OUTSOURCING AND BUNDLING STRATEGIES: ARMORS FOR SATURATED MARKET

Why companies bother to bundle and outsource? Are these moves necessary?

BUNDLING

Bundling is a necessity when the market you want to penetrate is already saturated and your resources are limited. In order for the company to stay in the market and compete with available resources bundling strategy is one of the answers. Below are few reasons why companies need to bundle?

Another way to differentiate your product or services.

Offering a bundle product for example (Microsoft Suite/Office) is another way of differentiation. Why it is differentiated? Because you offer a product that is unique or distinct, Microsoft Office offers not only Word but Excel, Powerpoint, Access, Publisher, Share point and the alike bundle into one program.

A disguised for price-premium or mark up.

When one of your products are not sellable and offers low profit margin then bundling it will help. Bundling it with an item that is hot on the market and set a premium price or mark up for that product can never be a questioned to the consumers because they will look at it as “A price for two in one”- An enticement for customers to buy your product without any question in mind.

Inventory Cost

As we all know that inventory is costly. The bigger and the longer your products stored in the warehouse the higher your inventory expenditures. Inventory is inversely proportional to the sales of the product. If the sales is low, the demand is low the inventory is bigger. Bundling the not sellable product with a sellable item could lessen the inventory and at the same time generating sales to the not hot item.

OUTSOURCING

Outsourcing can be either good or bad for companies because there are some implications the company needs to endure such as loss of control of management, hidden costs, threat to security and confidentiality, quality problems and tied to the financial well-being of the another company. So when the right time is the company will outsource? If you want to focus on core activities and cost reduction then outsourcing is best for the company. The company should select the right activity in the company that will be outsource because once the quality of your products for example will be hampered and it could cause loss in sales then outsourcing is not advisable. If it can’t be avoided that outsourcing is a must, the company should hire another party that will oversee and monitor these third party activities to ensure that the quality of the finished products will reach to its end consumer in good conditions and quality.