Product bundling is a common marketing strategy that involves offering several items for sale as one combined product offering.
This strategy is often utilised by cable television companies, who tell subscribers that, if they want channels A, B, and C, then they need to also subscribe to channels D, E, and F. Then there’s the fast-food industry, which is a master of the combo-buy — in effect, product bundling.
In the last two years, the Toronto Star has become skilled at bundling a variety of products to our print subscribers. The result has been a nice lift in consumer revenues.
Recently we launched a new product bundle offer that includes a Star ePaper subscription and Kobo Vox™ eReader. The Star ePaper, powered by Newspaper Direct, is a replica of the print edition.
Many newspapers market their e-papers (a.k.a. digital replicas) on their Web sites as a bundle subscription with print. In some cases, consumers can subscribe to the digital-edition only. The Star does not currently promote a Star digital replica subscription on our Web site.
We partnered with Kobo, an e-reading service provider, and chose to bundle the Star ePaper with their Kobo Vox™ eReader, which is akin to Amazon’s Kindle Fire or the Barnes & Noble Nook Tablet™ in terms of price and tablet-like features.
This device is a low-cost alternative to a full-service tablet and retails for about US$200. The Kobo brand is well-known in the Canadian market, and we thought it was important to bundle with a brand that consumers would recognise.
The Toronto Star is not the first newspaper to test a digital subscription with a tablet device.
In the fall of 2011, Philadelphia Media Network bundled a tablet along with a digital subscription. They chose the Arnova 10 G2 tablet and marketed a one-year and two-year digital subscription to Philadelphia Inquirer and Philadelphia Daily News.
The New York Times and Barnes & Noble also ran a promotion, which included a subscription to The New York Times and a free Nook Simple Touch eReader.
We had internal and external research on tablet usage and buying trends, thus we knew there were many people who intended to purchase an e-reader or tablet in the near future.
We decided to test this new offer to a small segment of existing weekend service subscribers who pay by credit card. This group was selected for several reasons:
- As existing subscribers, they already have an affinity for the Star.
- For whatever reason, they only subscribe to print on the weekend, so perhaps this new way of accessing the weekday edition would appeal to them.
- They already pay for their subscription by credit card, which is a requirement for the bundle offer we were introducing.
To date, the response rate from this target audience is in line with the average direct mail response rates to a non-subscriber file promoting traditional print. That’s not too bad.
The response is even more impressive when you consider that, as part of this offer, these subscribers also maintained their existing print subscription. In effect, they have opted to spend incremental revenue with our brand, not simply switch from print to digital.
While I think the idea of bundling a device like this with a digital edition is a good idea, there are several challenges that newspapers — and for that matter any type of organisations — should consider before launching this type of promotion.
Here are several things to consider:
Be careful about your bundle partner. Once you decide to bundle with another brand and take on the sales and marketing lead, consumers will hold you accountable for not just your product, but also the item with which you are bundling. This is all the more reason you need to ensure you work with a reputable company that will stand by its product and work with you on resolving consumer concerns.
Long-term subscription are required to recoup expenses. Another consideration is the time it will take to recoup the expenses associated with a bundle offer. When you bundle an item that has a high value, this means you need consumers to commit to a longer subscription term.
You need to ask yourself: How long is too long? This is especially important when you are bundling an electronic device that may be passé in less than a year once new and improved versions come to market.
We made sure consumers understood that what they were purchasing was a Star ePaper subscription, which was accessible to them on multiple devices, not just the Kobo VoxTM eReader that came with the promotion.
Focus on strong customer service support. Consumers will expect your call centre to be knowledgeable about your e-paper as well as some basics about the bundle item. Make sure they are well-prepared with a detailed Q & A that addresses some questions about the bundle items benefits and features.
What’s next? We will be promoting this offer to a new test segment of existing subscribers and select former subscribers. In reality, we are taking a lesson from the tortoise on this campaign with a targeted, unhurried launch that allows us to take time to review results and modify our marketing campaign, if needed.
In short, there’s no need to rush.