Question

Qualitative – Andy is the marketing manager for Global Auto. Historically, Global has sold cars as a "core good" - that is, a piece of metal, rubber, and glass that you drive. He is interested in the idea of "product-service" bundling for his firm. Give two examples of how you might provide such a bundle.

Answer 1

Andy can bundle product and services for Global Auto in some following ways:

1. The core product, i.e., a car with car insurance:

We can bundle the core product and service together by bundling a car with car insurance.

It would increase the overall sale of car insurance as the company is ready to provide a bundle to the customers. On the other hand, we can look at it in another way also- it will be economical for the company.

The company can come into contact with any insurance policy at a cheaper rate if we are getting more demand for insurance along with our product.

Moreover, it would attract the customers too if we will provide the bundle of car and insurance at a rate lesser than the rate of individual product and service, as we are also getting economical advantage because of this.

2. The core product, i.e., a car with ca ar subscription service:

It is a service for customers of a company under which instead of leasing, car is provided to the customers without any down payment for a fixed time period, but they are charged a fixed amount for that period of subscription. It comes with giving more flexibility to change the car if you get bored in the meantime. We can also Include maintenance expenses in this.

This service, when taken individually, costs customers a very big amount.

On the other hand, if we bundle it with the car, it will be economical for us because we would be able to come into a contract with the respective organization for a larger contract to purchase such services in bulk and we would be able to provide it to customers at a cheaper rate. It would attract more customers.

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