What is bundling in Business – The model

Disruption seems to be a normal part of business these days. But do we know why unbundling causes markets to disrupted? What does Bundling mean in business Bundling and unbundling value can change markets and dramatically change the competitive positions of incumbent companies. Companies bundle products or services and make it a lot easier to

Gary Fox

Bundling Is A Business Process Used To Combine Multiple Products Or Services

What is bundling in Business – The model

Disruption seems to be a normal part of business these days. But do we know why unbundling causes markets to disrupted?

What is bundling?

Bundling is a business strategy and concept that involves analysing a value chain and then adding together smaller parts to create a bundle offer. This appeals to the set of customers or creates a new market for customers who want to buy bundled units rather than individual parts. Essentially, consumers benefit by making a saving.

What does Bundling mean in business

Bundling and unbundling value can change markets and dramatically change the competitive positions of incumbent companies.

Companies bundle products or services and make it a lot easier to buy a total ‘package as opposed to smaller pieces.

As an example, Setapp a company has made it easier for mac owners to get a range of apps at a much lower price by bundling products.

On the other hand, unbundling is about breaking down something into smaller parts. In other words, it changes the value proposition and often creates a market by appealing to people who need parts but the whole.

New and disruptive startups often attack large established players who offer bundles and then unbundle the market.

Digital technologies are transforming the world and allow us to reconfigure products and services in new ways. As a result, you now have a more modular set of products and services emerging that can be combined in new ways.

The result is that the value chain can be reconfigured in new ways – either bundling or unbundling products and services.

What are some examples of bundling?

A bundled business model involves combining or integrating multiple complementary products or services as a package for a single price (Docters et al., 2006Hahn and Morner, 2011).

Examples of companies who use bundling are

  • Microsoft bundles its productivity software, consisting of multiple complementary applications, as Office 365; computer manufacturers partner with Microsoft to bundle hardware with the Windows operating system.
  • Telecommunications companies bundle TV, internet and phone services. 
  • McDonald’s bundles its food offering into meals.
  • Xbox sells with bundles of Games.
  • Setapp bundles software products that otherwise would cost a lot more.

What is a bundling strategy?

A bundling strategy is an assessment of market conditions to understand if a customer segment will value a bundle and to assess the opportunity.

It is unwise in the era of increasingly personalized experiences and choose to force people to choose a bundle. Bundles can have negative effects if they then lower the value of the other products and cannibalize the sales and profit margins.

Bundling As Personalization – Modular Bundling Systems

Car manufacturers such as BMW offer the ability to create your own bundle and/or customize your car. Often they offer lower price options that naturally fit together e.g. a technology package or entertainment package.

What are the benefits of bundling?

Bundling products or services offer economies of scope, in other words, you can sell more to a single customer.

In terms of digital technologies, there are large economies of scale. As an example, simply adding an app to a mobile phone whilst it is being manufactured incurs a very low, almost zero cost.

That app though could offer free TV to a consumer or free Spotify for a limited period.

The bundling increases the value proposition to the consumer and makes it a more attractive purchase.

What is Unbundling?

Unbundling is a business strategy and concept that involves analysing a value chain and then breaking it apart into smaller parts to create individual offers. This appeals to the set of customers or creates a new market for customers who want to buy individual units rather than bundled products or services. Essentially, consumers benefit by making having a greater selection and choosing only what they want.

What are some examples of Unbundling

Probably the biggest examples are from.

As a result, massive changes are taking place across many industries such as hotels, banking (aka FinTech) and healthcare to name a few.

unbundling Examples

Google unbundled newspapers

Newspapers in the were still stuck into the old form of distributing news (content) through the printed paper when Google started to dominate our search habits. Digital content, as opposed to physical papers, could be distributed with low costs compared to print. Google became the gateway to news sources and content across the world., thus unbundling the newspaper industry.

Bundling vs Unbundling In A Digital Age

Bundling and unbundling in a digital age offers new opportunities for incumbent organizations as well as new startups.

Bundling of services produces new and unique value propositions while unbundling offers opportunities to focus on a niche value opportunity and scale.

New Examples of Unbundling

CBInsights have run a series of graphics demonstrating how large traditional industries are being unbundled as a result of digital technologies and new startups.

Unbundling the Bank

Unbundling The Bank
The unbundling of the bank by new Fintech startups

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