Parts 1 and 2 in this series discussed the fallout from a poor product bundling strategy. This last entry will focus on the considerations for creating product bundles.
1. Product bundling should be done as a convenience for the customer, not as a business strategy.
Product bundling can offer good value to the customer when it assembles required or highly desired components of a solution into one, coordinated, easy-to-use offering. To do this most effectively, the product internals (installation, set up, configuration, documentation, and management) should be as integrated as the product externals (packaging, pricing).
2. Product bundling should not be used to internally improve the sale of laggard products.
There is a reason why a product does not succeed in the market. It is because in the eyes of the customer, the product’s perceived value isn’t worth its price. By adding a laggard product into a bundle, there is the potential to devalue the entire bundle. At best, the laggard product will be ignored. If the product isn’t doing well, the reasons why it isn’t selling should be identified, corrected and tested before that product is added to a bundle.
3. Product bundles should go through the same planning and strategic rigor that a product marketer would give to any new product.
Each component of the product becomes an integral feature of the product. This means that the business is making a commitment to sustain and improve those features for the lifetime of the product bundle. Product bundling will also affect the sale of other products in the product line – for better and for worse. These relationships should be understood and potential impacts considered and planned for before the product bundle is introduced.
4. Product bundling should never be done when the business lacks a strong understanding of their customers and prospects.
When the marketer truly does not understand their customer and prospects, introducing a product bundle is like playing roulette. You have many more opportunities to do harm than to do good. Product marketers must take the time to learn about and truly understand their customers and prospects first. This knowledge will lay a foundation for a solid product strategy which may include bundling.
5. Product bundles should include mechanisms to track the usefulness of their components.
By definition, product bundles are complex. That complexity seeps through every aspect of the product and makes managing them much more difficult. Understanding how components are valued and used will be critical to making feature investment decisions and on growing the bundle’s success in the marketplace. Product marketers must make sure that they have mechanisms that will give them insight into the value and use of the contributing components. This needs to be available from day one, not as an afterthought.
It is my hope that by sharing some of these hard won lessons, others will more carefully consider the benefits, costs, and consequences of entering into a product bundling strategy.
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