Product bundling

In <a href="/facts/Marketing/LttVQ66t">marketing</a>, product bundling is offering several <a href="/facts/Product_(business)/l9P9fUJa">products</a> or services for sale as one combined product or service package. It is a common feature in many <a href="/facts/Imperfect_competition/uqdBDpU9">imperfectly competitive</a> product and service markets. Industries engaged in the practice include telecommunications services, financial services, <a href="/facts/Health_care/LPS1WKbI">health care</a>, information, and <a href="/facts/Consumer_electronics/cJ8g9NXh">consumer electronics</a>. A <a href="/facts/Software/RP79lVSW">software</a> bundle might include a <a href="/facts/Word_processor/qAR7lagF">word processor</a>, <a href="/facts/Spreadsheet/0cvc1GeB">spreadsheet</a>, and <a href="/facts/Presentation_program/mj0nngQm">presentation program</a> into a single <a href="/facts/Office_suite/WcKtjN6j">office suite</a>. The <a href="/facts/Cable_television/GzXa4pbW">cable television</a> industry often bundles many TV and movie channels into a single tier or package. The <a href="/facts/Fast_food/LuzphkQW">fast food</a> industry combines separate food items into a "<a href="/facts/Combo_meal/FcfKNV26">combo meal</a>" or "value meal".
A bundle of products may be called a package deal; in <a href="/facts/Recorded_music/BMbpAWkE">recorded music</a> or <a href="/facts/Video_game/vmTdNASJ">video games</a>, a compilation or <a href="/facts/Box_set/3UF4l4gx">box set</a>; or in <a href="/facts/Publishing/7g01YeYG">publishing</a>, an <a href="/facts/Anthology/AjRSwF91">anthology</a>.
Product bundling is most suitable for high volume and high margin (i.e., low marginal cost) products. Research by <a href="/facts/Yannis_Bakos/FeUMIU9F">Yannis Bakos</a> and <a href="/facts/Erik_Brynjolfsson/87FLBFYf">Erik Brynjolfsson</a> found that bundling was particularly effective for digital <a href="/facts/Information_goods/GgYKQh5B">information goods</a> with close to zero marginal cost, and could enable a bundler with an inferior collection of products to drive even superior quality goods out of the market place.
Most firms are multi-product or multi-service companies faced with the decision whether to sell products or services separately at individual prices or whether combinations of products should be marketed in the form of "bundles" for which a "bundle price" is asked. Price bundling plays an increasingly important role in many industries (e.g. banking, insurance, software, automotive) and some companies even build their business strategies on bundling. In bundle pricing, companies sell a package or set of goods or services for a lower price than they would charge if the customer bought all of them separately. Pursuing a bundle pricing strategy allows a business to increase its profit by using a discount to induce customers to buy more than they otherwise would have.

Product bundling open-in-new

Product bundling