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10 Product Bundling Tips and Strategies for 2020

What is Product Bundling? What products should you offer as a bundle? A list of tested strategies for product bundling in 2020.

10 Product Bundling Tips and Strategies for 2020

The findings of Derdenger & Kumar, who have examined the psychology behind product bundling, are still up-to-date. Their findings are clear – without flexible and dynamic sets of product bundles, there won’t be sales growth.

“Sales of both hardware and software components decrease in the absence of bundling, and consumers who had previously purchased bundles might delay purchases, resulting in lower revenues.”

By wrapping products and services into bundles at a discounted price, you entice customers to spend more. What is even better is that bundles work in every industry imaginable and with any product or services, making it an exceptional marketing strategy for a business of any type and size.

In this article, we'd like to show you how to uncover the untapped buying potential of your customers with product bundling. Let’s dwell on some use cases and learn how to tailor bundling to modern saving-savvy consumers in 2020.

What is Product Bundling?

Product Bundling is a marketing technique that groups several products/services together and sells them as a single product often at a discounted price. This technique is widely used across multiple industries to entice customers to spend more, move surplus products, or increase sales on a less popular item. 

To give you an example, think of fast-food restaurants. McDonald’s Happy Meal is the most popular example of a bundle that achieved fantastic sales results and will probably go down in history as the most profitable bundle in the long history of bundles. 

Happy Meal Product Bundle

There exist two main types of product bundling – mixed and pure. In the case of mixed bundling, a business offers both a bundle and separate components of the bundle for sale. In the case of pure bundling, only the bundle is available and customers are unable to purchase components separately. Cable providers and TV channels offer a great example of pure bundling – you want to watch one channel? Not so fast, you need to also get 200 others that you will never use. And to sweeten the deal, you need to pay for the whole set.

What Science has to say about Product Bundling?

In 2011, Derdenger & Kumar examined the impact of bundling on Nintendo sales results. They offered a bundle with a video game and the Nintendo console. In addition to offering the bundle, both components were also sold separately. After long months of testing different configurations, they came to the final conclusions:

  • Bundling works best with dynamic customer segmentation as it enables retailers to invoke some purchases earlier in time.
  • Pure bundling performs significantly worse than both mixed bundling and selling pure components. Pure bundling caused a 20% decrease in sales.

When customers couldn’t buy single components, the overall sales of both were diminishing. Savings coming from the price of the bundle which was lower than the price of both components were not convincing enough. Why is that? Looking at the way today’s market operates, there is more than one reason to explain that.

Monopolies are gone. There is very little chance that your customer can't find similar items by turning to your competition. If one of the bundle components is not attractive enough to buy the whole set, a consumer can look for the desired item somewhere else. Maybe your competitors have come up with a better bundle idea?

The key thing to understand about bundling is that the product value decides if the customers purchase the bundle or not. Knowing how much a customer is ready to pay for bundle components is critical to evaluate future sales of your sets.

For example, I created a bundle of two items at a regular price of $10 for each and want to sell it for $17. My potential buyer is ready to pay $10 for one of the products but only $5 for the second one. What is the result? No purchase. For the customer, the value of the bundle is $15, not $17.

Product Value and Product Price

Subjective product value is the main reason why pure bundling devoid of flexibility never ends well for your sales. Let’s go back again to fast-food restaurants and McDonald’s to understand this example better.

When I visit fast-food restaurants, like McDonald’s, I always buy a sandwich only. If I could only choose from multiple sets of products, even at very special prices, I’d probably end up hungry, and for sure, I’d never come back again to make another order.

This also happened in Kumar’s research. When the lack of components sold separately cost them lots of lost purchases.

Of course, it couldn’t be as simple as offering a bundle + offering its components separately. You can give your customers more than a choice 'save with a bundle or buy at a regular price'. You can predict their needs and let them choose how they want to save.

The Dynamic Effects of Product Bundling as a Product Strategy by Derdenger
The Dynamic Effects of Bundling as a Product Strategy by Derdenger, Timothy, and Vineet Kumar

Flexible and Personalized Product Bundling

Coupons from McDonald’s are a fantastic example of how to make bundling consumer-friendly. Coupons define categories of products that need to be in the set but the final look of the bundles is up to customers.

Product Bundling at McDonald's

Coupons and discounts based on order structure perfectly meet the requirements of flexibility and personalization. According to Kumar’s research, bundling performs best when combined with dynamic customer segmentation. Coupons make it easy. You can seamlessly sync bundling promotions with your customer segmentation and trigger coupon delivery based on real-time segments’ updates. Let’s use one more example to show you how it works.

It always starts by analyzing sales data. For example, 20% of customers who have ever bought a printer, have made another purchase to get reams, and 11% have also bought toners.

A dynamic segment of all customers who have bought a printer is our target group for the bundles. Dynamic means that if someone buys a printer after the segment is created, he/she also enters this segment right away.

The bundles that we will offer to printer owners:

  • toner + 2 reams,
  • toner + 4 reams,
  • toner black + toner color.

After estimating the value of bundles, we need to define a discount for each set.

Discounts from bundling campaigns will be active only if all components of the set are in the customer’s cart.

The coupon for the bundle is delivered automatically to every customer who has entered the segment of printer owners.

In the case of coupon codes sent via emails, you have a chance to additionally personalize the message and build a 1:1 interaction with a customer. Moreover, if you use unique coupon codes, they will track users and deliver detailed redemption data.

