Planning bundling and marketing efforts for a digital distribution platform
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Date
2023
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Thesis (M.S.) - Bogazici University. Institute for Graduate Studies in Science and Engineering, 2023.
Abstract
The literature on supply chain coordination is extensive, and there are numerous methods for coordinating these systems. There may be various types of associated costs in these systems related to production, quality, or sales effort, and various approaches and extensions may be integrated to such systems. Product bundling is one of the common practices that supply chain members can use to expand the market. Our study combines supply chain coordination and product bundling by incorporating marketing effort. While application developers (ADs) decide on price and marketing effort, the distribution platform (DP) decides whether to bundle developers’ products and the commission rate he will charge them. This thesis adds to the literature on optimal platform bundling strategy when producers have the option to increase demand with marketing efforts. When the distribution platform implements the bundling approach, how application developers set their prices when the distribution platform offers a bundle option, and the effects of bundling on supply chain members are just a few of the questions we try to address. As a result of this study, it is shown that DP’s optimal strategy on product bundling is dependent on the price ADs would announce. Secondly, ADs optimal pricing decisions may depend on the presence of bundling option provided to DP when there is a constraint on commission rate. Thirdly, it is shown that while the existence of the bundling option always benefits the distribution platform, it might benefit or harm application developers depending on the model settings. We also find that the total supply chain revenue is higher in the centralized supply chain compared to the decentralized supply chain. NOTE Keywords : Supply chain coordination, Product bundling, Pricing, Marketing.