Final Research Project for PGDBM Marketing

PRODUCT BUNDLING A NEW STRATEGY FOR RETAILERS N INDIA

Executive summary

In this report we have endeavored to understand the factors affecting customer choices.
We have tried to develop better bases for customer segmentation to understand brand
loyality and shopping pattern .

Product bundling is a pervasive selling strategy in market . exe- of which include

sporting and culture organization offering seasonal tickets and restaurant providing
complete dinner and retail stores offering discount to customer buying more than one
product. Product Bundling refers to the bundling together of more than one product for a
sale. This is very common for digital products, where the marginal costs of each product
is very low.
Product bundling are many types like pure product bundling and mixed product and
mixed leader .

Pure bundling wheer can only purchase the entire bundle or nothing, mixed bundling
occurs when consumers are offered a choice between the purchasing the entire bundle or
one of the separate parts of the bundle.

Pure bundling can be further divided into two cases: in joint bundling, the two products
are offered together for one bundled price, and, in leader bundling, a leader product is
offered for discount if purchased with a non-leader product. Mixed-leader bundling is a
variant of leader bundling with the added possibility of buying the leader product on its
own.

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Recent report of price war and heavy media spending by three major organization (big
bazaar and vishal megamart and salasaar ) has stimulated us to look into media and price
market on customer purchasing decision.since this field consist of many players and
each player have multiple brands cattering to different segements .we have done
perceptual mapping to better understand consumer’ perception about product bundling .
For focusing the marketing strategy of product bundling we are identified two
dimensions in which product strategy are classified-
a. focus b. form
the focus of bundling can be either the price or the product. While the form of the
bundling can be none pure or mixed.
Impact of the price discount on the perceived attractiveness of the bundle depend upon
the type of the product that is being discounted.

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 Introduction

Bundling is selling a quantity of a single product or a group of one or more products to

customers. Typically, the cost of the bundle is lower than the item by item cost of the
bundle parts.

product bundling is a marketing strategy that involves offering several products for sale
as one combined product. . Product Bundling refers to the bundling together of more than
one product for a sale. This is very common for digital products, where the marginal
costs of each product is very low. If most of the marginal cost is associated with
packaging and distribution, this is further reduced when the products are bundled
together, as they share the same costs of packaging and distribution. Thus the incremental
cost to the firm (i.e. Microsoft!) for bundling together additional software products is
very small (actually zero aside from any opportunity cost). Thus a suite of products may
allow for greater market penetration into different software markets than if the software
was sold separately. For software that is not currently used by the consumer, but is
purchased through a bundled package, it works to lock-in the consumer once he/she
decides to use that category of software. Thus bundled software can ensure strong market
positions across multiple markets.

The strategy is most successful when:

• There are economies of scale in production .

• There are economies of scope in distribution.
• Marginal costs of bundling are low.
• Production set-up costs are high.
• Customer acquisition costs are high.

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• Consumers appreciate the resulting simplification of the purchase decision and
benefit from the joint performance of the combined product.

This strategy is very common in the software business. For example -

1. Computer software is a general term used to describe a collection of computer

programs, procedures and documentation that perform some task on a computer
system. The term includes application software such as word processors which
perform productive tasks for users, system software such as operating systems,
which interface with hardware to provide the necessary services for application
software, and middleware which controls and co-ordinates distributed systems .

2. Bundle a word processor, a spreadsheet, and a database into a single office suite .
3. In the cable television industry (for example, basic cable in the United States
generally offers many channels at one price) .

4. The fast food industry in which multiple items are combined into a complete
meal. A bundle of products is sometimes referred to as a package deal or a
compilation or an anthology.

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pure bundling occurs when a consumer can only purchase the entire bundle or nothing,
mixed bundling occurs when consumers are offered a choice between the purchasing the
entire bundle or one of the separate parts of the bundle.

Pure bundling can be further divided into two cases: in joint bundling, the two products
are offered together for one bundled price, and, in leader bundling, a leader product is
offered for discount if purchased with a non-leader product. Mixed-leader bundling is a
variant of leader bundling with the added possibility of buying the leader product on its
own.

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Research objective:
To know effect of product bundling on shopper’s buying preference.

Analyzing positive as well as negative effect of product bundling .

Research methodology:

The market research will be based on systematic research design to meet the objective of
the study .primary data will be used to accomplish this report .shoppers will be queried
for the research purpose filling up questionnaire by shoppers will do primary data,
therefore secondary data may also be used for research purpose.

Descriptive research

Descriptive research which has been used for the description of the effect of shoppers
buying preference .for Descriptive research we use survey method and personal interview
method.

