3.4 Bundling Marks and Spencer is marketing a new outfit consisting of a skirt a

Question

3.4 Bundling Marks and Spencer is marketing a new outfit consisting of a skirt and a shirt. They are deciding whether or not to bundle them together. What should they do? In the table below are the two potential customers. Assume they both items cost Marks and Spencer £20 to purchase. They must charge eoveryoue the saine prie anud they want to masinie prolit. Skirt Shirt Valentina 5030 Alison£40 £35 (i) What would they charge for each item separately? (ii) What would they charge if they decided to bundle a shirt and skirt together?

Explanation / Answer

Bundling is a marketing strategy in which producers sell their products combined as a single product that is make bundles of products and sell them as a combined single product. It is mainly beneficial to the customers as they are able to purchase products together from one producer or seller at a relatively cheaper price.

i. In above question, there are two producers Marks and Spencer produces skirt and shirt and two customers Valentina and Alson who buys these products. Producers decide whether to bundle them together or not , the cost of both items to marks and spencer is 20 pound.

Without bundling them together, producers charges for 50 pound of skirt from valentina and 40 pound from alson and for 30 pound of shirt from valentina and 35 pound from alson.

ii. With bundling shirt and skirt together producers can either charge pound 80 or pound 75. However, bundling scheme is customer-friendly that is together they charge relatively lower prices.Hence, they charge a bundle of skirt and shirt together at pound 75 from both customers valentina and alson.

Therefore, bundling together will give producers pound 150 from both customers while seperately charges for each item will give them pound 90 for skirt and 65 for shirt that is pound 155.

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