Product Mix: Explanation, Strategies, Dimensions, Example
This guide will consist of what is Product Mix, Definition, Why it is Important, Strategies and Dimensions of Product Mix with Examples.
What is Product Mix?
Heard about ITC Ltd. which was known as Imperial Tobacco Company of India Limited which was renamed as I.T.C Limited in 1974? Can you recall a few products which I.T.C deals in? Well, there are so many that it becomes difficult to keep a count of it. It included products like- Notebooks, household appliances, food, attire section, skincare, and the list continue.
If we look into the market, it is not shocking to find, currently, not only ITC but there are many such companies who produce goods of a different variety, few of them are TATA, Coca-Cola, and etc. Now to give this thing a name, the term “Product Mix” has been used.
Product Mix also known as Product Portfolio, is the total number of goods that the business organizations provide to the customers. A mixture of different types of goods and services using which the customers and attain their utility.
Why is Product Mix Important?
After understanding what it is, the next question is why should a company or business organization provide so many products and services to their customers, they can produce one product and excel in it. But there are a few reasons why Product mix is important, few of them have been mentioned below:
- Continuous looking at the product mix and bringing change as per the need of the consumers would bring about more consumer trust. They will approach the respective company first for any product. During this process, the interest of the core customers should not be neglected.
- Providing more products and services with different variety would help the business to grow faster and the customers will be able to recognize the company through their products and services of different varieties
The returns are not restricted to one product, if one type of product or service can’t bring enough profit, then the other products and services will help in bringing it.
Like any other business activity, Product mix also has strategies so that it can be efficient enough to bring about a proper and lucrative return to the business.
Some of the strategies are:
- With the existing products and services, if a company or a business organization finds it difficult to exist then they can start the product mix strategy. Here the organization will try to come up with some new product line.
Instead of starting with a new product line, the organization might try to increase the variety of products under the existing Product line.
At times, when companies provide significant products or services at a costly price, then it might become difficult for a few groups of customers to purchase them. Then they have to find an alternative to that product. This might cause losing customers, which any organization might not want to happen. To overcome this problem, the company or the business organization can come up with low-cost products of the same kind, so that customers with low purchasing power can have access to them.
Product differentiation should be avoided. Throughout the market, homogeneous products should be sold at the same price range.
Converting the product line from fat to thin, just to remove the unwanted products, can help the organization in getting more profit with a smaller product line.
To understand the dimensions of the product, it would be easier if we consider a company as an example. Let us continue with the example of ITC Ltd.
Product Mix has 4 Dimensions:
ITC Ltd. produces goods and services of various types, food, hotel, attire, stationery and education and etc. These different categories of products and services produced by ITC ltd. are known as the product line.
1. Product Width
The number of the product line that is produced by ITC ltd. are known as Product width. The product width is enormous for ITC Ltd. They produce food items, clothing, school stationery, home stationery, and etc.
2. Product Depth
All types of products produced by ITC ltd. under each product line are known as the Product depth. ITC Ltd. also has quite a good amount of Product depth because even under stationeries they have a variety of products, under food they have so many kinds of products, starting from cookies, to chocolates, to so many things, again under hotels, they have few different types of hotels.
3. Product Length
The total number of products that are produced by ITC ltd. are known as the Product length. ITC Ltd has a huge number of goods and services. Thus, their product length is very big.
4. Product Consistency
Product consistency checks if all the products in the product line are similar or not. As ITC ltd. produces a variety of goods and services, their product consistency is quite low, as they are not related to each other. The more the variety, the less will be its consistency.
Thus, this is what the Product mix or Product portfolio exactly means. In simple words, it is various types of goods and services that we, the consumers are getting from a company. It contributes to the growth and expansion of the business also.
Also Read: Cross Promotion: Definition, Features, Advantages, Example
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