Data source

Both primary and secondary data has been gathered to provide for better picture of
interferces. However not much secondary data has been taken . therefore ,more emphasis
has been given on primary data .through questionnaire and personal interviews etc .

Primary data:
a. Response from shoppers in Kanpur city.
b. Research approach : field survey
c. Research instrument :
d. Structure questionnaire consisting opens and close ended questionnaire

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Research approach
Two different approaches has been used for this particular project .they are –

Observational data

Exploring oneself to different markets, retail stores etc and just observe ,which age group
of shoppers come frequently ,which class of shoppers working or nonworking frequently
visiting to the market and what their shopping habits. through observation(it could also
known) that whether shoppers having vendor relationship or vendor loyalty with them.

Survey research

Observation would not be enough to get on to the conclusion therefore second research
approach which has been used is survey research. for extensive research survey research
is the best suited. survey would be undertaken to know to effect of product bundling on
shoppers .moreover survey would be provide with more accurate data ,which will help in
analyzing .

Sampling plan

A survey has been targeting the shoppers to know the effect of product bundling on
shoppers .further classification on the basis of different shoppers profile has been done –
working, nonworking.

Sampling size

a. The sample size is 100 ,which may not reflect a true picture of the consumer’s mind .

b. The respondents will be chosen through simple ramdom sampling .

c. Lack of enough time was one of the major constrains . Sample size how many people
would be survey or interviewed for the purpose of correct and accurate information. it has

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been favorable to take large sample size .hence sample size come to about 100 shoppers.
all these shoppers has been interviewed personally.

Contact method
Personal interview would be preferred.

Data analysis
Data until analyzed is of no used . analysis will be done based on the response of people
surveyed and analyzing the responses of questionnaire .

Data interpretation
After analysis data will be interpreted and inferences will be drawn and transformed to
meaning information to get a vivid picture.

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 Objective

To determine the most basic purpose of using product bundling among shoppers.

a. To determine the kind of product bundling being used by shoppers.

b. To determine the overall attitude of shoppers towards product.

c. To determine the usage rate and frequency of purchase of product by product bundling

d. To determine the decisive factors in deciding a product by product bundling.

e. To study the result from various angles including sex size, usage rate wise attitude
score wise.

f. To determine the influencers of product bundling among shoppers.

g. To determine the satisfaction level of shoppers of product bundling.

h. To study the entire process involved in the extension of the product .

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 Types of product bundling
1-Pure bundling

2-Mixed bundling

3-Product bundling

4-Price bundling

5-Mixed leader bundling

Pure bundling
Pure bundling is a strategy in which only a bundle of product is available for purchase. in
other word ,buyer must purchase the bundle, since they do not have the option of
purchasing individual component. Firm sells product only in a package not separately.

Mixed bundling
Mixed bundling gives buyers the option of purchasing either the bundle or any or all the
individual component .hence whenever product sold in a package as well as separately is
mixed bundling. A mixed bundling strategy refer also to an offer of more model or
packaging forms of same product .when a firm sells the same product in different size.

Ex- small and large package of beer, biscuit or soaps.

Price bundling
Price bundling is the sale of two or more separate product in a package at a discount
without any integration of the product. because of product are not integrated the
reservation price for the price bundle is by definition equal to the sum of the conditional
reservation. price of the separate product. the motivation for the customer to buy the
bundle is the discount offered because bundling itself does not create value

Ex- set of luggage items,a six pack of beer and combo meal .

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Product bundling
Product bundling is the integration and sale of two or more separate product or services at
any price.

Mixed leader bundling

Mixed leader bundling strategy consist of bundling of two or more product ,where one of
these is a leader product ,price high innovative other is price low and mature to sell the
first at profitable price, firm usually gives the discount for the second product .

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5 ps for making decision to spend their available resources on consumption related
items .

1.What they buy

2. When they buy

3. How often they buy it

4. How often they use it

5. How they evaluate it after the purchase

Product bundling has become a very common phenomenon in the marketplace. The
variety of bundling strategies appears almost endless. These include offering "more of the

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same" (e.g., buy three, get one free), bundling a product with a complementary item (e.g.,
free film with the purchase of a camera), offering something totally unrelated (e.g., a
chance to win a Hawaiian vacation with the purchase of a microwave), bundling a
product with a discount (e.g., buy one suit and receive the second suit for half price),
bundling products with donations to charity. and bundling transactions together (e.g.,
trading in an old car for a new one).Bundling is a very popular sales-promotion tool, in
which a critical issue is to decide what products should be sold together in order to
improve sales. Traditionally, this decision is based on the order data collected from the
points of sale marketing implications .

