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2022-10-19 5:00 pm

Product Bundling Definition

In marketing, product bundling is the act of combining at least two separate products together and selling them as a single product, usually at a lower price. It is a popular sales strategy present across business verticals and possible for both physical and digital products.

What are the main types of product bundling?

  • Leader bundling – this bundling type includes a more expensive premium product bundled with a cheaper one.
  • Fixed price bundling – this bundling type mixes at least two products together and sells them at a new fixed price. 
  • Collection bundling – this bundling type allows customers to choose products from a specific category and buy at least two at a lower price. 
  • Buy X, Get Y (BOGO) – this bundling type offers a bonus free item with a purchase of another. 
  • Pure bundling – this bundling type means that it is impossible to buy specific items individually, they are only available as a bundle. Typically, stores use mixed bundling strategy which means that items can be both sold separately and as a bundle.
  • Mix and match bundling – this bundling type gives customers freedom to choose which products they want to purchase together at a lower price. Usually, the store would name a specific collection that can be used for bundling. 

What are the main benefit of product bundling?

  • Improved inventory management – product bundling can help move slow-moving stock faster. 
  • Better chance at up- and cross-selling – with the right bundling strategy, businesses can create smart product combinations that achieve granular business goals. 
  • Product differentiation – if you offer very similar products to your competition, selling them as a bundle may successfully give you a competitive advantage.
  • Improved convenience – customers are more likely to spend more upfront rather than purchase single products separately over a longer period of time. 
  • Fewer orders – bundling results in fewer but bigger orders which can help optimize shipping and inventory management costs. 

How to get started with product bundling?

Before deciding on a specific bundling strategy, you need to consider at least two crucial factors. Product bundling can be implemented through either unique promo codes that have to be applied at the checkout for the bundle to be activated; or an auto-applied promotion that is added to the cart automatically once bundling conditions are met. Second of all, it is recommended to run a thorough analysis of which products should be sold this way considering both the attractiveness of such an offer and its profitability. Here are some other tips to consider:

  • Highlight the added value – product bundles are supposed to be perceived as amazing, almost unskippable deals. To deliver on this requirement, make sure to convey the savings and the value of the bundle clearly. 
  • Make it time-limited – urgency can encourage customers to purchase a bundle faster then they would otherwise. 
  • Personalize bundles – if possible, segment customers based on their previous purchase history and target specific bundles at predefined customer groups to increase the success rate of your offer and protect your margins. 
  • Keep bundling profitable – speaking of margins, keep a close eye on not only the bundle performance but also whether the introduction of this offer didn’t have negative impact on other products.

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