Losing A Bundle

What are some other bundled products?

Yesterday I discussed how part of Apple’s success comes from the iTunes Store, where they unbundled the individual songs on an album. You can still purchase an album, but now you don’t have to. With individual songs costing 99 cents, piracy is less of an issue: most people feel they can afford the price.

Bundled products load unneeded products in with desired ones, simplifying the marketing and enabling the seller to earn a wider margin. But if the same goods or services can be delivered in an unbundled manner, they can be sold more efficiently. So what are some bundled products that we see?

You don’t have to look far—just think about the most inefficient services we receive. Health care and education are two services that bundle their products together, costing consumers more than they need to. With college, for example, you see fancy dorms, upscale food, and plush gym facilities tied together with core educational services. At many universities and colleges, tuition has risen dramatically even as country-club facilities have expanded.

But without shareholders and a bottom line, it’s up to states or alumni to hold schools accountable for wasteful spending. Ohio State has several golf courses and a private airstrip. Why would a public university need those, not to mention a climbing wall that can accommodate 10 students at a time?

But the market may have reached a tipping point. Tuition and debt are unsustainable for many, and no one wants to see their money wasted. If the core educational mission can be unbundled from other activities, college could cost a lot less.

By |2012-05-17T05:51:28+00:00May 17th, 2012|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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