Managing Successful Bundling

Simon + Kucher & Partners

Operating within a competitive market requires organisations to unearth new and innovative answers to the age old question: "how can we sell more and increase our profits?" The challenge is complex, especially for multi-product companies, and there is a string of potential solutions. One such opportunity is bundling. While by no means a new concept, bundling can be a powerful and innovative tool to win/retain market share and increase/stabilise profits for companies selling a range of goods and services. Bundling can open a new value proposition to both customers and sellers if it contains elements the customer demands, is priced appropriately and communicated effectively.

Rationale for bundling

Bundling combines multiple products or services and offers them for sale together. From Microsoft's Office software, to movie tickets with popcorn at your local cinema, bundling works because it allows organisations to transfer untapped willingness-to-pay from one product to another, thus increasing overall sales revenue. It provides an opportunity to exploit profit potentials, but by no means is it the single, easy answer for all organisations.