Product bundling (or bundle marketing) refers to a scheme in which several products are sold together as a combined product.
In the software industry, it is quite common to bundle various programs together and sell them as one unit. An example of this would be Microsoft Office, which includes Word, PowerPoint, and Excel. Another familiar example would be present in the fast food industry, where different food items are put together to create a full meal. Some appliance companies also sell their television sets together with an entire home theater system, making them appear less expensive to customers. As such, bundled products may also be referred to as package deals.
There are various types of bundling, and the choice of which to use depends on the products and circumstances under which they are sold. If the customer does not have a choice but to purchase the entire package as is, then this is referred to as pure bundling. Pure bundling can be further divided into three categories: joint bundling, leader bundling, and mixed-leader bundling.
On the other hand, mixed bundling takes place when the customer is able to choose between buying the full package or one of the components only.
By using bundle marketing, small businesses can also create tie-ups in order to combine compatible services and products. As a result, it is possible to gain more customers who may be attracted by the ease with which buying decisions can be made, and thus generate further income for both businesses.