Product Bundling Strategy- A Practical Guide for Improved Sales
What is Product Bundling?
Product bundling in the simplest sense is a combination of products/services offered at a price lesser than what you’d pay if you bought each of them individually.
Product bundles though consisting of multiple products, act as a single entity for purchase. A product bundle will have its own unique ID and product detail page.
Product bundles can be an add-on, say, a telecom provider offering a free subscription to Netflix and Amazon Prime on buying a certain plan.
They can even be up-sells, say, earphones or a mobile protective cover for a phone you purchased. Another good example is software products.
Cloras is an integration software that helps you connect your ERP with third-party platforms like your eCommerce platform. Cloras when paired with a Product Information Management (PIM) solution like flexiPIM (helps you create, enrich, manage and distribute product information) can make the whole process of managing your back office and marketing workflows completely systematic and data-driven.
Such an approach towards bundling “essential” products together in a way that the buyers and the sellers benefit alike is called a good Product Bundling Strategy.
Is Product Bundling Effective?
Yes. If done right. The reason why product bundling is effective is the customer perception of buying products at a lower price without the hassle of searching for multiple essentials. In this very human psychology of purchasing, lies the secret to an effective product bundle.
An effective product bundling strategy is one which,
- The customers are spared the effort of searching for multiple products.
- The customers feel that the bundle is priced lower than what they’d pay if they bought the products separately.
- If the maximum number of products (if not all) in the bundle are suitable to their needs.
- If they find one or more products in the bundle that are new to them but are actually helpful. This makes you stand out as — knowledgeable.
In my opinion, if your product bundles achieve at least two of these, then they’re effective.
Is product bundling right for you?
“Bundling is pervasive in several markets, and it works in many cases,” says Vineet Kumar, Assistant Professor at Harvard Business School, in his research. The research also stated that people were drawn to bundled products if they were given a choice to also buy them individually. For example, Mc Donalds Happy meal.
Product bundling strategy works for most markets like food chains, restaurants, beauty, home decor, video games, construction, industries, and so on.
Product bundles work for companies that have a low margin on their products. If customers can sense positivity with your product bundle offering, it’s an idea that’d work for you. Offering packages to your customers works the same for companies doing great sales by encouraging a higher spend than usual.
More or less, product bundling strategy works for most businesses when done right.
Product bundling types (With examples)
Here are the types of product bundling strategies that you should consider.
- Pure bundling
These are product bundles that are available as bundles only. They cannot be purchased as individual items. This type of bundling has its pros and cons.
For example, If you are selling a set of shampoo, conditioner, and hair serum but do not offer the flexibility to buy them individually, the customers who may not need a hair serum may back off from buying it.
On the other hand, pure bundling may help in some cases where the bundled products complement each other. For example, a men’s haircut kit. The buyers will be sure that they’re getting multiple items that they need without the hassle of searching for them individually and at a lower price.
- Mixed bundling
Mixed product bundling enables customers to buy products either individually or bundled up. Mixed bundling is the most common type of bundling that most businesses use.
- Combining products of similar use
This type of bundling is usually useful when the products sell in multiples. For example, a set of water bottles, a pack of T-shirts, a pack of perishable items like food.
- Bundling a low-cost or excess quantity product with a good seller
A diary bundled with individually less selling items like a pen, bracelet, and a pencil pouch. This type of product bundling strategy not only increases sales but also clears products from the old stocks that didn’t sell.
- Upsell bundling
This type of product bundling is suitable for products that offer a base product and additional features or add ons with it. For example, TV. A basic model has a base price that the buyer can choose. The same model will have additional features like a bigger-sized screen, QLED display, Built-in Alexa and so on that are up-sell product bundling features for a basic model.
Here look at this example from Amazon. Amazon uses a “Save and Upgrade with a similar product” option which gives both a less and a more expensive model. This gives a direct comparison of features to the buyers leading them to make better product decisions, thereby upselling a product.
SAAS products like flexiPIM have a basic plan for people who are just exploring the need for PIM with their B2B business and a premium plan and enterprise plan for Small to medium businesses and brands.
- Cross-sell bundling
Cross-sell bundling encourages the buyers to buy products related to the one they’re buying.
For example, when a customer buys a phone online, they have recommendations to buy accessories like a screen protector and a phone case.
They feel that they’re being given good advice to use their main purchase item (phone in this case) in a more efficient way by buying the accessories. This is a type of product bundling strategy that benefits you and your customers alike.
- Occasional bundling
This type of product bundling strategy can be either mixed or pure type. These product bundles are the ones that are available at a festival or a celebration.
ArtNaturals offers valentines’ day premium essential oil kits. These occasional bundles have customer emotion attached to their buying decisions. Such Product bundles give a greater return in a limited time. Other examples could be limited period offers Black Friday sale, festive offers, Holiday season sale, and so on.
Read more
- Pros and Cons of Product Bundling Strategy
- The buyers’ pros
- The ease of buying
- Asking for a cost breakup - The sellers’ pros
- Frictionless buying process
- Clear excess inventory
- Get recommendations
- Increase in sales and revenue
2. Best practices for Product Bundling Strategy
2.1 Offer flexibility to the customers
2.2 Make your bundles meaningful to the customers
2.3 Not offering bundles at all is not the solution
2.4 Study customer behavior
2.5 Offer custom bundling
3. Conclusion
The detailed article was originally published in flexiPIM. Click here to read it in just one click.
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