Product bundling is the process of securing two or more necessary goods or services from a single vendor. This strategy usually provides several advantages, including saving a great deal of money. Long a practice among businesses, the concept of product bundling has expanded to include residential customers over the last twenty years, especially in regard to various types of communication services.
The basic nature of product bundling involves the willingness of a supplier or vendor to provide two or more services to a customer for basic rate. This rate normally provides significant savings over purchasing the products individually. For example, a communications company may choose to offer a cable TV bundle that allows the subscriber to enjoy cable television, local telephone service, and Internet access as a single product offering, rather than having to purchase three different services at a cumulative higher rate.
Along with saving money, product bundling also provides other benefits for the customer. One has to do with sheer convenience. Rather than having to deal with multiple vendors in order to have access to multiple products, the customer has one central vendor for all his or her needs. This concept of one-stop shopping means the client spends less time keeping up with payments to various vendors, and has one central pipeline when there is a need for customer support or if there is a question about one of the services.
Vendors also benefit from providing various types of bundled packages to their clients. In many cases, the cost and convenience created by product bundling go a long way toward promoting customer loyalty. This makes the client less likely to switch to another vendor for any of the services, especially if the price for the bundle is competitive. Product bundling also simplifies the billing process for the vendor, since all services and products are usually billed on one monthly invoice, rather than several different ones.
Product bundling is also a common strategy with software products. For example, office suites offered by different manufacturers will normally include a data processing program, a spreadsheet program, an email client, and presentation creation software, all in one package. This makes it much easier for customers, since they can purchase all these software options as part of one package, rather than paying for them individually. Depending on which software manufacturer is involved, the savings can be substantial.
The idea of product bundling is also used in other ways. For example, a local business that mows lawns as its main service many offer customers a bundled package that also includes shrub trimming and basic landscaping, for a small additional fee. Often, this is less expensive to the customer than purchasing the different services separately. Even businesses like delicatessens can use this basic approach of product bundling, such as offering an entrée along with two or three sides for a single price that is lower than buying the items separately.