The role of service bundling in creating viable eServices




June 5, 2006
16:00 - 17:30
Hotel Golf - Jupiter Hall 1

Chair:
Timber Haaker, Researcher
TelematicaI Instituut, The Netherlands
Panelists:
Claas Müller-Lankenau, Research Associate
Department of Information Systems, University of Münster, Germany

Ziv Baida, Researcher
Faculty of Economics and Business Administration, Free University Amsterdam, The Netherlands
Henny de Vos, Researcher
Telematica Institute, The Netherlands

Topic and issues
Bundling is the strategy of marketing two or more products and/or services as a package at a special price (Venkatesh & Mahajan, 1993). Bundling is a well-known practice in today’s e-markets. Consider for example bundling of mobile services with 'an almost for free' handset, or the ‘triple play’ bundle that provides telephony, Internet access and television, often on a single bill.

The value creating logic behind bundling may be different for different cases, e.g. depending on whether a commercial or not for profit service is considered. Bundling may be demand driven, e.g. when a provider aims at creating a bundle of services that responds and adapts to context dependent demands of a user. Or bundling may be intended to drive revenues, to create customer lock-in, to achieve economies of scale and scope, or to create entry barriers. Service bundles are typically offered by a number of organizations collaborating in a value network. The underlying business model that, among others, determines the way revenues are shared is crucial.

There are even more options for bundling mobile services, since these can be delivered via different networks on a number of alternative devices in varying situations and for varying prices. Therefore any final decision about adoption and use of mobile service bundles has to take characteristics of devices, networks, service bundles and price-levels into account, as well as the context and characteristics of users. Typical bundle characteristics are bundle composition, bundle focus, bundle price and bundling strategy (pure bundling versus mixed bundling).

Notwithstanding the wide application of bundling strategies still little is known about what constitutes a successful bundle. Clear guidelines neither for the design of service bundles, nor for the underlying business models are available.
This panel addresses the role of service bundling in creating viable e-services. Important issues regarding e-service bundles are:
  • What are generic design rules for creating viable e-service bundles regarding bundle composition, focus, price and strategy?
  • How can demand and supply be matched with service bundles?
  • How can service bundling provide new revenue streams for mobile services, e.g. from mobile advertising?