The product mix is the collection of all product lines that your company offers.
As your company grows, you’ll eventually add new products and services to your offerings. You may start offering new products within a certain category of offerings, or you could expand to new niches. Over time, these collections of products will become your company’s product mix. Understanding this mix can help you decide how to optimize your approach to your market and how you serve your customers.
In this article, we’ll explore the definition of the product mix, its dimensions and characteristics, and why it’s important to your business.
Table of contents
- What is the Product Mix?
- What is the Importance of Your Product Mix?
- How Do You Improve Your Product Mix?
- The Overview of Your Company’s Product Focus
What is the Product Mix?
The product mix, also called the product assortment, is the collection of all products that your company provides to your customers. In your company, it is composed of product lines, which are unique categories or brands of products that your business sells.
One example of a large product mix is Nestle, which has over 2,000 brands in its portfolio. Some of the many product lines within Nestle’s product mix include beverages, cereals, coffee, and chocolates.
Most companies start with a very limited product mix, often composed of just one line. As a company grows, its product mix will evolve and develop four unique dimensions.
The width of your product mix, also known as its breadth, is the total number of lines that your company offers. If your company offers two unique lines, then your product mix has a width of two. For example, a technology company might sell photo editing software and video editing software.
The length of your product mix is the total quantity of products that your company offers. For example, if you have three products in your photo editing tool line—filters, background removal, and AI face replacement—and two products in your video editing line—video editing and audio mixing—then your length is five.
The depth refers to the total number of variations that are present within a product line. A variant is a unique version of a product that can exist within the same product line.
For example, each of your tools in the photo editing line may have a PRO version that has more features and a more complex interface, as well as a higher cost. That means you have two variants for each of your three products: PRO and Standard. Therefore, your photo editing product line has a depth of six.
The consistency of your product mix refers to how closely related your product lines are to each other. The more closely your product lines are related, the greater the consistency of your product mix is. This relationship can be regarding how products are developed, used, or distributed. Unlike the other three dimensions, there’s no numerical value associated with consistency.
To illustrate this, let’s say you’re a software company selling photo editing, audio editing, and video editing tools. Those are fairly related to each other, meaning you have a high consistency. Many designers and creative agencies would need all of your products to sell their own services.
What is the Importance of Your Product Mix?
Knowing the characteristics of your product mix is crucial in developing your brand’s image. Here are some of the salient benefits of understanding and managing it:
Targeting Customer Pain Points
If your brand’s product mix is geared towards fulfilling the needs of a certain niche, then users within that niche are likely to be more loyal. They’ll see your company as a resource of the tools and services that they need to get the job done. Because they have a good experience with your other tools, they keep doing business with you and expand the number of products they use.
Ensuring Product Focus
As your business grows, you may be tempted to keep adding more and more products, increasing your product mix width. There are merits to this approach. For example, having a lot of width and depth means that you are reaching into many different markets, which diversifies your portfolio and reduces risk.
However, carelessly adopting the principle of “the more, the merrier” can lead you to spend resources expanding into niches that don’t provide a lot of reach or revenue.
By keeping your product mix focused on the customers who matter most, you can maximize your revenue without spending too much money on potentially fruitless expansion efforts.
Upholding Your Brand
A large part of customer loyalty will come from the image that your brand projects through its product mix. For example, Apple almost exclusively sells premium, high-value electronic products that come with a promise of performance, elegant design, and extensive support.
If you drastically deviate from the brand you built, you may alienate your loyal customer base. They may question whether you plan to stick to the promises that your brand has implicitly made.
One example would be if high-end handbag brand Hermes started a line of more affordable, mass-produced bags. This would go radically against its brand image of extremely high-end, handmade bags that are produced in low quantities. Brand-loyal Hermes customers would very likely turn away from the brand with this decision.
Understanding how your product mix fits into your audience’s perception is therefore critical in maintaining your image and the loyalty of your users.
How Do You Improve Your Product Mix?
In order to optimize and improve your product mix for your audience, you need to approach it with a purposeful strategy. The key is to select a strategy that aligns with your goals for your brand and your products, and adjust your mix accordingly.
Here are some of the most important strategies:
Increase Product Mix Width
By increasing the mix with and adding new product lines, you diversify your portfolio and reach new customers. These new product lines will benefit from the reputation and goodwill that your existing lines have built for your brand. Furthermore, that means they’ll have an easier start compared to an unknown player in the market.
However, as we said, expanding too far away from your current brand can lead to you alienating your existing base or stretching yourself too thin. Be mindful when you widen your mix.
Increase Product Mix Depth
Deepening its depth and adding new variations to each product can help you serve more customers within your niche. Instead of expanding to new product lines, you can improve and diversify what you already have.
There are several approaches to mix depth. Two simple methods that apply to most product mixes are “trading up” and “trading down.”
In “trading up,” you introduce a higher-cost product to a product line. This can simultaneously elevate your branding and also create more demand for lower-cost items. In “trading down,” you do the opposite—add a lower-cost product to an existing line of more expensive items. This provides more opportunities for budget-minded customers to purchase from you.
Reducing Width or Depth for Underperforming Products
Maintaining a large product mix incurs a certain cost, whether due to the need for regular security updates or providing customer support.
If you analyze the performance of your it and determine that certain product variations or even entire product lines aren’t doing well, it’s a valid strategy to retire these items. This strategy can reduce spending and help you increase consistency.
The Overview of Your Company’s Product Focus
In many ways, your product mix determines what your company is focusing on when it comes to your customers. Every item in your mix reflects a segment you’re trying to serve and reach. It’s important to keep your eyes open when deciding how to modify your mix and determine whether expanding really will benefit you.