Skip to main content

Bundling

warning

This is an early draft and isn't yet up to our standard. You can contribute improvements.

Bundling​

Definition & Summary: Combining products or changes together so that a less desirable item is packaged with a desirable one, encouraging adoption of the whole package . In practice, bundling hides or offsets something that might face resistance by delivering it alongside something the user needs or wants.

Detailed Explanation: The purpose of bundling is often to drive adoption of a new or disruptive component by coupling it with existing demand. Origins lie in price bundling (e.g. sell two complementary goods together), but strategically it's used to push changes covertly. Key principle: ensure the bundle's overall value proposition is positive for the user, so they accept the "bad" with the good. This can accelerate evolution -- for example, forcing an upgrade by bundling a necessary service with an upgraded one. It was infamously used in tech to introduce new standards hidden in bigger releases.

Real-World Examples:

  • Historical: Microsoft bundling Internet Explorer with Windows in the 1990s is a classic case . Users got a free browser with their OS (a need: access to the web), which hid the disadvantage for competitors (it undercut Netscape). Over time, this bundling made IE ubiquitous. (It also led to antitrust action -- a risk of bundling strategy when too successful.)

  • Historical: Cable TV providers bundle less-popular channels with very popular ones in packages. Consumers who want the popular channel must pay for the bundle, effectively driving distribution for channels that would not survive alone. This "hide a disadvantageous change" (like a price increase) by mixing it with must-have content is a bundling play.

  • Hypothetical: A SaaS software company needs to deprecate an old feature that some legacy customers still use. They release a new upgrade bundle: the old feature is removed, but the upgrade includes extra storage and a new AI tool at the same price. By bundling improvements with the removal of the old feature, they soften the blow and get customers to accept the change.

When to Use / When to Avoid:

  • Use when: You have a change or component that users would likely reject on its own (e.g. a price increase, a new but initially inconvenient standard) but you can pair it with something they strongly desire . It's effective for rolling out evolutionary steps in your value chain without giving customers a stark choice to opt-out.

  • Avoid when: The bundled items are unrelated -- customers aren't fooled and may resent being forced to take something they don't want. Also avoid if bundling triggers regulatory concern (tying arrangements can be illegal in some contexts if you have market power, as seen with Microsoft).

Common Pitfalls:

  • Customer frustration: If customers feel the bundle is coercive (e.g. "Why must I buy X to get Y?"), it can cause backlash and even drive them to seek alternatives.

  • Overshadowing value: The positive part of the bundle must clearly outweigh the negative; if not, users focus on what they're unhappy about (like bloatware bundled on new PCs hurt user satisfaction).

  • Legal risks: As noted, aggressive bundling by a dominant player can invite antitrust scrutiny (courts ruled Microsoft's bundling as anti-competitive ).

Related Strategies: Confusion of Choice (bundling can be combined with complex packages to make alternatives hard to compare), Raising Barriers to Entry (bundling many features raises customer expectations), Land Grab (bundling can quickly expand user base for a new service by piggybacking on an existing one).

Further Reading & References:

  • Wardley, S. -- On Bundling . Defines bundling as "hiding a disadvantageous change by bundling with other needs" and cites examples like introducing changes under the guise of packaged deals.

  • U.S. vs Microsoft (1998) -- Antitrust case documents (DOJ findings) . Describes how bundling Internet Explorer with Windows gave Microsoft a strategic edge (and the legal ramifications).