What is Product Bundling?
Let’s assume you walk into a store looking for a specific item. You discover an offer that allows you to get that particular item with other complementary products at a lower cost than purchasing them separately. This is known as “product bundling.” It is a marketing strategy that allows businesses to offer customers multiple items as a package deal.
The idea behind product bundling is to provide value and convenience to customers. It allows you to display multiple products simultaneously, enticing customers to purchase more in a single transaction. This strategy can also benefit customers by offering a complete solution or experience in a single purchase, often at a lower cost than if they purchased each item individually.
This article will explore the basics of product bundling—how to use it, why customers find it appealing, and some notable examples of successful product bundling strategies.
What is product bundling?
Product bundling is a marketing tactic that allows businesses to combine related products into one unit at a discounted price compared to selling each one separately. In addition to saving money on advertising, it enables brands to boost sales volume and average order value. Product bundling provides a discount on the items purchased in combination to encourage purchases.
Advantages of product bundling
Product bundling benefits brands and customers alike. Brands sell their products faster, and customers save time by getting great deals. Let’s examine more advantages of this marketing strategy.
Increase your average order value.
Product bundling can be used as a pricing strategy to increase customers’ average order value. You can offer discounts or better pricing when you bundle products than if they were bought separately. Customers may feel this adds value to their purchase and be encouraged to spend more money than planned. Additionally, bundling offers chances for cross-selling and up-selling. You can entice buyers to purchase more by pairing well-liked or expensive products with complementary goods.
Personalized customer experience
You can increase customer retention and loyalty by making unique and personalized offers. Examine your regular customers’ profiles in your CRM to learn more about their preferred products. Next, devise a suitable product mix according to their preferences. If your customer regularly purchases skin-whitening cleansing foam, you can assume they have acne scars. To properly address this issue, you can provide them with moisturizing products and chemical peels. Keep in mind that your customers will value your consideration and care.
Reduce inventory waste
Most businesses’ warehouses hold some deadstock. Overstocking negatively affects a business’s agility, cash flow, and storage expenses. These products linger on shelves, making room for new inventory difficult. Bundling is an excellent way to remove this dead stock before it becomes an issue. When you combine a product that is not selling well with one that is, customers will view the combination as a good deal and be more likely to purchase the faster-selling item. This is the best solution to reducing inventory waste and saving money on inventory storage costs.
Types and Examples of Product Bundles
Different product bundles work for different circumstances, ultimately providing the best solution to achieve your marketing goals. In this section, we will explore various product bundling strategies.
Pure bundles
Pure bundling is a product bundle in which the individual products or services are not sold separately. In other words, the items in a pure bundle are only sold together. This method restricts your customers’ options. Take the cable company as an example. Selecting different service and channel bundles but not individual channels within the bundle is possible.
Sometimes, pure bundling is preferred because it is thought to boost sales. Customers also have to pay for channels they do not care about to get the channel they want.
New product bundles
This strategy is used when a new product comes to the market, and vendors want to promote it. They pair existing (most popular) products with new ones to have customers discover them. E-commerce businesses employ this strategy, combining new products with their well-known inventory to increase the visibility of the new product. The more popular an existing product is, the closer the buyer comes to the new product.
This strategy is widely used in the video game industry, particularly following the release of a flagship game such as Grand Theft Auto, the most recent FIFA title, or a Call of Duty game. Sony offers a “bundle pack” with the PlayStation system and a copy of the game. Frequently, the bundle includes additional benefits such as online gaming credits or a limited-edition box art or sleeve that can only be obtained by bundle purchasers.
Mix-and-match bundles
Using this bundling technique, marketers can select multiple products for packaging, allowing customers to choose the items they need and customize their bundles. This gives customers the satisfactory impression that they control the transaction. Businesses frequently use perishables for these packages, such as personal hygiene products, fresh juice, or beer, or selecting a T-shirt when purchasing a pair of jeans or trousers.
Examples of mixed bundling include movie theatre snacks and fast food combos, where each item can be purchased separately or together for a single price. It is the ideal way to motivate your customers to buy goods in large quantities without pressuring them to purchase things they do not want to.
Cross-sell bundles
Cross-sell bundling involves pairing complementary products to make a single bundle. This bundling technique is effective for less expensive items and parts or accessories that accompany more expensive ones. For instance, buyers are constantly tempted to purchase earbuds or a case in addition to a phone.
You could pair this bundling technique with another tactic, such as discount bundling, to make it even more effective. If you want to cross-sell an item, consider offering a discount on the entire bundle or just that one item.
Gifting bundles
The gift bundle serves customers looking for complementary products that can be given as gifts to loved ones, friends, or family. The reasoning is that the more products in a set, the better the present. This bundling is particularly popular when shoppers are searching for festive gifts that are both stylish and useful. For instance, barrettes and heat-protective hair sprays can be sold alongside hair straighteners, making the perfect gift set.
Inventory clearance bundles
Deadstock keeps companies from spending money on developing new products, which causes them to stagnate. By employing inventory clearance bundling, you can free up inventory space and lower the cost of holding inventory by pairing a faster-moving item with a stagnant item. More so, by giving discounts on your bundles, you can encourage customers interested in a best-selling item to think of the bundle as a whole as a deal, increasing the likelihood that they will buy it.
A clothes store can make a bundle out of a shirt and a tie or combine hair scrunchies in various colors to guarantee that the smaller items that do not sell as well are taken off the shelf and placed at a lower price into customers’ shopping carts.
Buy-one-get-one bundles
Recall the buy-one-get-one-free offers in some shops, where you get a discount on a complementary or free item after purchasing the main product. The most effective use of this strategy is when a customer buys an item and will most likely not return to purchase it again anytime soon. For example, when a customer buys a laptop, a free decal is added to the cart. This will encourage customers to purchase products from you and could create room for referrals.
If you want to stand out from your competitors and build a strong brand identity with a loyal customer base, employ product bundling in your marketing strategy.