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Pricing problem in wireless telecommunication product and service bundling

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  • Yang, Bibo
  • Ng, C.T.

Abstract

This paper investigates a mixed bundling problem in the wireless telecommunication business. Customers can buy cellular phones at a discount price if they subscribe to a service plan with the price above a threshold. We have proposed using nonlinear mixed-integer programming to determine the optimal price to maximize the total profit of the service providers. An efficient algorithm has been presented to solve this problem when discrete demand data is available. We have compared the profits from three strategies: individual sale, mixed bundle and pure bundle. Our analysis suggests the condition under which the mixed bundle strategy outperforms other strategies. We have also studied the impact of parameters on the solution. The results of the analysis may help the service providers adjust their pricing schemes according to changes in the market. In the case of incomplete information (only the distribution of the demand is known), we apply another research approach (partition graph) to determine the optimal bundle price.

Suggested Citation

  • Yang, Bibo & Ng, C.T., 2010. "Pricing problem in wireless telecommunication product and service bundling," European Journal of Operational Research, Elsevier, vol. 207(1), pages 473-480, November.
    • Handle: RePEc:eee:ejores:v:207:y:2010:i:1:p:473-480
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    2. Urueña López, Alberto & Gijón, Covadonga & Castro García-Muñoz, Raquel & Ureña Fernández, Olga & Feijóo, Claudio, 2015. "The drivers of the substitution of individual services for bundled services: The case of Spain," 26th European Regional ITS Conference, Madrid 2015 127187, International Telecommunications Society (ITS).
    3. Sobolewski, Maciej & Kopczewski, Tomasz, 2017. "Estimating demand for fixed-line telecommunication bundles," Telecommunications Policy, Elsevier, vol. 41(4), pages 227-241.
    4. Li, Jianbin & Liu, Lang & Luo, Xiaomeng & Zhu, Stuart X., 2023. "Interactive bundle pricing strategy for online pharmacies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    5. Mihaela STEFAN & Andreea MARIN-PANTELESCU & Mirela TÃœRKES, 2018. "Strategic Management Of The Romanian Telecommunication Services," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 451-461, November.
    6. Cataldo, Alejandro & Ferrer, Juan–Carlos, 2017. "Optimal pricing and composition of multiple bundles: A two-step approach," European Journal of Operational Research, Elsevier, vol. 259(2), pages 766-777.
    7. Haiyan Shan & Chen Zhang & Guo Wei, 2020. "Bundling or Unbundling? Pricing Strategy for Complementary Products in a Green Supply Chain," Sustainability, MDPI, vol. 12(4), pages 1-25, February.
    8. Marjan Izadpanah & Ali Vaezi, 2023. "A Bundle Pricing Approach for Mobile Telecommunication Services: Method and Data Analysis," Journal of Emerging Trends in Marketing and Management, The Bucharest University of Economic Studies, vol. 1(3), pages 7-25, September.
    9. Harrison, Rodrigo & Hernandez, Gonzalo & Muñoz, Roberto, 2019. "A discrete model of market interaction in the presence of social networks and price discrimination," Mathematical Social Sciences, Elsevier, vol. 102(C), pages 48-58.
    10. Chen, Yi-Ting & Sun, Edward W. & Lin, Yi-Bing, 2020. "Merging anomalous data usage in wireless mobile telecommunications: Business analytics with a strategy-focused data-driven approach for sustainability," European Journal of Operational Research, Elsevier, vol. 281(3), pages 687-705.
    11. Wu, Xiangxiang & Zha, Yong & Ling, Liuyi & Yu, Yugang, 2022. "Competing OEMs’ responses to a developer's services installation and strategic update of platform quality," European Journal of Operational Research, Elsevier, vol. 297(2), pages 545-559.

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