FLASH SALE! - "FINANCIAL MODELING COURSE BUNDLE AT 60% OFF" Enroll Now

Product Mix

Updated on March 19, 2024
Article byRutan Bhattacharyya
Edited byRutan Bhattacharyya
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Product Mix?

Product Mix, also known as product assortment or product portfolio, refers to the various product lines and individual products offered by an organization in the market. Focusing on the product assortment helps companies analyze customers’ requirements and introduce more products to fulfill the demand better.

Product Mix

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Product Mix (wallstreetmojo.com)

A product portfolio’s primary function is to give organizations an understanding of a specific product and the techniques to advertise it to as many consumers as possible. The right combination of product lines can offer extensive information regarding all products and the target customers. There are four elements of product mix — length, depth, consistency, and width.

Key Takeaways

  • Product mix meaning refers to the complete set of products in a company’s portfolio. A prudent mix can increase sales and help maintain a stellar brand image. Moreover, it helps fulfill consumer demand.
  • There are four dimensions or elements of the product mix. They are length, width or breadth, consistency, and depth.
  • Multiple factors impact a business’s product portfolio. A few common ones are the impact of marketing mix elements and the organization’s production capabilities.
  • A key difference between a product line and a mix is that there can be multiple product lines. However, a business cannot have multiple product portfolios.

Product Mix Strategy Explained

Product mix meaning refers to the complete range of products sold by a business. It varies across different organizations. While multiple companies only have a limited number of offerings, various organizations offer different kinds of products grouped under separate product lines.

An organization’s product portfolio plays a crucial role in maintaining and enhancing its image, and it helps the business manage inventory and fulfill customers’ requirements better. Moreover, it helps businesses identify loyal customers and spot consumers switching to competitors’ offerings.

The larger a company’s product assortment, the more it can help the business formulate strategies to increase sales. On the other hand, businesses can incur significant losses if the product portfolio consists of a product with no customer demand. Hence, organizations focus on selling products that are popular among consumers. This helps them compete with their peers in the market. Moreover, it directly enables them to develop a strategy to increase efficiency and improve sales.

If the product mix is incorrect, for example, suppose there are not enough products in a product line, a business’s sales can decrease. Hence, companies must ensure that the products complement each other rather than compete.

Let us look at some factors affecting a business’s product assortment:

  • The effect of different marketing mix components.
  • Government-issued advisory concerning the products.
  • The product cost involved narrowing and widening the mix.

Lastly, a business’s production capabilities are a factor affecting product assortment.

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

Elements

Let us look at the dimensions or elements of the product mix:

Product Mix Dimensions

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Product Mix (wallstreetmojo.com)

#1 – Length

The length is the total number of products in a product portfolio. In other words, businesses can determine their product mix’s length by adding all the products. For instance, let us say that a company has five product lines and ten products in each of the lines. In this case, the length will be fifty.

#2 – Consistency

This refers to the relationship between the different products in the mix. The relationship can be regarding the production process, distribution channels, etc. Focusing on this element can help organizations reduce production costs. Moreover, it ensures that a company’s brand image is synonymous with its offerings. One must remember that the higher the number of products offered, the lower the consistency.

#3 – Depth

Depth is the different types or variations of products in a particular product line. Generally, the variations depend on the products’ features like size, shape, etc. For example, a company sells fruit juices of different flavors (guava, orange, apple, etc.) falling into the same product line.

#4 – Width

Commonly referred to as breadth, width is the total number of product lines offered by a business to consumers. For example, if a fast-moving consumer goods or FMCG company sells potato chips and soaps, it has two product lines. However, it will have three product lines if it starts offering biscuits.

Examples

Let us look at a few product mix examples to understand the concept better. 

Example #1

Sinomax USA has decided to expand its product mix by acquiring the exclusive license for Vibe-branded bedding products and mattresses, which were only sold to consumers through Amazon. Sinomax secured the agreement via Kimberly LLC.

The Chief Executive Officer of Sinomax, Frank Chen this that Vibe is an exciting addition to their brand portfolio as it provides quality products with supporting social proof. He remains confident that the vertical integration with global and domestic capabilities will keep improving the brand’s reputation.

Example #2

Suppose Company XYZ has two product lines: biscuits and potato chips. So, all the products sold fall into the FMCG category. The production and distribution procedures for both product lines are the same.

In this case, there are two product lines. Hence, the width of the product portfolio is two. The mix length is the different product types under each product line. For example, suppose the company offers two flavors of biscuits and four flavors of chips. The length will be six. The depth of the biscuit product line is two, and that of the chips product line is four. Here the consistency is high as all products belong to the FMCG segment.

Importance

Let us go through the following points to understand the importance of product mix in marketing.

  • It helps organizations focus on the primary business. This enables them to boost overall growth.
  • A prudent mix helps a business maintain the right supply-to-demand ratio, enabling it to change the production process duration according to consumer demand.
  • Lastly, it helps organizations fulfill customers’ demands and maintain their brand image.

Product Mix vs Product Line

Let us look at the differences between a product line and a product mix in marketing.

  • A product line is a group of products with similar characteristics or attributes. On the other hand, a product portfolio refers to an organization’s complete set of products.
  • A product line is a part of the product mix. But, on the other hand, product mix covers all aspects concerning products, including product line.
  • Some factors impacting product line are brand, target audience, price range, etc. In contrast, some aspects affecting a product portfolio are production capabilities, brand identity, and financial standing.
  • A business can have various product lines. However, an organization cannot have more than one product mix.
  • Unlike product assortment, the product line has a narrow span.

Difference Between Product Mix And Marketing Mix

The terms product mix and marketing mix often confuse Individuals new to the business world. One must know their critical differences to avoid confusion and understand these concepts. So, let us look at their distinct characteristics.

BasisProduct MixMarketing Mix
Meaning This term refers to a business’s complete range of products. It refers to multiple controllable variables businesses utilize to increase their product’s demand.
BroadnessProduct assortment is a narrow term defining individual product lines. It is a part of a marketing mix.A marketing mix is a broad term; it covers the entire array of marketing tactics (place, promotion, price, product, etc.)
ImportanceIt has significantly low importance compared to a marketing mix.A marketing mix plays a much more crucial role than a product portfolio. 

Frequently Asked Questions (FAQs)

1. What is product mix decisions?

These are a company’s decisions regarding removing an existing product or adding a new offering to the product assortment. The decisions may also be regarding lengthening an existing product line, adding a new line of products, or introducing new variants of a specific brand to improve profitability and grow the business.

2. What are the five product mix pricing strategies?

The following are the five strategies:
– Line pricing: This involves categorizing products based on overall value to consumers and features.
– Bundle pricing: In this case, businesses group multiple products and offer them at a single price.
– Captive pricing: This pricing strategy involves pricing products having both a primary product and several accessory products required for the core product to offer full value.
– Byproduct pricing: Businesses use this strategy when a saleable byproduct results from the production process.
– Optional pricing: This is the practice of offering the main product at a low price and selling add-ons at a higher price.

3. What is product mix analysis?

It involves considering various go-to-market strategies to identify the right product mix at the regional, customer, and national levels.

This article has been a guide to what is Product Mix & its meaning. We explain its comparison with the product line, elements, importance, & differences with the marketing mix. You may also find some useful articles here –

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *