Product-Service Bundles

The business concept of bundling products and services is far more than just adding a service to a product. It deals with a new market concept, where the bundle attracts customers who wouldn’t buy the product without bundle. A well known example is market development the mobile phone.

A mobile phone as such was considered (and still is) as too expensive. The problem was (and still is) that the costs are higher than the perceived value. So one may conclude that there is no market for mobile phones.
However the service of a telecom company (connecting people at any moment they want) has a high perceived value (say. 0,40 € per minute) in combination with low costs (say. 0,10 € per minute).
The marketing trick in such a case is to combine the product and the service in one bundle. See Fig, 3,3.

Figure 3.3. Case: the value/costs bundle of the introduction period of mobile phones

Note: Even now, in a mature market of mobile phone services, it appears hardly possible to stop with the marketing concept of the bundle (some providers tried tried): only very few people are aware of the financial consequences of the bundle



and rather buy the product and the service separately (which is cheaper). The negative result for the environment is that people throw away their old mobile phone (before they otherwise would have done it) each time they enter a new lease contract (say every two years).