"Intertemporal
Mixed Bundling and the Summer Rock Concert Industry"
Rafi
A. Mohammed, Cambridge Strategy & Economics
eBusiness
Research Seminars
NE20-336 (3 Cambridge Center)
Wednesday, April 16, 11:30 PM-1:00 PM
Refreshments Provided
Abstract
This
seminar is on mixed bundling and is divided into theoretical and
empirical sections. The theoretical section proposes a new mixed
bundling model. Traditional mixed bundling theory posits that
the price of a bundle is less than the sum of the individual component
prices (e.g., McDonald's Value Meal) and the bundle is targeted
toward lower value consumers. In contrast, this paper proposes
a theoretical model where: (1) the bundle price is greater than
the sum of the individual component prices, (2) the bundle is
targeted toward higher value consumers, (3) buying frenzies may
result from this strategy, (4) the strategy induces uncertainty
in a market not previously characterized by uncertainty, and (5)
the concept of intertemporal mixed bundling is introduced to the
literature.
While
economists and marketers have been discussing the merits of bundling
for over half a century, there is very little evidence on the
profitability of bundling. This paper presents one of the first
empirical tests of bundling to the literature. Data from the summer
rock concert market is used to test the effects of bundling. One
interesting note is that several popular rock music acts have
benefited from this research.
Rafi
Mohammed holds economics degrees from Boston University, the London
School of Economics and Political Science, and Cornell University
(Ph.D.). His past experience includes starting a media consulting
practice in Los Angeles and most recently, being a thought leader
at Monitor Group. He is the lead author of an Internet marketing
textbook titled Internet Marketing: Building Advantage in a Networked
Economy (McGraw-Hill, second edition 4/18/03). Rafi is currently
an economic consultant and is writing a trade book on pricing/bundling
topics.
Calendar
for Spring 2003 Research seminars
