According to Wikipedia, “Product bundling is a marketing strategy that involves offering several products for sale as one combined product.  A bundle of products is sometimes referred to as a package deal or a compilation or an anthology.” (www.wikipedia.com)

Bundling has made news recently in regard to the communications industry’s packaging of local, long-distance, and internet services.  The bundling offers multiple services to the consumer at a discount while increasing sales for the company by drawing in consumers who might for example have used the company’s local but not long-distance service, or phone services but not Internet connectivity.  Because of the bundling, the company also realizes a savings, for example there is no need to set up a new account and send out an additional monthly bill as would be the case if the consumer used only phone services and a different consumer used only Internet services.

Products can be bundled as well as services.  The common one we think of is that the purchase of most computers includes pre-loaded software programs.  Bundled products can be complimentary in nature, like a razor and shaving cream, shampoo and conditioner, or toothbrush and toothpaste.  But consumer-centric bundling can also be effective in selling a new product or service to a known consumer demographic.  Examples of this can be seen on breakfast cereal boxes that include a coupon for a DVD or for free admission for the children to a theme park (Mom and Dad still have to pay for themselves, a sale the park might not have had if the parents couldn’t [or wouldn’t] afford to pay for themselves and the children).

Whereas some forms of product bundling are promotional in nature and have a short life span, other forms of bundling can develop into long-term, sustainable “new” products. Automobile bundling takes place when the new car dealer offers financing, service, and insurance services as part of the purchase. Bundling takes place when your credit card company includes travel, credit, insurance, and many other services.  (www.aicpa.org/pubs/tpcpa/feb2002/bundling.htm)

In a slow economy, both individual consumers and business customers need to maximize the effect of each dollar they spend.  If you can offer the customer value by bundling your products or services, you may attract more customer dollars.  Because, like in the communications company example above, your marginal cost for handling the customer is lower than for two customers, each buying a separate item, your profit margin is increases at the same time your sales do.  In retail, the items are treated as one sale, so additional cashiers are not needed to handle the increased sales dollars.  Similarly, there my not be a need for an additional bag for the item.  If the items are big and need to be delivered (like furniture or appliances), the savings is achieved by both going to the same address, which reduces mileage travel time costs.

There are many opportunities to bundle products or services in small business.  Here are a few “top of the mind” examples:

• Furniture store – sofa and table, or table and lamp.
• Hardware store – paint brushes, scrapers, tape, and paint (one stop shopping!)
• Grocery store – cereal and milk, ribs and baked beans or corn, ice cream and topping.
• Printer – letterhead and business cards.
• Salon – haircut and facial or nails.
• Clothing store – slacks and belt, or blouse and scarf.
• Attorney – living trust and living will.
• Auto service – oil change and tire rotation.
• Deli – a “meal deal” with sandwich, chips, drink and cookie.
• Donut shop – donuts and coffee.
• Dry cleaner – suit and tie cleaning, jacket cleaning and waterproofing.

There are so many possibilities that the list is virtually endless.  So much so, that it might make an interesting contest to see who can come up with the most examples (attention publisher: any interest?)

The American Institute of CPA’s, in urging its own members to adopt bundling as a market strategy, notes “Bundling services can provide your firm with a strong competitive advantage in the market place. It can dramatically improve your marketing return on investment. Because it is client driven, the selling process is more productive.”  (www.aicpa.org/pubs/tpcpa/feb2002/bundling.htm)

If you want to “test the waters” before committing to long-term bundling, you may be happy to learn that it is also effective with short-term promotions.  You can offer a “limited-time offer” to gauge the response and measure the additional sales and profitability.