10 Ways Retailers Can Leverage Bundling Of Products To Drive Sales

As you know, bundling is a competitive pricing tactic where merchants group products or services together as a package deal to create a new price point. (Examples of bundling include McDonald's value meals; new cars whose sticker price already includes sunroof, GPS, and other extras; bundled computer packages that come complete with monitor, mouse, keyboard, and preloaded software for a single price; or the bundling of shampoo, conditioner, hand lotion, and anti-wrinkle formula in one package).

Advantages of bundling include cost efficiency, market opportunities to enhance profits, and more competitive pricing. Bundling might also encourage customers to look to one single source for several solutions.

Advantages to customer of bundling:

Bundling allows consumers to benefit from a single, value-oriented purchase of complementary offerings. There’s less confusion with studying (and ordering) several different products at the same time. The consumer can recognize cost savings of as much as 7 to 15 percent over the cost of purchasing the items separately; and the customer might enjoy additional discounts if they purchase larger volumes or more items from a single supplier. Some consumers dislike bundling of the type of services like phone, music, and subscriptions, where they are required to order or receive a minimum that they won’t use to the fullest.

Here Are 10 Bundling Techniques And Advantages:

1. Pure bundling. Where you offer a group of products that are only available as a bundle and aren't sold separately.

2. Mixed bundling. Where you offer products that are sold both as bundles and as individual units.

3. Cross industry bundling. Where you offer products from more than one company that complement each other. Product bundling may also incorporate products from multiple producers.

4. Premium bundling. Pursue strategies in which the bundled price is actually higher than the total of the included products.

5. New- or lesser-product bundle. If you bundle a successful product with a newer or less successful product; the stronger product will help the other product find its way into a new market.

6. Bundling increases speed. You can prepare and send out a package of bundled products quicker than preparing a bunch of separate items and sending them out after gathering them.

7. Bundling increases efficiency. When putting together the bundled merchandise, your employees can focus on one trip down the warehouse aisle to get the bundled package, as opposed to gathering individual products, one at a time.

8. Bundling at a lower price point is an advertising opportunity.  Lower price point is a great opportunity to advertise this fact; in your outreach, you may also touch potential customers who are focused solely on price.

9. Bundling leads to extra sales. With bundling, customers order and purchase products they might not otherwise have considered or purchased.

10. Bundling is a competitive tactic. Product bundling not only can lead to more customers and sales for you; it also makes it difficult for your competitors to track what you are doing and compare to your prices.

Takeaway For Retailers:

If you're not already doing so, consider bundling.  If the product combination is right, the decision to bundle can produce the following results: 1) Increase unit sales volume; 2). Increase margins; 3). Offer new channel and cross-industry opportunities; and 4) Offer exposure to new potential customers.

Bundling makes it more difficult for your competitors to gather pricing intelligence on your company and your products. Remember to use your own competitive pricing intelligence tools to help you be aware of their prices and information 24/7. Don't cannibalize your own more profitable sales, resulting in lower contribution margins and potential channel conflict. Be selective in what and how you market, but, with the right bundle, you and the customer can both win.

Note: Some of the material for this blog post was gathered from The Reference For Business, "Who Benefits From Bundling" by Bjorn Meissling, PhD; and "The importance of Product Bundling" from Brighter Mind Publishing.  

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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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