BUS 675 Winter 2014 Midterm 1. What is product-service bundling and what are the benefits to customers? Site some examples

Product-service bundling refers to a companies building service activities into its product offerings for its consumers (pg.9) A well-known pioneer in this area is IBM, which is a service business but views its physical goods business as just a small part. Cable/Satellite companies are now those in the Product service bundling business – as they try to build offering that support three main services, TV, Internet and Phone. Due to convenience and pricing tiers customers can save on monthly rates all by contracting with one company and calling one number when needed. The major player that has taken Product service bundling to new levels is Apple. Apple is famous for its major products – Mac’s, IPhones, IPod’s, but has redefined his product-service business in the arena of the Genius Bar and Apple Care. Its been a huge success for its customers and its profits margins as consumers consider physical goods knowing the services are bundled in.

2. Some people tend to use the terms effectiveness and efficiency interchangeably, though we’ve seen they are different concepts. But is there any relationship at all between them? Can a firm be effective but inefficient? Very efficient but essentially ineffective? Both? Neither? Pg 14

Efficiency: Doing something at the lowest possible cost.
Effectiveness: Doing the things that will create the most value for the customer.
Value: The attractiveness of a product relative to its price.

It is possible for a firm to be very effective at what they do in serving their market, but be very wasteful (poor efficiency) in doing so. Alternatively, a firm could operate efficient but fail to effectively deliver a product or service that the market expects and desires. High preforming firms