Pricing Strategy Of Product Bundling In Monopoly And Competitive Environment

With the rapid development of economy and a wide range of goods, market competition becomes fierce. Enterprises and businessmen take a variety of marketing tools to promote sales in order to maintain a competitive position, among them, bundling is widely adopted in business marketing strategy as an effective marketing means.For enterprises, bundling can be seen as similar to quantity discounts, generally speaking bundling’s success depends on reasonable strategies tied to "1+l>2" to achieve the coordination and mutual promotion of the two commodities, ultimately maximize the profit of the enterprise. For the consumer, proper bundling reduces the search costs of consumers, besides, consumers can save the economic costs and obtain greater value through the purchasing of bundled products.Marketing and economics literature studied many aspects of bundling, mainly including benefits of bundling as a tool for price discrimination, a cost saving mechanism, a means of entry deterrence and so on. This paper firstly introduces the relevant information of bundling and reviews the current research status related to product bundling of domestic and foreign scholars. Then we examine the bundling strategy of two products by using the method of utility, including pure bundling strategy and mixed bundling strategy. We also discuss the pricing strategy of mixed bundling strategy under monopoly situation and game strategy in competition condition. The results indicate that: under the monopoly environment, the optimal price of pure bundling strategy is less than the sum of the optimal price of the no bundling strategy, and the implementation of mixed bundling strategy makes the product increasing, besides, the influence degree of the marginal cost on this three strategies is different; under the competitive environment,the optimum bundling strategy exists, and there is a market entry barriers and the retailer could enter the market with a competitive advantage only when it meet the entry conditions; Enterprise could avoid the formation of the competitive environment by market foreclosure such as price adjustment mechanism or profit distribution system; The influence of the marginal cost on sales strategy of monopoly environment is larger than the effect on the equilibrium of the competitive environment.