Product Mix

The Product Mix, also known as the Product Assortment, refers to the complete range of products that a company offers for sale to its customers. It represents all product lines and individual items sold by a business under one umbrella and is a key element of a firm’s marketing strategy. Managing the product mix effectively allows companies to cater to diverse consumer needs, enhance market coverage, and maximise profitability.

Concept and Definition

The product mix is defined as the set of all products and items that a seller offers for sale. Each organisation’s product mix varies depending on its size, resources, market objectives and customer segments.
For example, a company like Hindustan Unilever Limited (HUL) offers a wide product mix including personal care, food, and household cleaning products, while a company like Maruti Suzuki offers a narrower product mix focused on different types of vehicles.
In simple terms, the product mix shows how many different products and categories a company has and how they are related.

Components of Product Mix

The product mix has four key dimensions: width, length, depth, and consistency.
1. Product Mix Width:

• Refers to the number of different product lines a company offers.
• Example: ITC has multiple product lines such as cigarettes, foods, stationery, and personal care products.

2. Product Mix Length:

• Indicates the total number of products in all product lines.
• Example: If ITC has 4 product lines and each line has 10 items, the total product mix length is 40.

3. Product Mix Depth:

• Refers to the number of variants offered within a single product line, such as different sizes, flavours, colours, or price levels.
• Example: Colgate offers various toothpaste variants like Colgate Total, Colgate MaxFresh, Colgate Sensitive, etc.

4. Product Mix Consistency:

• Measures how closely related the various product lines are in terms of use, production requirements, distribution channels, or price range.
• Example: The product mix of Nestlé is consistent because most of its products—like milk, coffee, chocolates, and cereals—belong to the food category.

Structure of a Product Mix

A product mix can be illustrated as a combination of product lines (groups of related products) and individual products within those lines.
For instance, a company like Samsung may have the following product mix:

• Product Line 1: Smartphones (Galaxy S, Galaxy A, Galaxy Z)
• Product Line 2: Televisions (LED, QLED, Smart TVs)
• Product Line 3: Home Appliances (refrigerators, washing machines, air conditioners)

Each product line contributes to the overall product mix of the company.

Importance of Product Mix Decisions

Product mix decisions are strategic in nature and have long-term implications for market success. The major reasons why product mix management is important include:

• Market Expansion: Broadening the product mix helps companies reach new customer segments and geographical markets.
• Risk Diversification: By offering multiple products, a company can reduce dependence on a single product line.
• Brand Strengthening: A diversified mix enhances brand visibility and consumer trust.
• Economies of Scale: Producing multiple related products can lead to cost efficiencies in production, distribution, and marketing.
• Adaptability: Enables firms to respond quickly to changing consumer preferences or market trends.

Product Mix Strategies

Companies adopt various strategies to manage and modify their product mix according to business objectives and market conditions.
1. Expansion of Product Mix:

• Involves adding new product lines or increasing the number of products in existing lines.
• Example: A beverage company launching an energy drink line to complement its soft drink products.

2. Contraction of Product Mix:

• Eliminating unprofitable or non-performing products or lines to focus on core areas.
• Example: A company discontinuing outdated or low-demand products to improve profitability.

3. Alteration of Product Mix:

• Modifying existing products or developing new variants to meet changing consumer preferences.
• Example: Introducing sugar-free or eco-friendly versions of an existing product.

4. Product Line Stretching: A strategy used to expand the product line in different price or quality segments. It can take three forms:

• Downward Stretch: Adding lower-priced products to attract cost-conscious customers.
• Upward Stretch: Introducing premium products to capture the high-end market.
• Two-Way Stretch: Extending both upward and downward simultaneously.

5. Product Line Filling:

• Adding more items within the present range of the product line to utilise unused capacity or meet intermediate consumer needs.

6. Product Line Modernisation:

• Upgrading existing products to reflect technological advances or market trends.

7. Product Line Pruning:

• Reducing the number of items to streamline operations and focus on high-profit products.

Factors Influencing Product Mix Decisions

Several internal and external factors influence a company’s product mix policy:

• Market Demand: Consumer preferences and market size determine which products are viable.
• Production Capacity: The ability to produce additional items without compromising efficiency.
• Financial Resources: Budget availability for research, development, and marketing of new products.
• Competition: Competitors’ offerings often dictate how wide or deep a product mix should be.
• Corporate Objectives: Alignment of product mix with company goals such as growth, market share, or innovation.
• Government Regulations: Legal and environmental policies may restrict or encourage certain product categories.

Advantages of a Balanced Product Mix

• Enhances company stability by spreading risk across products.
• Attracts diverse consumer segments.
• Improves brand recognition through multiple product exposures.
• Enables better utilisation of company resources and infrastructure.
• Encourages innovation and continuous product improvement.

Limitations of Product Mix Expansion

• Managing too many products may lead to complexity and inefficiency.
• Increased marketing costs for promoting diverse items.
• Possible brand dilution if product lines are inconsistent.
• Cannibalisation, where new products eat into the sales of existing ones.

Examples of Product Mix in Practice

1. Hindustan Unilever Limited (HUL):

• Width: Personal care, foods, detergents.
• Depth: Several variants of soaps (Lifebuoy, Lux, Dove), shampoos (Clinic Plus, Sunsilk).
• Length: Dozens of individual product items under each category.

2. PepsiCo:

• Width: Beverages, snacks, breakfast cereals.
• Depth: Different flavours and sizes for products like Pepsi, Lays, Tropicana.

3. Tata Motors:

• Width: Passenger cars, commercial vehicles, electric vehicles.
• Depth: Multiple models and variants under each product line.

Significance in Marketing Strategy

The product mix serves as the foundation for a company’s marketing planning. It influences pricing, promotion, distribution, and positioning strategies. A well-balanced product mix ensures that a company:

• Meets consumer needs efficiently.
• Maintains competitive advantage.
• Maximises profitability through optimal use of resources.
• Achieves synergy across its various product categories.