How To Use the Power of Packaging to Double Your SalesBy: David Frey
Packaging your products and service can be a powerful marketing technique to move more products and services and add more value. By packaging I'm not talking about how you wrap up the package. I'm talking about the "package offer" you present to your customer, sometimes called a bundled offer.
To give you an example, not long ago I purchased a vacation to Mexico that included our flight, food, hotel accommodations, and various entertainment specials in one "all-inclusive" package. We had a great time and saved tons of money. Using creative packaging deals can boost sales and impress your customer.
Another great example of this strategy is presented to you nearly everyday at fast food restaurants. When you buy a "happy meal" for your child (which I often do), you are buying a package deal. Instead of purchasing a soft drink, fries, and burger separately, it all comes together in one happy meal package (they even throw in a toy!). Packaging is so common in the fast food industry that 98% of all sales are package sales.
The Benefits of Packaging or Bundling
Assembling multiple products or services to sell in a package not only increases your overall sales but it also…
The Psychology of Combining Products and Services
The idea behind creating packaging deals is to combine products and services together and offering them at a lower price than you would pay if you purchased them individually. Bundling goods at a discount price plays a few psychological tricks on your mind that triggers you to buy. When you see a bundled offer of interest your mind says to you:
What is "Value"
It's important to know what value is when developing "packaged" products or services so allow me to take a moment and explain the true definition of "value." Value is…
Scenario 1 - If Price goes up, and Perceived Benefits stay the same, Value goes down.As a marketer, you always want to position your offer with the value going up. To do this you must either lower your price, increase your benefits, or increase your benefits more than you increase your price. Whatever you do, your value must go up because that's how consumers choose you over your competitor.
Okay, enough of the theoretical stuff, but its important to understand this when creating a bundled offer. Why? Because if you bundle your products and services right, you will be able to add even more benefits to your customer at a lower unit price, thus dramatically increasing the value of your offer in the mind of the consumer.
Examples of Packaging and Bundling are Everywhere!
You can see examples of bundling and packaging everywhere. Just look around you when you go out to shop for men's and women's clothing. Merchandisers have figured out that people will buy matching belts, ties, scarfs, and even jewelry in different stores just to match the outfit they purchased at their store.
That's why you see suits with matching ties and shirts for one low price. Or you'll find women's suits with matching blouses and jewelry for one price.
Amazon.com demonstrates a great example of packaging by offering you the book you have requested and a second related book. To see what I mean go to Amazon.com and type in "pool and spa maintenance" and this is what you'll see:
Notice that you not only get the book "Pool and Spa Maintenance" presented to you but you also get "Salonovations' Day Spa Operations" presented to you at an additional 5% off. Do you think that Amazon has increased their sales revenues and margins from this type of promotional offer? Absolutely.
Bundling products and services is so powerful that it revolutionized the software industry in the early 90's. Once Microsoft started the era of bundling desktop software, if you were a provider of just one software product you had very little chance of survival. Just ask Wordperfect, Novell (still struggling), Borland, Lotus and a list of other companies that were literally destroyed because they didn't bundle.
Using Joint Ventures to Bundle Products and Services
If you don't have (or can't offer by yourself) multiple products or services you may consider joint venturing to provide additional products or services of other businesses to bundle together with your offering.
For instance, if you are a men's clothing store, you could bundle the services of a local clothing tailor and a dry cleaner to provide a "Perfect Suit" program. The clothing store sells the untailored suit, the tailor fits the suit, and the dry cleaner cleans it. Everyone benefits resulting in more sales and new customers.
Suppose you were a marketing consultant (like me) and you noticed that many of your clients not only had marketing issues, but also bookkeeping and legal problems. Instead of doing a simple referral to other businesses you may consider forming a joint venture and offering a "Small Business Diagnostic" service that all three parties (consultant, bookkeeper, and lawyer) sell to their clients.
How To Develop a "Package Offer"
To develop different package offers think of the problems that your customers often experience and the potential solutions that you offer to help solve the problem. Then think of something else you may be able to add with the package that costs you little but adds great value.
For instance, the following are a four common problems that customer's of various small businesses face and examples of potential "packages" that might offered to solve the problem.
EXAMPLE 1 - Service Station
Customer Problem - Auto deterioration from cold winter weather
EXAMPLE 2 - Hair Salon
Customer Problem - Need to look your very best for your (or your friend's) wedding
EXAMPLE 3 - Laundromat
Customer Problem - Clean your dirty clothes
EXAMPLE 4 - Grocer Store
Customer Problem - You're hungry!
Important Packaging and Bundling Principles
Now that you have reviewed these four examples I hope that you get the idea of how to package products and services for maximum value and price. Let's take a moment and review each of these examples and pick out the important principles that you need to keep in mind when creating a package offer.
Principle # 1 - Each of the three packages offered was a solution to a customer's problem. Don't offer a packaged product or service unless it offers a solution to a problem. Why? Because people only buy things that solve problems they are experiencing.
Principle # 2 - Each offer actually had three unique offers that built off the lower priced package. Giving the consumer choices is what packaging and bundling is all about. Providing options with increasing value is what motivates consumers to "upsell" themselves by choosing the more expensive option.
Principle # 3 - The names of the different packages denoted increasing value such as, silver, gold, platinum or starter, super, ultimate. Notice that each word has increasing value. Also notice that the name of the lowest package denoted value. That's why we started with silver instead of bronze. It says that even the lowest option is valuable.
Principle # 4 - The additional products or services that are added on to the basic package have a low cost to you. The "add-ons" need to be cost effective because the incremental price you are charging needs to provide significant margin to the package.
Principle # 5 - I threw the Life cereal example in for two reasons, one, because it's my favorite cereal and two, because I wanted to show you that you don't have to have a bunch of different products to create a package. You can just add more of the same product to the package.
In fact, just yesterday I purchased two units of potato salad. A single unit of potato salad costs $2.00 and the double package costs $3.00. I bought the $3.00 package, ate the first unit and took the second one home!
Look Around for Packaging Options
Yes, you do have packaging options in your business. You just need to open your eyes to find them. In some way, shape, or form you can create unique packages of your product or service that will solve one or more of your customer's problems.
Packaging creates a higher perceived value by increasing the benefits and lowering the unit price. Examples of packaging and bundling are everywhere. If you don't have enough products or services to create a package offer, consider joint venturing with a company that does. Remember to provide a strong upsell option in your package by offering multiple options, each progressively more valuable and expensive.
© Copyright 2002, David Frey
The author assumes full responsibility for the contents of this article and retains all of its property rights. MarcommWise publishes it here with the permission of the author. MarcomWise assumes no responsibility for the article's contents.