Today, more than ever before, it is crucial to go beyond creating individual stand-alone products in publishing. You should strive to make your product line cohesive to make it easier for your target audience to understand and consume a topic to their liking, rather than trying to piece together stories on their own.
While news readers are increasingly faced with complex decisions that involve many different factors, they will often look to publications to provide options they can pick and choose from. This type of customization is called bundling. Most bundles make margin in giving your audience some of the things they want, but also some of the things that they will rarely use. Breaking things apart lets them see how you value each product, which is likely to differ from your perceived or real value in at least a few areas.
In any case, giving your readers a choice through bundling is a good thing. You can always find a way to improve reader experience by adding this option. Just remember to keep it simple and more profitable with one package deal and your audience is likely to focus on the total experiential value, perceive greater total value, and try features that they may not have otherwise. Here are more great bundling tips from Matt Lindsay, President of Mather Economics.
Let customers reveal their preference
A successful pricing strategy is one that matches a customer’s price point close to the value they place on the product. In most cases, it is difficult to estimate how much a customer values a product, or to place them in a customer segment, prior to the sale. Observing individuals’ choices between bundle options yields some insight into their perceived value of the product and their likely engagement with the product once they are customers. An individual’s choice between bundles is what economists call their “revealed preference,” and it is remarkably more accurate for predicting behavior than responses to focus group questions or survey responses, which is referred to as their “stated preference.”
To sort customers into segments using bundles, define product bundles so that they appeal to specific groups with similar perceived value. An example is using sports to differentiate customers willing to pay a premium for that content. As publishers are launching digital products focused on core audience groups, including or excluding these products in bundles will drive adoption and incremental revenue from those willing to pay more.
Selling more together than separatelyA successful bundling strategy will enable you to sell more of your products together than would be purchased if they were sold separately. This is the reason cable companies do not sell channels a la carte. Very few of us would buy more than five or 10 channels if that was an option, but because those five or 10 are valuable enough to us, we are willing to buy the premium bundle that includes hundreds we never watch. The music industry only gave up the album bundle and sold songs separately when faced with unrelenting digital disruption and piracy.
Publishers should be cautious when unbundling their traditional newspaper products so customers can buy only the section they read most. In most cases, the better strategy is to develop new products that augment the traditional bundle. Digital products are an excellent example of a value-adding addition to a customer’s print subscription, creating a bundle that yields additional revenue from existing and newly acquired customers, even if they may not place much value on digital or print access separately.
Expecting the unexpected
Behavioral economics has added another aspect to bundling strategy by identifying predictable reactions to bundle choices with certain patterns of price points. In Dan Ariely’s book “Predictably Irrational,” he cites a bundle of print and digital products offered by the Economist priced at $125 a year, the same price as the print-only subscription, which significantly increases the number of people that buy both print and digital subscriptions versus the digital-only subscription at $59 a year. He makes the point that people do not know what they want until they see a choice in context with other options. Offering multiple bundles gives individuals data to make their purchase decision. By being selective about the choices you give them, it is possible to affect their decision in predictable ways. For instance, offering a premium bundle at a high price point will cause more people to choose the mid-priced option relative to their choices without the high-priced option.
Never let a crisis go to waste
As digital distribution channels increase competition for audience and reduce demand for print products, use this opportunity to develop your own strategic options through new product development and bundling. Newspapers have the best content. The key to success in this new era is packaging and bundling your content to maximize your audience and revenue. Just look at your cable bill.