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Optimal Bundling pp 7–28Cite as

Bundling — A Powerful Method to Better Exploit Profit Potential

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Abstract

Most firms are multi-product companies faced with the decision whether to sell products (goods and/or services) separately at individually determined prices or whether combinations of products should be marketed in the form of “bundles” for which a “bundle price” is asked. Bundling plays an increasingly important role in many industries and some companies even build their business strategies on bundling. A renowned case is Microsoft. By smartly combining its application software into the “Office” bundle, Microsoft extended the quasi-monopoly of Word to Excel, Access and PowerPoint. Microsoft increased the market share of PowerPoint and Access when it bundled these two less attractive components with the attractive components Excel and Winword. The so-called “Office” bundle and its software components represent the standard in the application software market and have a share over 80 percent (see Wuebker, 1998, 189). In a similar way, Microsoft is trying to monopolize the Web-browser market. In mid-1996, its Web-browser Internet Explorer had a market share of 7 percent, while Netscape’s Navigator had a quasi-monopoly (over 80 percent market share). By bundling the Explorer with its operating system Windows, Microsoft’s share rose to 38 percent and Netscape’s lead in the browser market dropped to 58 percent by early 1997. Many software experts believe that Microsoft will soon get the leadership in the Web-browser market.

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Author information

Authors and Affiliations

  1. Simon, Kucher & Partners, Bonn, Germany

    Hermann Simon & Georg Wuebker

  2. Simon, Kucher & Partners, Cambridge, Massachusetts, USA

    Hermann Simon

Authors
  1. Hermann Simon
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  2. Georg Wuebker
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Editor information

Editors and Affiliations

  1. International Technical Development Center, Adam Opel AG, 65428, Ruesselsheim, Germany

    Ralph Fuerderer

  2. School of Business Administration, University of Mainz, 55099, Mainz, Germany

    Andreas Herrmann

  3. Simon, Kucher & Partners, Haydnstraße 36, 53115, Bonn, Germany

    Georg Wuebker

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© 1999 Springer-Verlag Berlin Heidelberg

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Simon, H., Wuebker, G. (1999). Bundling — A Powerful Method to Better Exploit Profit Potential. In: Fuerderer, R., Herrmann, A., Wuebker, G. (eds) Optimal Bundling. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-09119-7_2

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  • DOI: https://doi.org/10.1007/978-3-662-09119-7_2

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-08459-1

  • Online ISBN: 978-3-662-09119-7

  • eBook Packages: Springer Book Archive

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