Bundling and unbundling is a business strategy that business owners can use to increase the perceived value they provide to their customers. Bundling is when a company offers a package deal of products or services, and unbundling is when a company breaks down the package deal and provides the products or services separately.
If done right, both bundling and unbundling can increase the profits a business generates and can lead to a host of other benefits as well.
In this article, we will discuss how to use bundling and unbundling in your business and give you examples of how they can be used in current day-to-day operations.
Let's dive deep into this topic.
What Exactly Is Bundling And Unbundling?
Bundling happens when a company offers a package deal of products or services. For example, a telecommunications company may offer a deal that includes a cell phone, a service plan, and a set amount of data.
When it comes to clothes, a company might offer a high-quality suit and accompanying accessories that go together as part of a bundle.
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Unbundling is when a company breaks down the package deal and offers the products or services separately. For example, one may offer the cell phone separate from the service plan, or the data may be provided separately from the cell phone.
Both bundling and unbundling can increase profits and can be very successful in business. Bundling can increase sales because it can make buying multiple products or services easier for the customer. In this case, the customer would be paying less than if they had to buy the products separately.
On the other hand, unbundling can increase profits because it allows companies to charge more for each product or service.
As you can imagine, there are a few factors where one strategy might work better than the other. Let’s explore this in more detail.
Why Do Bundling And Unbundling Work In A Business?
There are a few reasons why bundling and unbundling work in business.
First, bundling can be used to increase sales because it makes buying multiple products or services easier for the customer. The customer can buy all of the products or services at once, find a job and they don't have to go to multiple places/websites to find them.
This can be especially helpful if the products or services are related.
When it comes to unbundling, one can use this to increase profits because it allows companies to offer more choices to the customer. Providing this selection means that the customer can choose which products or services they want and don't have to buy anything they don't want to - but have to since it’s forced into the bundle.
Unbundling can also increase profits for a company because it allows them to target specific customers. The company can use email segmentation and send the right product, to the right customer, at the right time. Based on the company's research, it may decide to offer a cell phone with unlimited data to one customer and a cell phone with a limited amount of data to another customer who might not need this feature. You can use personalized subject lines, compelling CTA’s, emojis etc to get a good open rate in your email campaign.
Instead, research might show that the latter might need additional services that are more beneficial, such as a home T.V. package.
Both bundling and unbundling can be used to increase brand awareness. When a company offers a selection of products, they promote all of the products or services in the bundle, which means that customers will get to know what’s on offer - even if it’s not the right time for them to choose such a bundle.
When it comes to unbundling and if an offer is presented correctly, people will automatically ask for custom solutions to their specific needs. Companies need to listen to the feedback they get and act on it if it makes business sense.
In addition to the above, businesses can use KPIs software to ensure that bundling and unbundling are effectively executed in their industry.
Some KPIs that one can use are customer lifetime value, contribution margin, and gross margin. These all help measure how profitable a customer is and whether or not the products on offer in their bundling and unbundling strategies are effective.
How To Apply This Strategy For Success In Business
Now that you know a little more about bundling and unbundling, let's look at how you can apply this strategy for business success.
There are a few things to keep in mind when applying this strategy.
First, it's important to know your target audience. This means that you need to know who your products or services are marketed to and design your bundles accordingly.
Second, it's essential to ensure that the products or services in a bundle are related to each other. This will make it easier for the customer to understand what they're buying and increase the chances of them purchasing the bundle.
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Third, it's important to make sure that the bundle price is collectively lower than the individual prices of the products or services that are in the bundle would have cost if bought separately. This will make the offer more attractive to the customer and increase the chances of them buying it.
Fourth, it's essential to market your bundles effectively. This means using a mix of digital and traditional marketing tactics to reach your target audience where they’re at.
Fifth, it's essential to make sure that the quality of your products or services is high. This will ensure that customers are happy with their purchase and increase the chances of them buying from you again.
Finally, ensure that your bundles make sense within the timeframe you offer it in. For example, if it happens to be Christmas time, eCommerce businesses can take specific steps to ensure success with the bundles and products on offer.
These bundling strategies can include gift-wrapping services, festive packaging, and discounts to entice buyers to pull the trigger.
Example Of How Bundling And Unbundling Work In A Company's Marketing Campaign
Apple is an excellent example of a company that uses bundling and unbundling in its marketing campaigns.
They offer a variety of products and services, including cell phones, laptops, tablets, and software. And they offer these products and services in bundles as well as individually.
For example, they have the Apple One bundle, which gives its users access to six Apple services in one subscription. This currently includes:
- Apple Music
- Apple TV+
- Apple Arcade
- Apple News+
- Apple FItness+
Apple also uses bundling to increase brand awareness. For example, they often release new versions of their software along with new versions of their cell phones and laptops. This allows them to market their products to their customers at once.
Bundling can also be made more accessible when using specific apps on your website and specific landing pages to increase conversion rates.
These apps can help make the sale, and include items such as countdown timers, pop-ups, or even image sliders that feature multiple product images.
As another example, let's say that your business deals in the crypto space, and you want to encourage the buying and selling of fiat crypto. In this case, bundling and unbundling might be used to simplify the buying process for a user and make the offer more enticing.
For example, a user may visit your website and see that they can buy a bundle of Bitcoin, Ethereum, and Ripple all at once. In addition, this offer is only there for a limited time and is limited in quantity. This could be an example of bundling together an offer that makes sense for the potential customer.
The key is to make it as easy as possible for people to buy what they want. By using bundling and unbundling, you can make this process more accessible than ever before.
The Benefits Of Using This Strategy In Terms Of Marketing
There are a few key benefits of using bundling and unbundling in your marketing campaign.
Firstly, it makes it easier to create viral content in your business. This is because customers are more likely to share a bundle they've purchased (and feel like they’ve found a great deal) than an individual product or service. When customers share with one another, your business gets a boost of referral marketing and your audience reach gets naturally extended.
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Next, it makes it easier to target different markets. By bundling products and services together, you can create more appealing packages for a specific audience.
Finally, it makes it easier to track customer behavior. You can see what products and services people buy together and use that information to improve your marketing strategy.
Using Marketing To Your Business' Advantage
While bundling and unbundling are two great business strategies, it's important to remember that the general marketing strategy is still one of the essential tools at your disposal. No matter how great your products or services may be, if no one knows about them, you're not going to make any sales.
Marketing can take many different forms, from online advertising and SEO to traditional print ads and digital illustrations, and direct mail. The most important thing is to find a content marketing strategy that works best for your business and stick with it. Consistent marketing is critical; if people don't see or hear your message often enough, they'll forget about you.
There are various marketing tips to boost your sales, and by using the ones specific to your business type, you can get long-term success.
Bundling and unbundling are two great business strategies that can help you improve your marketing efforts. Using bundling can make it easier for customers to purchase your products or services. On the other hand, by using unbundling, you can make it easier for customers to buy what they want without feeling like they need additional products.
Always remember to put your customer first and use marketing to your advantage. With these two strategies in place, you can't go wrong.
Hanson Cheng is the founder of Freedom to Ascend. He empowers online entrepreneurs and business owners to 10x their business and become financially independent. You can connect with him here.