One prevalent approach to increase both retailer and manufacturer revenues are to improve the attractiveness of a product offering by bundling related product categories together for one price. To be most effective, bundled products should be developed with an integrated design approach that seeks to achieve utility for the end customer. We propose a bundled product design approach that endogenizes demand dependencies between the product categories and thus determines the impact of the bundle and cross-category competition on proposed engineering designs. Additionally, the approach simultaneously considers uncertainty in engineering design, competing manufacturer product attributes, and customer preferences to ensure acceptable product profitability and market share under interval uncertainty. We find after optimizing manufacturer profit and market share that considering demand dependencies can lead to optimal bundle and individual product designs that increase profits for both retailer and manufacturer.
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e-mail: nawillia@umd.edu
e-mail: azarm@umd.edu
e-mail: pkannan@rhsmith.umd.edu
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March 2010
Research Papers
Multicategory Design of Bundled Products for Retail Channels Under Uncertainty and Competition
N. A. Williams,
N. A. Williams
A. J. Clark School of Engineering,
e-mail: nawillia@umd.edu
University of Maryland
, College Park, MD 20742
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S. Azarm,
S. Azarm
A. J. Clark School of Engineering,
e-mail: azarm@umd.edu
University of Maryland
, College Park, MD 20742
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P. K. Kannan
P. K. Kannan
R. H. Smith School of Business,
e-mail: pkannan@rhsmith.umd.edu
University of Maryland
, College Park, MD 20742
Search for other works by this author on:
N. A. Williams
A. J. Clark School of Engineering,
University of Maryland
, College Park, MD 20742e-mail: nawillia@umd.edu
S. Azarm
A. J. Clark School of Engineering,
University of Maryland
, College Park, MD 20742e-mail: azarm@umd.edu
P. K. Kannan
R. H. Smith School of Business,
University of Maryland
, College Park, MD 20742e-mail: pkannan@rhsmith.umd.edu
J. Mech. Des. Mar 2010, 132(3): 031003 (10 pages)
Published Online: March 16, 2010
Article history
Received:
January 19, 2008
Revised:
December 16, 2009
Online:
March 16, 2010
Published:
March 16, 2010
Citation
Williams, N. A., Azarm, S., and Kannan, P. K. (March 16, 2010). "Multicategory Design of Bundled Products for Retail Channels Under Uncertainty and Competition." ASME. J. Mech. Des. March 2010; 132(3): 031003. https://doi.org/10.1115/1.4001000
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