What Is A Product Mix? (With Basics, Importance and Example)

By Indeed Editorial Team

Published 1 May 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A product is an item that a company manufactures to distribute to its customer base. A product mix is the total number of product lines or individual products that a company manufactures. Understanding the basics and importance of product mix can be helpful to the professionals working in product development and related departments. In this article, we find the answer to "What is product mix?", explore its basics, dimension, its importance and review an example of product mix.

What is a product mix?

A product mix is the total number of individual products and the product lines that the company manufactures. The product mix is something that keeps varying from company to company. Some companies have a limited number of products, while others have several lines of products, which include a number of different products in each product line. A company can have a number of product lines containing several products.

A product line is basically a group of several products which are similar in terms of their basic attributes. The products which fall into the same product line generally target the same customer base and have almost similar prices. Professionals working in the product development department often create flowcharts to illustrate their different various product lines and to explain how the product lines relate to one another.

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What are the basics of a product mix?

Here are the basics of a product mix that help companies to maintain the needs of their existing customer base and reach out to new customers:

Significance

Companies with large product lines often focus on product mix. Focusing on product mix allows companies to analyse the needs of customers so that they can introduce some new products to the line. It helps businesses to fulfil the demands of their customers better. Using product mix perfectly helps companies to stay with the latest trends, as there can be many competitor companies that focus on several customer bases.

Function

The main function of a product mix is to provide companies with an understanding of a particular product and the methods to advertise it to as many customers as possible. A good product mix can provide detailed information about each and every product and the target customers. For example, if a soap company produces a basic budget soap, an expensive soap and nature-friendly soap, then a good product mix contains all the varieties of soaps that the company produces with the types of consumers and their needs.

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Size

The larger the product mix is, the more it can help the company in planning strategies for growing sales. If the product mix contains a product that is unpopular among consumers, it can lead to a significant loss in sales. Companies often focus on having those products in the product mix which are in demand. Focusing on products that are currently in demand with the customers can help companies to stand against their competitors in the market.

Effects

Product mix can help the companies know their loyal customer base and the customers who are switching to their competitors. This can directly help them to plan and build strategies that focus on increasing the efficiency of the sales. For example, if you are managing a chain of hotels for a company, you can offer your customers different kinds of rooms, gardens and swimming pools in one place. This way customers can get different kinds of facilities in one place.

Misconceptions

Some companies can misunderstand a product mix as a group of several products that a company puts into the market. A product mix provides detailed information about each product in the group and helps in optimising the production and delivery processes. Introducing too many products into the same group can lead to a downgrade in sales. Using product mix carefully allows companies to make sure that their products are complementing each other instead of competing.

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What are the dimensions of a product mix?

A product mix strategy helps to define each product category and the number of total products which the company offers. A product mix has the following four dimensions:

Width

The total number of product lines that a company suggests refers to as the width of the product mix. For example, if a clothing company sells only ties and belts, then it has two product lines. If it starts selling shirts, then it has three product lines.

Length

The total number of products in a product mix is the length of the product mix. You can determine the length by adding all the products together. For example, if a company has three product lines with five products in each line, then the length of the product mix is 15.

Depth

The total number of variations or types of product in a product line is the depth of the product mix. The variations may depend on the shape, size, flavour or any other features that the company provides. For example, a company may sell potato chips of different flavours that fall into the same product line.

Consistency

The relationship between different products of product mix is called consistency. This relationship can be about the production process and the distribution criteria of the products. Focusing more on consistency can help companies in reducing the production cost of the products. If there is more product variation, then there is less product consistency.

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What is the importance of a product mix?

The product mix is important for both large companies and small businesses. Product mix allows companies to expand their customer base by introducing more products into different niches. Having a better understanding of the basics of product mix and how to use them efficiently can be helpful to the companies. Here are the reasons why product mix is important:

Meeting the need of the customer

Proper management of products from manufacturing to distribution helps the company to fulfil the needs of its customers. A happy and satisfied customer can again buy products from the same company. For running the production line smoothly, companies do a proper tracking and assessment of their customer's feedback. Product mix can help in maintaining the supply to demand ratio and allows companies to change the speed of the production process according to the market demand.

Maintaining the image of the business

The reputation of a company depends on various factors, including delivering the best quality products and maintaining consistency. Product mix plays a very important role in fulfilling the demands of the customers. If a company sells its products at low prices and suddenly makes the price high, the customers would get confused with the prices and doubt the quality of products.

Focusing on the primary business

When companies concentrate on product mix, it becomes easy for them to focus on their primary business. Many companies broaden their business by introducing new product lines. Focusing on product mix can help companies to keep their focus on everything that is important for overall growth.

Example of product mix

Here is an example that can help you understand the product mix and its dimensions:

There is a company which has two product lines, a soft drink product and a juice. Under both the lines, they manufacture varieties of soft drinks and juices of different flavours but in the same size and quantity. All the products the company is producing are in the beverage category, the production and the distribution process is the same for all of them.

In this example, we have two product lines, so the width of the product mix is two. The length of the product mix is the total variety of products under each line. Let us assume the company produces three different flavours of soft drinks and four flavours of juice. Here the length is seven, the depth for the soft drink product line is three, and for the juice product line, it is four.

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What are common product mix strategies?

Here are some common examples of product mix strategies:

  • bringing a change to an existing product strategy can help improve an existing product

  • eliminating low-performing lines or products can simplify product mix

  • implementing a depth strategy is useful if a company keeps and expands its current lines

  • identifying and communicating new uses for existing products without affecting the existing products or lines

  • increasing the number of product lines or product variations

  • adding a product with lower cost to its existing line of products

  • adding a product with a higher cost to an existing line to increase the demand for its low-cost products

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