The travel agencies recommend customers to purchase travel packages rather than a single component of travel. And thus, consumers choose their preferred travel package, and this makes it more easier to save the travel budget. Price bundling, which off...
The travel agencies recommend customers to purchase travel packages rather than a single component of travel. And thus, consumers choose their preferred travel package, and this makes it more easier to save the travel budget. Price bundling, which offers two or more separate products or services together in a single package at a different price form the sum of the components` prices, is one of the most prevalent marketing practice in tourism industry. This paper addresses key aspects of monopoly firm`s commodity bundling decisions which relate to the tourism industry in particular. We examine the effects of bundling on a travel agency`s optimal prices and profits under heterogeneous customer preferences.