Customers prefer the pure bundle rather than the mixed bundling. customers perceived
the pure bundle as providing for pure bundling than for mixed bundling more value for
money than the mixed bundle, so that the customer‘s intention to buy produces greater
results .

Increasing the number of items in a bundle makes it more difficult for competitors to
duplicate the bundle. Therefore, product bundling can be used as a

Strategy for product differentiation.

Increasing the number of items, the supplier could raise the intention to purchase.

Nonetheless, it is important to consider just how many bundle components customers can

Process into their decisions. Customer’s process information about a set of attributes,
until the amount of information exceeds their cognitive capacity. This line of reasoning
suggests that

More components in a bundle are better until the number exceeds processing capacity, so
that information overload occurs and purchase intentions decrease.

Another important characteristic that may influence the purchasing decision is the

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Complementarily of the products bundled. That in very related bundle components, the
purchase intentions can be greater than in either moderately related or unrelated
components. Customers evaluate bundles consisting of functionally related products
differently from bundles consisting of functionally unrelated products. With the
expression functionally related products“ we shall refer to the type of bundles composed
by goods that present some degrees of complementarily, e.g. television and DVD-player.
Usually the consumers perceive a bundle composed of complementary items as more
favorable than a bundle composed of functionally unrelated attributes. Hence, discounts
offered can also depend on the heterogeneity of bundled products. The lower is the
heterogeneity, the lower will be the discount .

Pricing the bundle

For a firm with a broad line of complementary products, product bundling can be used as
a price strategy alternative to the more traditional follow-the-leader and cost-based
strategies. Customers may have problems in evaluating bundles of products. Customer
evaluation may be biased. Sub-optimal decisions and inaccurate understandings of the
magnitude of savings offered in bundles are likely outcomes.

The perception of prices is sometimes inaccurate because customers may have problems
in conducting mental arithmetic.

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Method of cost allocation

1. Some times a product bundling has individualized pricing for the component, and in
this the individualized pricing can be used to determine a cost allocation.

2. Some times a combination of product will be offered at a lower price than when the
products are purchased separately. The discount must be applied evenly to the eligible
and ineligible component.

3. file servers and other component that have multiple purposes some eligible and some
ineligible can be cost allocated by using a simple average of the different function for a
project .

4. some but not technical services are eligible for discount .a fair and accurate
determinations of resources to be utilized for each part of project amy be submitted.

5. Equipment racks and uninterruptible power supplies are some times used for both
eligible and noneligible component.

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Vishal mega mart
It started as a humble one store enterprise in 1986 in kolkata (erstwhile Calcutta ) is today
a conglomerate encompassing 73 showrooms in 50 cities. India’s first hyper market has
also been opened for the Indian consumer by vishal .situated in the national capital Delhi
this store boasts of the single largest collection of goods and commodities sold under one
roof in India .

The group had a turnover of Rs. 1463.12 million for fiscal 2005, under
the dynamic leadership of Mr. Ram Chandra Aggarwal . The group had
of turnover Rs 2884.43 million for fiscal 2006 and Rs. 6026.53 million
for fiscal 2007
The group’s prime focus is on retailing. The Vishal stores offer
affordable family fashion at prices to suit every pocket.
The group’s philosophy is integration and towards this end has
initiated backward integration in the field of high fashion by setting up
a state of the art manufacturing facility to support its retail endeavors.

Vishal is one of fastest growing retailing groups in India. Its outlets

cater to almost all price ranges. The showrooms have over 70,000
products range which fulfills all your household needs, and can be
catered to under one roof. It is covering about 1736711 sq. ft. in 18
state across India. Each store gives you international quality goods and
prices hard to match. The cost benefits that is derived from the large
central purchase of goods and services is passed on to the consumer.

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 Founder of the vishal

Mr Ramachandra Agarwal

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Mr surendra Agarwal

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 Mrs uma Agarwal

Big bazaar

Big Bazaar is not just another hypermarket. It caters to every need of your family. Where
Big Bazaar scores over other stores is its value for money proposition for the Indian
customers. At Big Bazaar, you will definitely get the best products at the best prices -
that’s what we guarantee. With the ever increasing array of private labels, it has opened
the doors into the world of fashion and general merchandise including home furnishings,
utensils, grockery , cutlery, sports goods and much more at prices that will surprise you.
And this is just the beginning. Big Bazaar plans to add much more to complete your
shopping exper Big Bazaar is a chain of department stores in India currently with 75
outlets. It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same
economy model as Wal-Mart and has considerable success in many Indian cities and
small towns. The idea was pioneered by entrepreneur Kishore Biyani , the CEO of Future
Group. Currently Big Bazaar stores are located only in India. It is the biggest and the
fastest growing chain of department store and aims at being 350 stores by the end of year
2010eince

Food bazaar

Ab Ghar Chalaana Kitna Aasaan

Food Bazaar invites you for a shopping experience, unique by its

ambience. At Food Bazaar you will find a hitherto unseen blend of a
typical Indian Bazaar and International supermarket atmosphere.

