Frequently it is advantageous to businesses to offer a group of produc

Question

Frequently it is advantageous to businesses to offer a group of products or services as a package, or "bundle." Bundles of existing products act like new products in the marketplace but typically are less expensive and risky to create and require less time to introduce. Aggregation bundling is a market-expanding strategy that involves creating a bundle that will appeal to numerous customer segments, albeit for different reasons; the goal is to reach a large market and reduce complexity by marketing fewer separate products.  For example, a credit card may include a wide variety of services, such as car rental insurance and a purchase protection plan. Even though it is unlikely that large numbers of subscribers are interested in all the available services, they all use the same card.

Loyalty bundling is another such strategy, where the goal is to expand sales by reducing a customer's incentive to sample and perhaps switch to a competitor's product. For example, a cereal company sometimes offers "variety packs," each with several different brands of that company's cereal. But whatever the bundling strategy, manufacturers must be careful to offer bundles whose value is perceived as greater than the sum of the individual components, to avoid the impression that portions of the bundle are wasteful. Additionally, manufacturers often benefit from continuing to offer specialized products separately (at a relatively higher price) to attract certain customers.   1  1. The author mentions the example of a credit card that offers a large variety of services (see highlighted text) most probably in order to

(A) illustrate the point that bundling strategies can be applied to customer services as well as to tangible consumer products
(B) underscore the point that customers can become confused when presented with too great an array of services
(C) strengthen the argument that offering customers variety discourages them from sampling among competing products
(D) question the assertion that aggregation bundling is always an effective market-expanding strategy
(E) illustrate how the bundling of products or services enlarges the potential market for the bundle by appealing to numerous customer segments

2 
 2. The primary purpose of the passage as a whole is to

(A) explain how bundling shortens product introduction time
(B) examine the strategy of loyalty bundling in a particular industry
(C) consider how bundling is used to enhance product sales
(D) contrast bundles of existing products with new products
(E) compare the effectiveness of two different types of bundling strategies

3 
 3. The author of the passage implies that which of the following is true of bundling as a market-expanding strategy?

(A) The bundling of services may be counterproductive when it appears unlikely that a large number of customers will be interested in all the services offered.
(B) Bundling is likely to give customers the impression that portions of the bundle are wasteful, and this can result in disappointing sales.
(C) Bundles of services are typically more difficult to market successfully than are bundles of products.
(D) Bundling can be useful as a "last resort" strategy to dispose of products that have not sold well separately.
(E) The marketing advantages of bundling are not undercut when a company continues to offer some of the bundled products separately.

sayan640 · Answer

KarishmaB   MartyMurray

3. The author of the passage implies that which of the following is true of bundling as a market-expanding strategy?

(A) The bundling of services may be counterproductive when it appears unlikely that a large number of customers will be interested in all the services offered.
(B) Bundling is likely to give customers the impression that portions of the bundle are wasteful, and this can result in disappointing sales.
(C) Bundles of services are typically more difficult to market successfully than are bundles of products.
(D) Bundling can be useful as a "last resort" strategy to dispose of products that have not sold well separately.
(E) The marketing advantages of bundling are not undercut when a company continues to offer some of the bundled products separately.

I was confused between B and E.
I rejected B becuase of this part -  this can result in disappointing sales. . Even though the passage mentions that the bundling can give customers the impression that portions of the bundle are wasteful , nowhere did it mention about its effect on sales volume.

hence I chose E.

APram · Answer

in Question 3, E is correct answer as the passage gives additional support for this in last line of the passage.

Wangcincay · Answer

for question 3 where did it says the product is a part of the bundle? It says specialized product.

guddo · Answer

3. The author of the passage implies that which of the following is true of bundling as a market-expanding strategy?

The passage says bundling can expand a market by appealing to many customer segments, even if different customers value different parts of the bundle. It also says manufacturers often benefit from continuing to sell specialized products separately at a higher price.  So separate sales do not necessarily weaken the bundling strategy ; they can  add another source of value .

(A) The bundling of services may be counterproductive when it appears unlikely that a large number of customers will be interested in all the services offered.

Wrong. The credit-card example says many customers may not want all services, but the bundle can still work.

(B) Bundling is likely to give customers the impression that portions of the bundle are wasteful, and this can result in disappointing sales.

Wrong. The passage warns manufacturers to avoid that impression, but it does not say this is likely.

(C) Bundles of services are typically more difficult to market successfully than are bundles of products.

Wrong. The passage does not compare service bundles with product bundles in this way.

(D) Bundling can be useful as a "last resort" strategy to dispose of products that have not sold well separately.

Wrong. The passage presents bundling as a market-expanding strategy, not as a way to dump unwanted products.

(E) The marketing advantages of bundling are not undercut when a company continues to offer some of the bundled products separately.

Correct. The passage says manufacturers often benefit from continuing to offer specialized products separately, at a relatively higher price, to attract certain customers. So separate offerings can coexist with bundling.

Answer: (E)

Frequently it is advantageous to businesses to offer a group of produc

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Frequently it is advantageous to businesses to offer a group of produc

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615 to 715 in 15 Days (Ria's Strategies)

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