Product Bundling and Whole Products

Today we'll take a look at how a product bundling strategy relates to whole products.

In prior posts How to Damage your Product Line by Using Bundling as a Product Strategy, Unexpected Results from a Product Bundling Strategy and The Dos and Don'ts of Product Bundling, we've seen the dangers in product bundling. This is particularly the case when the impetus for the bundle isn't customer-based.

The most compelling reason for bundling products together is to deliver a whole product.

What is a whole product?

A whole product is a product that is completely operational or able to be used as intended without requiring any additional purchase.

The Christmas season always reminds me of the classic example that demonstrates the value of whole products. I remember a time when battery-operated toys were packaged with batteries. This whole product "bundle" (toy and batteries) ensured that there would be happiness when the toy was unwrapped on Christmas day.

Sometime when I was growing-up, manufacturers stopped bundling batteries with battery-operated toys. If you didn't happen to have on hand a stock of the appropriate A, AA, AAA, or other battery type, you weren't going to be able to enjoy the toy. (Don't try this on a 5 year old.)

If the number and type of battery needed was prominently displayed on the toy box, a forethinking parent could pick up batteries at the time of the toy purchase. This was actually impossible in the "old days" when toy stores did not carry batteries. Now that the practice of battery non-inclusion is rampant in toyland, toy retailers have had to take on the role of whole product enabler. Most now carry batteries.

Sellers seem embarassed to acknowledge that they are offering products that don't work without additional "parts". When was the last time that you saw a seller prominently mention that additional "parts" were needed?

For the buyer, by not receiving a whole product, the issues are those of cost and inconvenience.

• The product is not operational out-of-the-box
• Additional "parts" must be located and purchased for operation
• The customer assumes the responsibility to make the product operational (purchasing the appropriate parts and installing them correctly)
• The product purchase price is not the true cost of the product

We can see the issue from the manufacturer's point of view. Batteries are a problem.

1. They become an additional part to source
2. They become an additional part to assure (as in quality testing)
3. They become an additional cost to bear in the cost of goods
4. Their effectiveness is not infinite. They expire. The limited shelf-life adds complexity to stock management.

Whole product bundles create lots of conflicting trade-offs. How does the marketer decide when to take on whole product bundles?

I'll explore that question in an upcoming post.