How service bundling can increase the competitiveness of low market share transportation services

Konstantinos Panou, Seraphim Kapros and Amalia Polydoropoulou

Research in Transportation Economics, 2015, vol. 49, issue C, 22-35

Abstract: While transportation service providers continuously seek for new linkages to create value and to offset the risk of competition, they are compelled to restructure their business models and processes to become more integrable. A consequence of this has been a shift from the traditional focus on individual service strategies to a focus on bundle strategies. Building on bundle value is gradually becoming a key ingredient for the long-term viability of services as it fosters better allocation of resources and investment choices. This entails the assessment of the value that customers assign to bundles and the alignment of business models to match this value. To address this issue, this paper investigates the conditions under which a low share transportation service, bundled together with a ferry service and a tie-in recreational package, can compete with a faster transportation connection. By merging the conceptually rich business model research with the more rigorous bundling literature, the current paper proposes a mixed service bundling strategy as an effective way to increase market share and create customer value over time. This bundling strategy is applied in the case of an illustrative example of the connection between Patras, Kalamata and Crete and the results are reported.

Keywords: Service bundling; Price bundling; Bundling strategy; Business model; Value added services; Value of time; Transportation competition (search for similar items in EconPapers)
JEL-codes: L91 L92 M13 M15 M31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.retrec.2015.04.003

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