The Invisible Game

Chapter 17To Bundle or Not to Bundle: Is That Really the Question?

The very question of whether a company should bundle or unbundle its products implies that at any given point in a product's life cycle, there is an ideal way to package the various products, product components, and services in a portfolio into appealing offers for customers.

The easiest association with bundling for most people is the combo meal they can order at a fast-food restaurant: a sandwich, a side dish, and a beverage, at a lower combined price than the items cost separately. This is an example of ‘mixed bundling’, which means that a customer can also purchase one or more of the components of the bundle individually. The classic physical music formats such as the compact disc and vinyl LP are also familiar bundles, but they exemplify ‘pure bundling’. In contrast to mixed bundling, a pure bundle forces customers to buy the whole package – in this case, the whole album – even if they only want one or two songs. With some exceptions, the individual components are not available for sale separately.

So how should a company determine those ideal combinations of products and services in a portfolio and then sell them to customers? In the spirit of the Visible Game, companies can cite numerous practical and objective reasons to create bundles or break them up. These reasons include logistical and manufacturing efficiencies, easier and clearer communication, and the potential for better financial performance. ...