Flagged off in April’02, Food Bazaar is a chain of large supermarkets

with a difference, where the best of Western and Indian values
have been put together to ensure your satisfaction and comfort
while shopping.

The western values of convenience, cleanliness and hygiene are

offered through pre packed commodities and the Indian values of

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"See-Touch-Feel" are offered through the “bazaar-like” atmosphere
created by displaying staples out in the open, all at very economical
and affordable prices without any compromise on quality.

The best of everything offered with a seal of freshness and purity

will definitely make your final buying decision a lot easier.

Now Save, Even more

The Big Bazaar Wholesale Club brings to you an opportunity to save

in bulk as you buy in bulk. In line with the Big Bazaar tradition of
providing best deals at best prices, the Big Bazaar Wholesale Club
provides you bulk deals at wholesale prices.

An extension of Big Bazaar, the Big Bazaar Wholesale Club offers

multi-packs and bulk packs of a select range of merchandise at
wholesale prices. The merchandise categories range from Food &
FMCG to Home Linen and many more. You will not find any
merchandise being sold loose/single unit (except fresh) at a Big
Bazaar Wholesale Club.

A typical Big Bazaar Wholesale Club is located adjacent to a Big

Bazaar in the form of a separate section. The look and feel of a
wholesale market is evident in the stores from the stacking styles
and use of a lot of hand written signages by chalks on black slates.

Taking care of your savings, the Big Bazaar Wholesale Club will
ensure that the more you buy, the more you save. If you enjoy
shopping at wholesale markets for your entire family, or you have a
huge circle of friends who would like to get together for their
monthly shopping needs or if you are a retailer looking for
wholesale offers then the Big Bazaar Wholesale Club is the place to
shop at.

To shop at the Big Bazaar Wholesale Club, you just need to enroll
yourself as a member of the club. If you possess an Anmol card or
an ICICI-Big Bazaar card then you are automatically enrolled as a
member of the Big Bazaar Wholesale Club.

So buy more as you save more or save more as you buy more at
the Big Bazaar Wholesale Club.

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 Analysis Fact

1 . Do you get any benefit from product bundling ?

a. Yes
b. no

100%

80%

60% S e r ie s 2
40% S e r ie s 1

20%

0%
1 2 3

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2. How many times are you are going market for purchasing?

a. Once in a week

b. Twice in a week

c. Once in a month

d. Twice in a month

50
45
40
35
30 S eries1
25 S eries2
20 S eries3
15
10
5
0
1 2 3 4 5

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3. How frequently purchase product from product bundling?

a. Once in a week

b. Twice in a week

c. Once in a month

d .twice in a month

onc e in a w eek

tw ic e in a w ek

onc e in
am onth
tw ic e in a m onth

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4. .Basic purpose using product bundling for the

a. saving money
b.business purpose
c .others

s a ving m on ey
s a ving tim e
othe rs

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5 .what made you purchase product from product bundling
a. Personal use
b. office use
c. business
d. others

p ro d uc t p urc ha s e
60
50
40
30 S e rie s 1
20
10
0
ice

ers
l

ss
na

off

oth
rso

sin
pe

bu

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6. which malls are you going for purchase
a .Vishal mega mart
b. Salasaar
c. Big Bazaar

B ig B a za a r
s a la s a a r
v is h a l

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7 .Whom with you purchase product from product bundlind
a. spouse
b. child
c. parents
d. others

40
30
20
10
Series1
0
S1
spouse

child

parents

others

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8. Do you purchase product from product bundling
a. Yes
b. No

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8. you prefer doing the shopping from ?
a . small market
b .department store
c.super market
d.others

50
40
30
S e r ie s 1
20
10
0
others
market
super
small retail

department
outlet

stores

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9 .Do you recall any such schemes in which you have bought product in bundle ?
a. Yes
b. No

3
S e rie s 1
2 S e rie s 2

0 50 100

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10 .Do you purchase product from product bundling ?
a. Yes
b. No

