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.
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