Bundling, Pure Bundling and Mixed Bundling

The terms "bundling", "pure bundling" and "mixed bundling" are often used interchangeably but there are important differences between them.

 

Bundling...

...is a marketing practice that involves offering several different products for sale as one combined product. Examples would include things like "combos" or value meals at fast food restaurants (where a combination might include a burger, a drink and a beverage) or the concession stand at a movie theater (where it might include popcorn, soda and candy). Bundles are also common from cable companies (their bundles include the basic service, hardware like the cable box, access to specific features like packages of movies, sports and other specialty programming, etc). It is a popular practice that can increase revenue for the seller (by increasing sales) and provide increased satisfaction for the customer (who enjoy any savings and the convenience that comes with having to evaluate a single price).

 

Pure Bundling...

... is a type of bundling where the individual components that make up the bundle are only available when purchased as a bundle – they are not available for purchase separately. One example would be the cable company – you can choose different bundles of services and channels, but you can't select the individual channels that make up those bundles. Pure bundling is sometimes favored because it is seen as a way to increase sales – to get the channel you really want you also have to pay for a lot of channels you really don't care about. Because pure bundling also limits the choices available to the consumer it can come under scrutiny and even be subject to litigation.

 

Mixed Bundling...

... an approach to bundling where the individual components that make up the bundle are also available for purchase individually. Movie theater snacks and fast food combos are examples of mixed bundling – you can purchase each item individually, or together as part of the combo for a single price.

 

 

Pure bundling and mixed bundling are both examples of product bundling. The big difference between pure and mixed bundling is that mixed bundling allows the consumer to purchase the items separately while pure bundling does not.

Bundling offers a very powerful way to increase sales and also customer satisfaction. Although unbundling has become very popular, especially in things like flower delivery where perceived cost can be reduced with separate service fees and delivery charges, there are many customers that prefer the convenience that comes with bundled pricing.

Watch the customers at a movie theater, where the bundled packages offer little if any savings (almost always less than 5%). Customers love the bundles because there is less thinking (they don't need to add up the prices in their heads) and greater perceived value (they assume savings even when they aren't there).

More specifically mixed bundling is good, pure bundling more problematic. Mixed bundling allows your customers more options, when they want them, something they appreciate. Pure bundling can effectively force them to spend more money, but does anyone really like dealing with the cable company? Unless there are very few alternatives for your customers pure bundling is generally a dangerous game.

But mixed bundling offers the best of both worlds. Customers are not trapped, they have the ability to choose each individual item and you are not limiting their options. At the same time you are offering them the convenience of a bundle of products at a single price.

Sponsored by FloristWare – Floral POS Software

Beyond Cost Plus is sponsored by FloristWare – the most popular floral POS software system. FloristWare saves you time and money while increasing sales and profits.

FloristWare – flower shop software/POS system.

Related Material

Pricing Attraction Tickets and Bundles

Attractions are a highly perishable product and operators are keen on revenue management – combining bundles and hurdles in an effort to maximize revenue.

Real World Examples of Pure Bundling

Pure bundling is less common than the more popular mixed bundling, but there are still some high profile real world examples.

Six Reasons Why Consumers Love Bundles & Bundled Pricing

Consumers love bundles and bundled pricing – so much so that they will buy bundles with items and sizes they don't want even when they cost more. Why?

Bundled Chicken Dinners

Take-out chicken deals show that bundling is very effective at increasing revenue. Unbundling can make sense but bundling should not be forgotten.

Baggage Fees, Entitlements and the Perils of Unbundling

Earlier today I was speaking with a florist that was looking at changing the way they charged for some ancillary things (delivery, etc.) and it brought to mind the dangers of unbundling things perceived as entitlements.

In-Flight Internet Access: An Exciting Opportunity For Airlines

Access to in-flight internet is growing and presents exciting new opportunities for both travellers and airlines with the right strategy - and it's not the one most travellers think.

In-Room Internet Access at Hotels

Hotels employ some advanced techniques when pricing in-room internet access - but are they being too greedy?

The Diminishing Marginal Utility of Fresh Brownies

Diminishing marginal utility, and pricing to account for it, becomes very simple when you think about the enjoyment you get from something like fresh brownies.

Unbundling and the Entitlement Trap

Airline baggage fees offer incredible value to those that travel with more luggage without passing any of the associated costs onto those that don’t check bags. Why does everybody hate them?

Pricing Fail: In-Room Hotel Internet Access

In-room internet access: Inexpensive hotels give it away. More expensive hotels charge for it but give it away free in the lobby. Is this a sound pricing strategy?

The Appeal of Bundles

Combining multiple products for sale at a single price is known as bundling, and it is a powerful way to please customers and increase revenue.

Bundled Pricing at the Movies

Movie theater snack combos provide interesting real-world examples of both pure and mixed bundling.

Real World Pricing: At the Movies

A movie theater showcases many advanced pricing strategies including pricing that accounts for the diminishing marginal utility of popcorn and entices us to buy more than we could ever enjoy.

Bundling & Unbundling

The practices of bundling products and services into a "package deal" with a single price or breaking them out into separate line items.