60
50
40
30 S e rie s 1
20 S e rie s 2

10
0
1 2 3

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 Analysis fact

1. out the total customer of the sample size 48% of the customer
are visited Big Bazaar and 32%are visited vishal megamart
and 20%are visited salasaar .
2. out the total customer of the sample size 52%of the sample size
are purchaseproduct from product bundling and 48%are not
purchase product from product .
3. out the total customer of the sample size 54% of the sample
size purchase product from product bundling for saving
money and 24%are purchase for saving time and 22%are
purchase for other purpose .
4. out the total customer of the sample size 54% of the sample
size are purchase for personal use and 23% are purchasing for
office use and 12% are purchasing for business use and 11%
are purchasing for other purpose .
5. out the total customer of the sample size 46% customer are
going to market for purchasing once in aweek and 20% are
going twice in a week and 22% are going once in month and
21% are going twice in a month .
6. out the total customer of the sample size 36% are purchase
product from product bundling with our spouse and 25% are

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 going with child and 26% are with parents and 13% are going
with others .
7. out the total customer of the sample size 14% of the sample
size prefer shopping from small retail outlet and 46% are
prefer department stores and 21% are prefer super markets and
19% are prefer others .
8. out the total customer of the sample size 59% of the sample
size recall such type ofschemes in which they bought product
in a bundle .
9. out the total customer of the sample size 66% of the sample
size are get benefit from product bundling and 34% are not get
any benefit from product bundling .
10. out the total customer of the sample size 54% of the sample
size are purchase product from product bundling once in aweek
and 24% are purchase twice in a week and 22% are once in a
month .
11. out the total customer of the sample size 66% are recall the

such type schcemes and 34% are not recall the such type of
schcemes.

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Recommendation
The recommendation is necessary so that any organization in the near future keep a view
over it‘s overcoming

1. Organization should provide a product bundling for short period not for long
period because due to long period they are destroying their brand (image) loyality.
2. As product lies in maslow’s hierarchy .so we require better promotional media
like print media ,newspaper, magazine etc and better promotional campaign like
small stalls in some fairs ,organizing small function so that customer become
more aware about the product bundling .
3. Other than product bundling organization should provide other promotional tool
like coupons, contest. Price off, premium, special pack. Because in product
bundling consumer invests lot of money which every individual can not afford.
4. To attract new customer organization should launch new promotional schemes to
cover those customer which never take the use of product bundling but they have
interest to take the advantage of product bundling because it will help to tapped
the untouched market like rural sector and others.
Company should provide post purchase service with product bundling so that
there will be an increase in loyality status of existing customer

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Need and significance of the project

a. To know whether the people using product from product bundling

are satisfied or not .
b. To know whether people using product from product bundling .
c. To know about any new suggestion from shoppers .
d. To know about new prospective shoppers .
e. To know that which factor are affected shoppers buying decision .
f. To know that product bundling is a successful promotional tool
among shoppers .

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Limitations

Though the project has not faced any limitation in the terms of money or time ,still its
outcome may have been affected by following factors:

1. For Some people think that I am sales person ,so they did not entertain me
properly .

2. Some customer was totally satisfied and some were totally unsatisfied . this may
because of some ways of thinking of respondent .

3. Disinterest shown by few respondent to give response to the questionnaire

because they feel hesitation to response any questionnaire.

4. Results are valid for Kanpur and cities having similar demographic characters.

5. Doping effect is another limitation, which the research work can suffer from.

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 Conclusion

Product bundling is one of the most crucial feature in the

promotion of the product and increasing the brand awareness and
brand loyality .
Innovation in the product bundling are as crucial as it delivers the
product merit to consumer and meets their needs.
Product bundling provide the vital opportunities to build new
brand or reinforcement and value to a positive experience of an
existing product.

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 Learning

This project has been an enriching experience for me. It is through this that I could reap
exhaustive & profound knowledge about the product bundling I also leanrt a lot the
various local, competitors prevalent in the market. With the help of the detail study of
product bundling. I was able to get the in-depth knowledge of the distribution channel, s
and product bundling. I was also able to get in-depth knowledge about the product .

Finally, these opportunities to venture outside the secured environment of our B-School
and discover about the real professional moves, rarely knock the door. I was lucky
enough and also opportunist to a certain extent to seize hold of this opportunity so as to
augment my knowledge base. This project for me was like a blessing in disguise, as apart
from the knowledge it bestowed me with, it also acted as a catalyst and ignited within me
the flame to take up more of such projects, thereby never letting this flame to die out.

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 Biblography

www.google.com
www.rediff.com
www.research.com

Books :

Marketing concepts and strategies

Consumer behaviour

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