Country/Service Bundling in International Tourism: Criteria for the Selection of an Efficient Bundle Mix and Allocation of Joint Revenues

This paper addresses key aspects of commodity bundling decisions in business enterprises both in general and as they relate to the International Tourism industry in particular. The considerable importance and complexity of bundle mix and bundle pricing decisions on the transportation, sightseeing, and resort level of Tourism are discussed. The authors develop the basic theoretical structure and framework underlying bundling decisions and define key elements of required decision information. The complexity of the determination of optimal bundling mixes in a multiservice environment is demonstrated, and an algorithm which greatly facilitates such determination under certain assumptions is outlined and discussed. Finally, the problem of allocating joint bundle profits among associated profit or cost centers is reviewed in detail. A number of alternative allocation criteria based on commonly acceptable notions of bargaining power and fairness are proposed. Their relevance and applicability to international tourism and tourist enterprises are discussed.© 1979 JIBS. Journal of International Business Studies (1979) 10, 37–50

Stochastic Models of a Price Promotion

Stochastic models of a commonly used consumer marketing tool--a price off or price promotion--are developed. Two cases are considered: first, when the duration of the promotion is unknown to customers, and second, when it is known. The optimal duration is derived in both cases as a function of the probability of purchasers of competitive brands switching to the promoted brand, the increased quantity purchased due to the "bargain" and the possible increase in the consumption rate as a consequence. A numerical illustration and a discussion of promotion desirability at different times is presented. Finally, a procedure for estimating model parameters and testing model assumptions is discussed.

Optimal Resource Allocation Between Spot and Package Demands

This paper deals with the problem of allocating fixed resources between two types of demands; (a) spot demand; and (b) package (subscription) demand---demand that is satisfied by selling usage rights over a prespecified time period prior to actual consumption. In Model 1, a probabilistic spot demand for a single resource, stationary over time, is assumed together with externally determined spot and package pricing. It is shown that the optimal (profit maximizing) policy is to sell all the packages in the first period and the optimal number of packages to offer is derived. Model 1 is extended to the case when the package offers rights to any one of a number M of resources at a given time; similar conclusions are obtained. In Model 2, package price is considered to be a decision variable. It is shown that the optimal price should be monotonically nondecreasing over time, implying that the number of packages offered for sale each period will not increase over time. Finally, managerial uses of the proposed models for entertainment, leisure and tourist services are reviewed.marketing, marketing: pricing