What Is Product Mix Strategy?
A product mix strategy is a marketing strategy that analyzes the company’s existing products and allocates resources and efforts on product lines and individual products to best promote them to a specific market or audience and in this way to maximize the company’s growth and market share.
What Is a Product Mix?
A product mix, also known as product portfolio or product assortment, is the complete set of the company’s product lines and individual products. The mix can vary depending on the company’s business objectives and strategy from having many product lines each containing multiple products to limiting the assortment to several items.
In this way, a product mix differs from a product line that comprises products with a similar function and similar benefits and are promoted in similar markets.
Product Mix Dimensions
A product mix has four key dimensions
- Width, or breadth, is the number of product lines that a company has.
- Length is the total number of products in all product lines combined.
- Depth is the number of product variations in an individual product line.
- Consistency shows how closely product lines are interrelated in the context of their goal, production process, and distribution channels. This dimension is particularly important if a company wishes to establish itself as a recognizable brand.
Product Mix Strategies
To make a product mix work, there exist several strategies that can be chosen based on the company’s goals.
Roughly speaking, there are four key product mix strategies:
- Expansion, when a company increases the number of product lines that can even be unrelated to the existing product. This is usually done when a company feels that it cannot stand in the market with the existing portfolio.
- Contraction, when a company eliminates some product lines or individual products that are not profitable enough or to simplify remaining products. In this case, a company decides to focus only on the most profitable models or lines. of dropping or eliminating one or more product lines or product items. Here, fat product lines are made thin. Some models or varieties, which are not profitable, are eliminated.
- Alteration of existing products, when a company improves existing products in terms of features, qualities, or performance instead of developing new ones. This strategy is less risky compared to creating a new product from scratch.
- Product differentiation, when a company starts positioning a product as a superior choice to competition without making alterations to its features, qualities, or price. In this case, a company relies on effective salesmanship, aggressive advertising campaigns and clever promotion techniques to convince its target audience that their product offers better performance or higher quality.
Besides, there are complementary strategies that include:
- Deepening depth, when a company expands existing product lines with more models or varieties.
- Developing new uses, when a finds new use cases for existing product lines or products. Rather than changing the product lines, a company suggests new occasions or scenarios when a product can be used.
- Trading up, when a company expands an existing line with a higher-cost or more prestigious product to an existing line to improve their brand image and goodwill. Adding a higher-end product also encourages demand for cheaper products in the line.
- Trading down, contrary to trading up, a company adds a cheaper variety to an existing line of high-cost products to attract new customers who cannot afford the original versions. A company adds a lower-cost product to an existing line of higher-cost products.
