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 :

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

Product bundling is most suitible for high volume and high margin (i.e., low marginal cost) products.

See also : marketing, product management

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