Definition: 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.
A comprehensive look at what product management is and how to distinguish what good product management looks like.