Bundling is a business process where a series of blocks in a value chain are grouped to lock in consumers as the bundler takes advantage of its distribution network to limit competition and gain market shares in adjacent markets. This is a distribution-driven strategy where incumbents take advantage of their leading position.
Bundling vs. Unbundling
Usually, when a company has gained monopoly power it will use bundling to make consumers get its whole set of products and lock them, by levering on their existing distribution networks (Microsoft Windows is an example).
Unbundling instead is a business process where a series of products or blocks inside a value chain are broken down to provide better value by removing the parts of the value chain that are less valuable to consumers and keep those that in a period in time consumers value the most.
What is an example of bundling?
As Microsoft became a tech giant throughout the PC era, it managed to build such a strong distribution network, to be able to lock in consumers in the PC market for decades. Indeed, Microsoft bundled its Windows in computers before they got purchased.
Thus, encouraging manufacturers to push Microsoft’s products.
A business model primarily built on bundling if abused by a monopolist can turn into anti-competitive behaviors.
Other key business concepts:
- What Is Unbundling
- What Is Business Model Innovation
- What Is a Business Model
- What Is A Heuristic
- What Is Bounded Rationality
- What Is Business Development
- What Is Business Strategy
- What is Blitzscaling
- What Is a Value Proposition
- What Is a Lean Startup Canvas
- What Is Market Segmentation
- What Is a Marketing Strategy
- What is Growth Hacking