PRODUCT BUNDLING BASICS Motivating customers to buy more, Part Two

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14. PRODUCT BUNDLING BASICS Motivating customers to buy more, Part Two

• Avoid ‘cannibalization’–selling the same number of units as before the discount, but for a lower unit price • Bundle products logically with a theme; do not just put product together randomly • Coffee packaged with a mug • Free nutritional fact sheet with purchase of more than five pounds of an item • A gift basket WHAT WHEN HOW E.g. • Selling products that are complementary to another product, but which differ in popularity • Package of more products is perceived more valuable by customers than stand- alone e.g., a gift basket • Selling or even packaging complementing products together • A whole business model can be based on bundling and packaging otherwise stand- alone products together e.g., gift baskets IN-STORE PROMO 14 251 Bundling is simply selling products together. Bundling is meant to make products more attractive and lead to selling more units. For example, many fast-food restaurants will offer customers a “meal” option with a sandwich, fries, and a drink. Customers can also order the sandwich, fries, and drink separately. The meal option seems more attractive to the customer because the price of the meal is less than the individual prices of the sandwich, fries, and drink combined. It also is more attractive to the restaurant because they have sold a sandwich, fries, and a drink to the customer, when they otherwise might have sold only two or one of these products without the bundle. Similarly, in the picture shown here, teas and tea mugs are bundled together in an attractive basket. Together, they encourage a customer who might have just purchased either only tea or only the mug to instead buy the combination of them in the basket. – 2.3 PROMOTION: In-store Promotions – The next couple of pages have examples of product bundles. 252 PRODUCT BUNDLING EXAMPLES Bathing products gift basket Tea gift basket IN-STORE PROMO 14 There are even some companies whose whole business model is based on buying various products from multiple vendors and packaging them thematically together in a gift basket. Gift baskets are very popular. Natural high-quality food products or souvenirsgifts are especially suitable for product bundling. Customers in the mainland US, for example, are willing to pay between 100-200 for a gift basket of several products that altogether cost relatively little to produce, just because it looks nice and because it has an exotic origin e.g., Hawaii-made 253 You can bundle in a relatively sophisticated way, by packing related products in nice gift baskets as in the above pictures. Or, you can do it simply by offering stand-alone products at lower prices if bought together than if bought individually this is very similar to discounts. In this way, you do not have to bother with packaging your products. Remember, though, that packaging can add value to the product. The appropriate way to bundle depends on who you are targeting. For example, if you are bundling your products together and promoting it as a gift, the packaging should be nice and classy. – 2.3 PROMOTION: In-store Promotions – What ideas do you have for bundling your products? 254 PRODUCT BUNDLING EXAMPLES: BUNDLING CAN LEAD TO CREATING NEW COMPLEMENTARY PRODUCTS CD-ROM with interesting materials from the Big Island can be packaged or offered with another Big Island authentic product, or just added for free with the purchase of certain items or purchases above a certain value. It can be even given out free with certain purchases thanks to low production cost of the CD-ROM and binder. IN-STORE PROMO 14 255 This example shows how a gift shop with entrepreneurial spirit came up with a new product to better serve its customers. The store sells Big Island products and having a binder with pictures and a CD is just another idea of how you can offer more to customers. Given the relatively low cost of producing this product, you can even offer it at a discount or for free with other, more significant purchases. This can add a small incentive to encourage a customer to make a purchase. – 2.3 PROMOTION: In-store Promotions – What are some special events that you could leverage to sell more of your products? 256

15. SPECIAL EDITIONS BASICS Leveraging holidays and special events to sell