.

(4) Unlimited usage free:- Tariffs with high monthly rental and unlimited free usage. This may attract the high collers and this type of packages also ensures a minimum ARPU ( Average Revenue Per User) to the service provides.

(5) Zero Rental:- Packages with no Zero rental and high calls charges. This type of package may attract very low users, who want to own a phone use it very rarely.

(6) Prepaid plans with no administrative charges or plan free. This ensures a fixed ARPU to service provider.

(7) Plans to lack customers for a longer period of time:-

Tariff plan for minimum commitment of 3 years. Although it provides a facility to the customer to exist the plan but at Avery high cost, which discourages the customers from exiting the plan.