Product mix refers to the complete set of products or services offered by a business. These products or services are usually grouped within product lines, representing the different types of products offered.
For example, The Coca-Cola Company has its signature Coca-Cola brand, featuring original Coca-Cola, Diet Coke, Coke Zero, Cherry Coke, etc. This would be described as a product line, while their product mix consists of their Coca-Cola, Dr. Pepper, Glaceau Smartwater, Sprite (and so on) product lines.
The product mix is the total range of product lines and types a company has on sale for its customers.
A company’s product mix contains four main components.
Length: The range of products available in a particular product line.
Breadth: The number of product lines under a company.
Depth: The options available in a particular product line, such as different quantities, sizes, etc.
Consistency: How closely related product lines are to one another in their use, production, and distribution channels.
A product item is a specific product version that can be designated as a distinct offering among an organization’s products. Put simply, while the Coca-Cola Company has a product mix, and the Coca-Cola labeled products would be a product line, a single can of Coca-Cola is a product item.
Understanding the concept of a product mix can help your business in multiple ways. Keeping a well-maintained product mix will:
Offering a wide range of products means your business can cover multiple customer needs without losing sales to your competitors. If a customer can address all their needs with your company’s products, that customer will return again and again, knowing you offer just what they need.
Your product mix is a key factor in determining the image of your business. Keeping your product mix stable and familiar will help your customers understand what you do as a business, as well as what they should expect from you.
Utilizing the product mix concept helps you stay focused on your core business. It’s natural to want to expand your product mix as your business grows to reach a broader range of customers. However, by doing this, you may alienate your existing customers by offering products or services that only a small percentage of people actually need.
Maintaining inventory is tricky for any company, but even more so for a small business. Being a smaller business forces limitations on the number of products you can offer, so it’s vital to maintain a healthy product mix that reflects your core customers’ needs. Not only does this benefit your customer, but it also means you have less wastage when it comes to inventory management, as you’re only keeping the inventory you are selling.
The terms ‘product mix’ and ‘product line’ are often interchanged. And while they share some overlapping qualities, the two are actually very distinct.
So… when it comes to product mix vs product line, what’s the difference?
A product line is a singular line of similar products that are sold within a company.
A product mix is the combination of all product lines sold by the business. Some companies may have multiple product lines contributing to a large product mix.
When keeping product mix vs product line in mind, the key thing to remember is that a business needs to have a mixture of product lines to have a product mix.
A company can have many product lines, but only one product mix.
As product teams will know, there’s no direct correlation between the number of products you build and how much success you see. Below are 6 key product mix strategies so that you can make the most of the lines you launch.
Expansion of product mix - Expansion of product mix is when a business increases its number of product lines. These new lines are often related to the company’s current product range but are unrelated to the present products.
For example, if a beverage company introduces flavored water as a new product line, that would be an expansion of the product mix.
Contraction of product mix - Sometimes it pays to shrink your product mix to eliminate poor-selling items. Which products are bringing your overall mix down and reducing ROI in product development? Identify them and cut them out.
Deepening product mix depth - This strategy involves increasing product lines. Rather than adding new product lines, though, the business will look at more products that fit in with an existing product line. The result is a diversification of the product range.
Alteration of existing products - Here, existing products are changed or optimized to meet customer needs, rather than introducing new products.
Trading up - Trading up is when a company adds higher-priced items into its product line(s). This is designed to encourage more sales of mid-tier products and improve the prestige of the company. For example, when a software product launches a ‘Pro’ alternative.
Trading down - This is the exact opposite of trading up.; lower-priced items are added to the product line to increase sales.
So which of these key product mix strategies is right for you? Should you add new lines or diversify; trade up or trade down? The answer lies in your product mix analysis.
A product mix analysis looks at a range of go-to-market strategies to determine the best product mix at a customer, regional, or national level.
To perform a product mix analysis, you need to start by defining your scenario. Scenarios are usually defined by editing a demand plan or via a scenario wizard that only uses the necessary variables.
Once the scenario is confirmed, users will re-create the plan while taking into account every constraint of the system. If the scenario tasks you with changing the product mix at a regional or national level, you will need to re-optimize the supply plan alongside any changes.
The re-optimized plan will establish the impact on financial performance. Users will be able to see P&Ls by business unit, product, and major customer/store type, which will allow them to compare the impact of the new scenario vs the original plan.
Analyzing a competitor’s product mix is simple. Here’s how to do it.
Identify the outcome you want to learn by the end of your competitor product mix analysis. For example, you may want to understand the different tactics a business uses to promote a specific product line to its target audience.
Identify competing businesses that you can analyze, and categorize as per the following:
Direct competitors (selling the same products to the same audience)
Indirect competitors (selling different products to the same audience)
Replacement competitors (selling similar products to the same audience but in a different way)
Run a thorough analysis of your own products to determine their strongest points (like high-quality design, the finest materials, etc.) and their weakest (like lack of features). Use these key elements to compare your product mix to your competitors’.
Your competitors may have many products in their product mix, encompassing many different lines. One way to streamline the process is to focus on their most popular product first. Analyze important elements of this product, such as its design, its performance/functionality, overall quality, and price. Do the same for other major products in their catalog.
After analyzing your competitors’ products, examine their product mixes overall. How many product lines do they have? What different audiences do they target? Form a clear idea of who each product line is for and why it’s successful.
Finally, compare a competitor’s product mix with your own to see what you can learn. You may identify opportunities to diversify your product mix to reach new audience segments or improve the quality of one or more lines to gain a competitive edge.
Here are some examples of product mixes from famous companies.
Trader Joe’s product mix contains a massive range of products sold in more than 500 stores across the United States. The company takes a globalized approach — it sends workers to other countries to find unique products that align with local cuisines, which it sells under its own branding. This creates a diverse product mix appealing to varied tastes.
Apple’s product mix includes Mac, iPod, iPhone, Apple watches, iPad, Apple Music, and Apple TV. Its different product lines span entertainment, work/productivity, and lifestyle applications.
Amazon’s product mix spans online retail, Amazon Web Services, Amazon Video, Amazon Prime, and Amazon Kindle Direct Publishing. It caters to audiences looking for entertainment, businesses selling through its marketplace, and self-publishing creators.