Bundling Strategy in the IDM Marketplace

Abstract

In recent years, many local telecommunication firms are selling their interactive digital media (IDM) services such as broadband and Pay Television in the form of a bundle to their customers. On the other hand, many IDM firms (e.g. Apple iTunes) have chosen to sell their IDM services to customers in an unbundled manner. This chapter studies the effect of bundling and unbundling of any type of information goods which can be digitized. We will discuss the four factors which encourage IDM firms to choose either bundling or unbundling strategy in their marketing of digital goods. The four factors are customer, environmental, firm, and product. This chapter concludes by emphasising that bundling or unbundling might not be necessarily good or bad. The choice boils down to the market segment – the value that customers perceive from the products. It is also important to take into account the overall marketing strategy that the firm is embarking on and to also consider the market situation at the point in time.