Product bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite), and in the fast food industry in which multiple items are combined into a complete meal. Wikibooks has more about this subject: Marketing Look up marketing in Wiktionary, the free dictionary. ... Computer software (or simply software) refers to one or more computer programs and data held in the storage of a computer for some purpose. ... A word processor (also more formally known as a document preparation system) is a computer application used for the production (including composition, editing, formatting, and possibly printing) of any sort of viewable or printed material. ... Screenshot of a spreadsheet made with OpenOffice. ... In computing , a database can be defined as a structured collection of records or data that is stored in a computer so that a program can consult it to answer queries. ... In computing, an office suite, sometimes called an office application suite or productivity suite is a software suite intended to be used by typical clerical and knowledge workers. ... A value meal is a group of menu items at a restaurant offered together at a lower price than they would cost individually. ...

The strategy is most successful when:

• there are economies of scale in production,
• there are economies of scope in distribution,
• consumers appreciate the resulting simplification of the purchase decision and benefit from the joint performance of the combined product,
• when the marginal costs of bundling are low.
• when production set-up costs are high,
• when customer acquisition costs are high.

Product bundling is most suitable for high volume and high margin (i.e., low marginal cost) products. Research by Yannis Bakos and Erik Brynjolfsson found that bundling was particularly effective for digital "information goods" with close to zero marginal cost, and could enable a bundler with an inferior collection of products to drive even superior quality goods out of the market place.^[1] The increase in output from Q to Q2 causes a decrease in the average cost of each unit from C to C1. ... Economies of scope are conceptually similar to Economies of scale. ... In economics, Marginal cost is the additional cost incurred in producing one more unit of a product. ... Wikipedia does not have an article with this exact name. ... Erik Brynjolfsson is the Schussel Professor of Management at the MIT Sloan School of Management and the Director of the MIT Center for Digital Business. ...

In oligopolistic and monopolistic industries, product bundling can be seen as an unfair use of market power because it limits the choices available to the consumer. In these cases it is typically called product tying. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). ... In economics, a monopoly (from the Latin word monopolium - Greek language monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a product or service. ... Product tying is the practice by a supplier to force customers to buy multiple products as part of a package. ...

Pure bundling occurs when a consumer can only purchase the entire bundle or nothing, mixed bundling occurs when consumers are offered a choice between the purchasing the entire bundle or one of the separate parts of the bundle.

See also

• tying (commerce)
• marketing
• product management
• Local loop unbundling

Pure Bundling offers two possibilities: (1) Joint Bundling - the two products are offered together for one bundled price (2) Leader bundling - a leader product is offered for discount if purchased with a non-leader product Tying is the practice of making the sale of one good (the tying good) to the de facto or de jure customer conditional on the purchase of a second distinctive good (the tied good). ... Wikibooks has more about this subject: Marketing Look up marketing in Wiktionary, the free dictionary. ... This article or section does not adequately cite its references or sources. ... Local loop unbundling (LLU) is the process of allowing telecommunications operators to use the twisted-pair telephone connections from the telephone exchanges central office to the customer premises. ...

Notes

1. ^ See Bundling and Competition on the Internet and Bundling Information Goods: Pricing, Profits and Efficiency by Yannis Bakos and Erik Brynjolfsson.