Learn how coupons and discounts can increase your business growth with our library of promotion examples >>> 

What about users that you can’t reach with an email? Modern bundling engines such as Voucherify give you a variety of options to cover every touchpoint. You can use cart-level promotions, which automatically add a discount if all products from the bundle are in the cart. Then, no promo code is needed. You can also use a public code displayed as a web banner that customers can use at the checkout.

Promotions with bundles enable you to predict some purchases and invoke them faster. Defining correlations between the items in your inventory gives you plenty of possibilities for up-selling and cross-selling. For example, besides our bundles with toners and reams, we could offer a configurable bundle and target all customers who want to buy a printer:

Choose printer + add ream + choose any toner and get 10% discount for your set.

Bundling which defines only categories or types of products without pointing out which of them exactly a customer needs to buy increases the chances to meet their expectations. 

Ultimately, both sides are happy – customers get more for less, and your bundles perform well.

Product Bundling Amazon
An example of a bundle with discounts from Amazon

10 Product Bundling Tips and Strategies in 2020

2020 has proved to be a mini apocalypse. Besides uncovering faulty health systems, public safety regulations, and fake media factories, it has also shown that the digital transformation is not the question of “if” but “when.” Cut-throat competition in the digital retail environment, create a fantastic space for experimenting with smart bundles. 

Read more about planning sales promotions on a digital transformation journey.

"Bundling is a rather easy way of putting new product offerings together to complement the product line. There's more potential to get it right than to get it wrong." – Vineet Kumar.

Here are 10 tips to keep in mind when creating a product bundling strategy in 2020.

1. Keep the product value in mind 

The package must be worth more than the sum of its parts for the consumer (start with the most popular items and segment your audience based on their favorite products/categories). While keeping that in mind, the bundle should come at a cheaper price than all products combined. 

Your first instinct is probably to mix an expensive item with a cheap product, e.g., an exclusive perfume with a lipstick. But, this approach has been proven to be inefficient – customers will become alert of the bundle value when an extremely cheap product is added to it. In the worse case, they will feel preyed upon and lose interest in the bundle altogether because it will be too fishy in their minds. 

2. Strive for simplicity

The bundle must be easy to understand at first glance (always emphasize profits for a customer coming from bundling). Your bundle gets extra power if it solves a problem for the consumer or facilitates the process. It can be a combination of a product and a correlated service (a smartphone + system configuration).

3. Make bundles optional

The bundle should be one of the options, consumers can always buy products separately. Taking the choice away from customers will quickly direct them to your competitors. The appeal of bundling often lies in customers’ awareness that purchasing bundle components separately is a bad financial move. Unless you offer customers insight into individual components prices, the bundling will lose its appeal.

4. Offer fast-paced bundles

If you want to succeed in applying bundling in your sales strategy, it needs to be dynamic and awake interest. Consider flash-sales, promotions of the week, or special holiday bundles to boost urgency and a sense of scarcity to give customers an extra nudge to finish the purchase.

By emphasizing possible savings thanks to purchasing a bundle, you get a bigger chance of awaking customers’ interest. Make sure to highlight the discounted price and never force customers to calculate savings manually. 

5. Avoid cognitive overload

People think they like having variety much more than they actually do. For over a decade, behavioral economists have suggested that offering customers a lot of variety makes them more attracted to a store’s offerings, but also less happy with them. If you decide to offer complex bundles, with multiple options and combinations, customers may feel demotivated and anxious leading them to quickly lose interest and stick to a safer option of buying items separately. 

6. Mix fast- and slow-selling products

Product bundling is a fantastic tool to influence customers’ perception of a product. By bundling popular products with a slow-selling stock, you can successfully create an illusion that the not-so-popular product is in fact quite successful and in demand. 

7. Use the calendar to your advantage

Customers have come to expect and enjoy seasonal marketing and promotions. For instance, multiple console companies have been using bundles during the Christmas season due to higher expected demand for the product. You should use the seasonality of bundles to your advantage to exceed customers’ expectations. With this in mind, you should focus on holidays connected with gift-giving – bundles offer a quick and easily accessible gift option for loved ones and friends. 

8. Target customer expectations with bundles

Let’s assume that you offer courses on platforms such as Udemy. It makes sense to bundle Beginner, Intermediate, and Advanced Excel course at a discounted price as such a product combination meets customers’ expectations and aims to cover users’ needs from start to finish. On the other hand, bundling two advanced courses from Excel and SQL won’t make much sense as they do not offer immediate and transparent value to customers. 

9. Place bundles on the checkout page

Displaying recommended bundles at the checkout page is more profitable than showing them right after visitors enter your landing page. Customers on the checkout page have already committed to purchasing your products and are more prone to take quick purchase decisions. To succeed with this strategy, make sure that the bundle is relevant to whatever customer has in the cart and not expensive. The higher the price tag, the more time needed for considering the purchase. Your main goal should be to offer quick, relevant, and cheap addition to the main purchase. 

10. Research buyer personas for targeted bundles

You should never forget that each customer is different, visits your store with a different purpose, and wants to achieve different goals. However, there are still some behaviors and attributes shared between different customers. Equipped with customer data, you should identify buying personas and customer segments and target bundles only at them to avoid spray and pray bundling tactic that rarely works. 


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