Product bundling

Product Bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite). It is most successful when :

• a) there are economies of scale in production,
• b) there are economies of scope in distribution,
• c) consumers appreciate the resulting simplification of the purchase decision and benefit from the joint performance of the combined product,
• d) when the marginal costs of bundling are low.
• e) when production set-up costs are high,
• f) when customer acquisition costs are high

Product bundling is most suitible for high volume and high margin (ie.; low marginal costs) products.

See also : marketing, product management

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