Just visit any retail shop and try to observe a change in the offerings of the FMCG players. I am talking about bundle offers. Invariably every FMCG company is giving these kinds of offers. Let’s look at some of the bundle offers.
· Emami’s schemes include Emami Pure Skin worth Rs 22 free with Boroplus
Advanced Moisturizing Lotion worth Rs 98
· Five pieces of Sardija Cough drops worth Rs 5 free with 100 ml of
Sardija Cough Syrup worth Rs 50
· ITC is offering Vivel Di Wills shampoo (200 ml) free with its 75 gm
bathing soap for Rs 89
· Fiama Di Wills and Lux are offering free lufa with their body washes
· Sunfeast is giving 4 packs of variety of its biscuits for Rs 25
· Kurkure (Frito-Lay) is offering 3 different flavors for reduced price
· Meswak is giving toothpaste and tooth brushes together
in a nice cylindrical box
· Dettol has a bundle offer of its soap and liquid
These offers operate on logic of “Buy more to save more”. In these hard times this tactical measure can provide companies with more revenues (though profit may decrease), better cash flows. At the same time these offers help the companies to increase the trial of the new and upcoming variants/flavors which are often bundled with their best sellers. These offers also give them more shelf space and eyeballs in the retail chain. Consumers may not buy them immediately but atleast will pick up the bundle, look at the price point (I also did the same) and may decide to buy one in future.
Let’s look at how these offers work from the company’s perspective.
Because of the lower price point the total value perceived by the customer goes up and customer is tempted to buy the bundle product. He would not have bought the unbundled standalone product. Also these bundle offers create one more price point for the customer. Some customers buy the product at the new price point.
This strategy sometimes proves perilous for the company In the long run as the customer may get used to lower price point and may not be willing to shell extra money once the offer is withdrawn. This sometimes happens with Soaps which can often bundled in a pack of three and are price substantially lower.
From the customer’s perspective these offers are often tempting. Great packaging adds fuel to this temptation. In case new flavors/variants are bundled with existing flavors/variants bundling provides him the incentive to try. It also provides him with the incentive to buy more and pay less which he always strives for.
I am sure that someone amongst us will surely be tempted by one such offer…Soon…
Vikas
Next Post --> “Positioning of great Indians companies”
true, either a firm can test market its new product by bundling with a successful current offering or it can be a simple push for sales. But what I learnt from most of the cases, Market Research done through bundling doesn't help much as it's not clear that consumers will buy the standalone product. So, in Indian markets at least, it is mainly done to push the sales and achieve annual/quarterly targets.
ReplyDeleteOne more perspective comes from the retailers themselves. Based on the analysis of consumer behavior and product categories, they bundle the offerings. As I mentioned in a post earlier, analytics play a critical role here.
During a low spending economic period, It's for sure that companies won't be able to achieve their annual targets (One of their worries is to fully utilize the production capacity).
ReplyDeleteAnd because of competition, if one company comes up with a bundle offering,Consumer expectation; the main drive for these types of offerings, increases, hence coerce others (May be in a different product category) to follow the herd instinct.
Another reason that I have noticed is one or some of the items in the bundle has less shelf life to go. So the consmer should be wary of such deals while choosing to buy the bundle.
ReplyDeleteFrom the seller's perspective, bundling it is minimizing damages.(losses) and definitely not for creating awareness for a new product.
What do you think of bundled services...? This is usually done while marketing using the web.
ex. your astrological report on ....job front/personal relaitionships and so on. Then pay for .. a complete report.
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ReplyDeleteTake this example.Person A goes and signs up for a Gym for Rs 1100 for 1 year.Person B signs up for the same Gym for a month footing Rs 200.
ReplyDeleteIt is very common for the average A's of the world to drop in to the gym for a week and comfortably forget his subscription.Meanwhile,B would go for a few days in the month,recall at the end of the month that her subscription is expiring.B could renew membership for another month-use the gym better the second month and so on.While the As are good for cash flow and lower maintenance on gym equipment,the odds are that B-who uses the gym better would go for the gym again for the next year,and possibly have a better perception of the gym,do some positive word of mouth and and PR for the gym.In my opinion,it is more B's that gyms ought to want more.B consumes the service better,and tends to become a positive brand model.After all at the end of the day,marketing is about addressing customer's needs.And the health and fitness needs of B is served better.
This is a point of view about price bundling.
So,product bundling could give away the advantages of increasing consumption and retaining customers in the long term.
Other examples include 5 day test match tickets and the Madras December music season(SBJ's examples :)).
Like junta have pointed out,product bundling might help in driving up short term consumption and clearing shelves,especially during the drab seasons we are in now.
@ Vitriola
ReplyDeleteI think in these hard times marketer have no time and foresight to go this deep. They have to meet their quarterly targets as well:)..
Bundle products move faster....SFMCG...Super fast moving consumer goods :)..
When u r getting the moolah why worry about PR ;)...PVR style
Vikas
Welcome aboard guys!
ReplyDeleteInteresting comments...Vitriola's comment was quite insightful... though I noticed one contentious statement in Anuradha's comment- 'bundling is...definitely not for creating awareness for a new product'
But it is quite evident in the beauty care and health care categories where you try to increase the penetration levels of a new product using a successful product from the same category...an example that is on top of my mind is J&J's latest offer where its 'Blossoms' soap is offered free with the Baby soap so that mothers become aware of the new product and eventually end up buying it as a standalone product...
Bedi
PS - let's keep the momentum going guys!
@vitriola.. the gym analogy was refreshingly original.. but it does not look at bundling as an event-led strategy... what you need bundling for are those products that are either have been newly launched with no media support as yet /not been selling well /products that are perceived to be with highly priced.. marketing is about addressing consumer needs "effectively".. thus, A whose need is a year long subscription cannot be ignored.. it also forms a frame of reference with which B's ultimately.. make their purchase decision..
ReplyDeletei m not sure i agree with anuradha when she says it is not about awareness.. a prime example is once again J&J.. they offered Johnson's baby wipes(a category that has very very low awareness) with their baby shampoo.. mother pick up the bundle since it offers them a discount on the total price and hence try wipes.. this leads to awareness..
i agree with sumit when he says analytics is the critical issue here.. most of this bundling offered by manufacturers is on Modern Trade.. where sales at different outlets vary and bundling is done accordingly.. for eg, the J&J bundling i mentioned above was given only at Big Bazaar outlets in Bombay..
on a nationwide level, bundling brings in a lot more challenges than just consumer perception when the bundling is removed.. in execution, distribution challenges plays a huge role.. which is why i dont believe that bundling is done to achieve quarterly targets.. not sure the trade-off is right here..