What Is Product Mix and Why Is It Important?

Definition of Product Mix

Product mix or product assortment is the total number of product lines that a seller offers in the market to its buyers. The company may have one or several product lines, and each product line may have several products. When all these product lines are combined, it is called the company’s product mix.

A product is anything that is offered to a market to satisfy customer wants and needs. The product includes both tangible and intangible items available for sale in the market. A company sells a variety of products at the same time. For example, PepsiCo sells hundreds of products under the product lines of beverages, food, and nutritional products. These product lines, when combined, are known as the product mix.

A product line is a group of closely related products with similar functions, customer groups, outlets, and the same price ranges. For instance, the Nike product line includes Footwear, Apparel, and Sports equipment, and when all these product lines combine constitutes product mix.

The product mix is an essential element of the marketing mix because the other elements will work if there is a product or service to offer in the market. It is known as the central part of all marketing activities.

Dimensions of a Product Mix

Width – Number of Product lines

The width or breath of the product mix means the total number of product lines that a company offers to sell. For instance, if a company offers milk and yogurt, it indicates that it has two lines. Similarly, a cosmetic company manufactures four different types of products – jewelry, cosmetics, fashion, and household items. Its product mix width is 4.

Depth – Product Variation

The depth of a product mix means the total number of variations for each product a company offers. There may be different variations in the product e.g., size, flavor, taste, and many other characteristics. For example, Medicam sells four sizes, and two flavors of toothpaste means that this line has a depth of eight. 

Another thing I want to discuss is the average depth of the product line. Suppose a company’s first line depth is 8, and the second one is 10 then the average depth is 18.

Length – Total Products

The length of the product mix means the total number of products within the company’s product lines. For example, if a company has 10 product lines and each line has 3 products, then length is (10×3) = 30.

Length of the product mix refers to the total number of products in the mix. If a company has 5 product lines and 10 products under each product lines, the length of the mix will be 50 [5 x 10].

Product Mix Consistency

Product mix consistency is the close relationship between different product lines. The more product variation means less product consistency. For example, a dairy company has two product lines i.e. milk and yogurt. Both lines have the same users and distribution channels. Due to low product variation and high product mix consistency. Take another example of Philips Electronics with 7 product lines having a high production mix variation and low consistency.

Product Mix Examples

Let’s take a simple example to understand the product mix of Nike.

• Footwear – Boots for strikers, midfielders, Defenders and Sneakers
• Apparels – Headwear, Tops/Polos, Jersey, Jackets, Shorts as well as Shocks
• Equipment – Bags, Ball and Watches

In this example:

• Product Width: 3 (Footwear, Apparel, Equipment)
• Product Length: 14 (total number of items across all categories)
• Product Depth:
  • Footwear: 4 types
  • Apparel: 6 types
  • Equipment: 4 types

Nike only targets health-conscious and sports-focused customers. Offering such a diverse product mix allows the brand to serve various needs while maintaining a strong market presence.

Strategies to Improve Product Mix

Companies are always looking to find ways to make their product mix relevant and profitable and meet customer expectations. These adjustments need four main strategies.

Product Mix Expansion

When a company launches new product lines to enter new markets and reach new customers is called product mix expansion. This strategy is helpful for companies to grow beyond their original category and build stronger market presence. The wisdom behind this strategy is to generate more revenue, minimize dependency on a single product line and build strong global recognition.

Real Life Examples

1. Apple started with Mac Computer and then expanded into iPhone, iPads, Apple watches and other digital services like Apple Podcast, Apple Fitness and the list goes on.
2. Similarly, Amazon started as online bookstore and then expand into a global platform offering Amazon Web Services, electronics, groceries and entertainment.
3. Unilever is also on the same track by operating across food, personal care and then household product line.

Product Mix Contraction

Product mix contraction occurs when a company removes product that are no longer profitable and outdated. Instead of maintaining a large portfolio, companies focus on those products generate more value. Now the question is why companies follow this strategy because it helps reduce operational cost, improve efficiency and focus only on strong product line that delivers best results.

Real-Life Examples

• Google discontinued products like Google Hangouts, Google Web Light after the failed to sustain in the market.
• Coca Cola was not behind, it phased out Coca Cola spiced, Cherry Vanilla and Citra due to declining demand.

Product Line Extension

Product line extension occurs when a company add new variation of existing products to sever different customer preferences. It is a widely practiced strategy because it strengthens its existing brands without entering into new markets. The main benefit of this strategy is to increase customer choice, satisfaction and maximize revenue from existing products.

Real Life Examples

• Coca-Cola offers several variations such as Diet Coke, Coke Zero, Cherry Coke, and Vanilla Coke.
• Nike produces different versions of shoes like Air Max, Air Force 1, and Jordan models with multiple colors and designs.
• McDonald’s adapts its menu globally, offering items like McAloo Tikki in India and rice-based meals in Asian markets.

Product Diversification

When a company decides to enter completely to a new and unrelated industry or market is known as product diversification. This strategy carried more risk but a long-term growth opportunity. The main benefit of this strategy is to minimize the dependency on a single industry, generate multiple income streams and supports long term business stability.

Real-life examples:

• Samsung operates globally and primarily focus on electronics, technology shipbuilding, construction, and insurance.
• Virgin Group has diversified global brand expanded into airlines, health, music, telecommunications, and even space travel.
• Toyota, originally an automobile manufacturer, now also offers financial services and robotics.

Importance of Product Mix

A good product mix helps your business in many ways. Here is why it matters:

• It Meets Customer Needs. When you sell many different products, customers can find what they need from you. They do not have to go to another store. If your business keeps giving them what they need, they will keep coming back.
• It Builds a Good Image. The products you sell show people what your business is about. When your product mix stays steady and familiar, customers know what to expect from you. This builds trust over time.
• It Keeps You Focused. As your business grows, you may want to add more and more products. But adding too many products can be a problem. It can confuse your customers. It is better to stay focused on the products that most of your customers actually need.

Product Mix Vs. Product Line

Product mix refers to the total number of products that a company offers to sell. On the other hand, product line refers to related products with similar users and functions. In the above example of Nike, the footwear, apparel, and equipment are all product lines. When these product lines come together known as a product mix.

Conclusion

Expanding your business’s product mix the right way can help secure your future. When you conduct proper research, it reduces the risk of depending on only one product. It also allows you to address more customer needs and create new opportunities to grow your profits.

However, if you don’t have proper research and a clear plan, it can hurt your business badly. Adding irrelevant products to your mix can weaken your brand. The solution is simple: know your tareget customers and the market positioning, and make smart decisions about what to add and what to leave out.