MULTI-FEATURED PRODUCTS AND SERVICES - ANALYZING PRICING AND BUNDLINGSTRATEGIES

Many consumer choice situations involve the selection of optional item s or features from a menu. Often, in these situations, predesigned bun dles or packages of items are also offered. We present an analytical a pproach to these menu situations which takes into account the large nu mber of alternatives they represent, the interrelated nature of demand for the individual items, and the impact of bundling of items. The em phasis of our data-collection approach is on providing a realistic cho ice setting which represents all possible alternatives. In our modelli ng approach, we employ discrete choice modelling techniques which expl icitly capture the full range of these alternatives. We present the re sults of an empirical study of enhanced custom-calling features for re sidential telephone service. Using this approach, we developed well-be haved choice models that were used to predict demand and revenues for the features under a wide range of marketing scenarios. (C) 1998 John Wiley & Sons, Ltd.