Sunday, May 12, 2013
Bundling x | How does mixed bundling differ from pure bundling? Under what conditions is mixed bundling preferable to pure bundling? Why do many restaurants practice mixed bundling (by offering a complete dinner as well as an à la carte menu) instead of pure bundling?
How does mixed bundling differ from pure bundling?
Under what conditions is mixed bundling preferable to pure bundling?
Why do many restaurants practice mixed bundling (by offering a complete dinner as well as an à la carte menu) instead of pure bundling?
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Pure bundling means selling products only as a package. On the other hand, mixed bundling means selling two or more goods both as a package and individually.
ReplyDeleteMixed bundling is preferable to pure bundling when demands are only somewhat negatively correlated and/or when marginal costs are significant.
Many restaurants practice mixed bundling to capture as much consumer surplus as possible from the various customers. The à la carte menu can capture the consumer surplus from consumers who value some dishes much more highly than others. Simultaneously, the complete dinner retains those customers who have lower variations in their reservation prices for different dishes.
Pure bundling involves selling products only as a package. Mixed bundling allows the consumer to purchase the products either separately or together. Mixed bundling yields higher profits than pure bundling when demands for the individual products do not have a strong negative correlation, marginal costs are high, or both. Restaurants can maximize profits with mixed bundling by offering both à la carte and full dinners by charging higher prices for individual items to capture the consumers’ willingness to pay and lower prices for full dinners to induce customers with lower reservation prices to purchase more dinners.
ReplyDeletepure bundling : sell a product with a full package
ReplyDeletemix bundling : selling product with mix thing or packed or more goods.
in a restaurant like Mcd and KFC they are using mix bundling because not all the consumers want to eat rice with chicken and soda, maybe they want only eat a chicken, thats the market not all people eat from appetizer, main course, and dessert.
but for a restaurant like hanamasa or paregu they selling a pure bundling meal, ut of course pricey because the consumer get all you can eat, in this market of mix bundling, the consumer must prepare their stomach to eat because it will be charge if they dont eat very well.
GUIDELINE ANSWER:
ReplyDeletePure bundling involves selling products only as a package. Mixed bundling is selling the products both together and separately. Mixed bundling may yield higher profits when demands for the individual products do not have a strong negative correlation, marginal costs are high, or both. Restaurants can maximize profits by offering both à la carte menus and full dinners. By charging higher prices for individual items, restaurants capture consumer surplus from diners who value some dishes much more highly than others, while charging less for a bundled complete dinner allows them to capture consumer surplus from diners who attach moderate values to all dishes.