What is a product mix?
The product mix is the total number of product lines a company offers. Many companies sell multiple product lines, which can be similar or vastly different.
Elements of a product mix
All product mixes consist of the following four elements:
- Consistency: Shows how closely the company's product lines are related
- Width: The number of product lines a company sells
- Length: The total number of products in a company's product mix
- Depth: The total variations, such as size, flavor, and other distinguishing characteristics, for each product
What is an example of a product mix width?
The product width is different product lines from a company. An example would be Kellogg's four product lines:
- Cereal
- Breakfast snacks and pastries
- Crackers and cookies
- Frozen/organic/natural goods
What is an example of product depth?
A product mix's depth is the number of variations a company's product line has. An example of a car company with a 3-series product line may consist of many variations, like sedan, coupe, truck, and convertible, for a total product depth of four for the product line.
Importance of a product mix
A well-maintained product mix benefits a business in multiple ways:
- Effectively meets
- Builds a familiar business image
- Provides focus when growing your business
- Better inventory management
- More diversification for reduced risk of dependence on a single product or
Product mix examples
Apple
Apple offers several product lines to meet various customers' needs. For a simple product mix example of Apple, let's assume the company offers four product lines—iPhone, iPad, Mac computers, and AirPods for a product width of four.
In this simplified example, iPhones have the following variations: iPhone X, iPhone 11, iPhone 12, iPhone 13, and iPhone 14, resulting in a product depth of five. iPads come in the following variations: iPad Air, iPad Mini, and iPad Pro, resulting in a product depth of three. The Macbook product line includes Macbook Air, MacBook Pro, Mac Mini, and iMac for a product depth of four. AirPods are available in 2nd Generation, 3rd Generation, and Max for a product depth of three.
In this simplified example, Apple has a product mix length of 15 with an extremely high consistency because all the products share similarities.
Factors that might affect the product mix
Deciding to expand or change a product mix can depend on the factors listed below because each can positively or negatively affect a company.
1. Financial position
A large company in good financial health will likely include multiple product lines in its product mix because they have the resources to create and .
In contrast, startup companies don’t always have the budget to produce multiple new products immediately and focus on a smaller product mix until they become more established.
Another scenario is companies reducing the number of products or product lines they offer because they’re struggling financially.
2. Area of operation
A company's industry is a significant determinant of the size of a product mix. Companies will have a larger product mix in industries where it’s feasible and easier to create more products.
The smartphone vs. chip industry is an excellent example of how a company could have a larger product mix because of the industry's demands. The chip industry includes fewer variations than the various smartphone features needed to meet consumer preferences.
3. Production costs
Companies won’t continue producing nonprofitable products. Therefore, production costs can widen or narrow a company's product mix.
For example, suppose the manufacturing cost of a certain product rises or falls outside of the set budget. Then, the company may stop offering the product to help reduce costs, especially if the product is not in high demand.
4. Brand identity
Companies establishing themselves as well-known brands are more apt to continue adding new items or product lines, whether related or unrelated to their current products.
The rapport built by the company results in loyal brand followers. These followers are often more accepting of trying new products from their loved brands, resulting in the brand having a larger product mix.
5. Objectives and policy of the company
Developing a product mix depends on the company's established objectives and policies. Therefore, the company's plans or policy adjustments can result in modifying or adding product lines or products to the product mix.
6. Demands of the consumer
Consumers' preferences directly relate to a company's product mix because companies prioritize products with high consumer demand over products with low demand. Often, if a product's demand falls, the company removes the product from its product mix.
7. Fluctuation in demand due to other factors
While consumer preferences majorly affect product demand, other factors can result in demand fluctuations. For example, increased population, non-availability of substitutes, seasonal effects, natural disasters, war, and other scenarios can change consumers' preferences or needs. Therefore, a company is bound to adjust its product mix to meet the demand changes.
A good example of companies adjusting their product mix due to demand fluctuation was during the COVID-19 pandemic. The demand for masks greatly increased, resulting in more companies changing their product offerings to include personal protective equipment.
8. Government rules and restrictions
Legalities greatly impact a product mix's size because companies only produce products not restricted by the government. Therefore, if a product is declared illegal or harmful, companies must stop its production, resulting in a narrower product mix.
Difference between product mix and marketing mix
Knowing the differences between product mix and marketing mix is crucial when diving into the business world.
The basic difference between the two is that product mix refers to a company's complete range of products, whereas a refers to the controllable variables used to increase demand for their product. Therefore, the product mix is a part of the marketing mix, which consists of a broad range of marketing tactics.
A marketing mix is critical to business growth and success, while the product mix only defines the company's multiple product lines.
Product mix vs. product line
Although people use product mix and product line interchangeably, each has distinct qualities.
A product line refers to a singular line of similar products offered by a company, whereas a product mix includes all the product lines sold by a company. Companies with multiple product lines will have a large product mix. A company may feature many product lines but always has only one product mix.
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