Bundling as a Marketing Strategy for Small Businesses
While small businesses may not have the marketing budget of a large corporation, there are many strategies they can use to increase their sales. Market augmentation can consist of one strategy at a time or multiple concepts at once. The ultimate success of whether or not the strategies work depends not only upon the economy but on how well the ideas mesh with the consumer mindset.
Multiple Products for One Price
Clothing boutiques might consider bundling purchases and instituting a discount on the bundles. Customers who walked in to purchase a pair of shoes might end up walking out with a handbag, wallet or necklace in addition to their footwear purchase. Likewise, a tailoring service might offer a 10 percent discount when three or more items are brought in for servicing. A discount on the bundled products or services can increase overall sales and profits and bring in new customers who appreciate the value of the discounts. This strategy is also called pure bundling because the consumer gets all of the bundled products when making the purchase.
When a small business has a hot product or service, leader bundling is a way to increase sales of the popular commodity and boosting transaction frequency of the customers. In leader bundling, the desirable product is offered at a discount only if it is purchased with an additional product at the full price. This strategy is popular during the holiday season such as when a new video game is offered at a discount when the gaming system is purchased at the full price.
Mixed Leader Bundling
One effective strategy to increase sales revenue is to offer a second product or service at a discount when purchasing the first at full price. Also referred to as leader bundling, the consumer makes the choice to select the bundle or not, but he or she can still purchase the originally desired product. Leader bundling allows the consumer to try another one of a small business' offerings and the business is able to maintain loyalty and the profit margin. Many self-storage service companies offer a buy one month, get one month half off. Once a customer is engaged with a business with one service they generally purchase more.
With joint bundling, two associated services or products are offered at a discounted price. Internet service providers have successfully engaged in joint bundling by offering high speed wireless internet and digital cable television service at a discount only when the two services are purchased together at the same time and for the same service duration. According to Homes Alive, sometimes one product in a bundle is more highly coveted than the other, such as the desirable companionship of a dog with the less desirable barking each time the doorbell rings. Small businesses are able to increase sales while maintaining the same level of profit because no additional customers need to be recruited to achieve the sales increase.
About Larry Alton
Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.