The concept of product mix is explained to the students to enhance their knowledge level in the field of marketing and like. The students can easily understand the concept here at Vedantu as it has been provided in a comprehensible manner to make it easier for them. The Vedantu website also provides them with several other study resources for absolutely free.
What Do You Mean By Product Mix?
Product Mix, another name as Product Assortment, refers to several products that a company offers to its customers. For example, a company might sell multiple lines of products, with the product lines being fairly similar, such as toothpaste, toothbrush, or mouthwash, and also other such toiletries. All these are under the same brand umbrella. Whereas, a company may have varied and distinct other product lines that may be in good contrast to each other, such as medicines and clothing apparel.
Product mix can also be understood as the complete set of products and services that are offered by a firm. A product mix consists of the product lines, which are associated items that a consumer purchases.
Marketing Mix Definition
A marketing mix includes various areas of focus as a comprehensive part of the market plan. The marketing mix is best defined as a common classification that begins with the four Ps:
What Does an Effective Marketing Plan Suggest?
To have a broader range of areas of marketing than to fixate on one area. This will help reach a wider audience, and with these four Ps in mind, the marketing professionals can maintain their focus better on the priority things. Focusing on a marketing mix helps an organization to make strategic decisions while launching new products or revising their existing products.
Definition of Marketing Mix
Marketing is the set of actions, or tactics, which a company uses to promote its brand or its product image in the market. The 4Ps which are Price, Product, Place, and promotion make a typical product mix for the business to achieve a standing on the market. Nowadays, the marketing mix includes several other Ps like Packaging, Positioning, People, and even Politics being vital among other elements.
Four P's of Marketing
Now we will head to discuss the four Ps.
This refers to the value which is put for a product. It depends on the costs of production, the segment that is targeted, the ability of the market to pay, the supply-demand, and a host of other directions as well as indirect factors. Pricing can also be used as a demarcation, to differentiate the products and enhance the image of a product. A businessman uses varied pricing strategies to sell their business overall.
This refers to the item that is being sold. This product must deliver a level of performance that is expected by the target customers, else even the best work on the other elements of the marketing mix will go in vain.
This refers to the point of sale. In an industry, catching the eye and mind of the consumer and persuading them to buy is the main aim of a good distribution or 'place' strategy. Retailers for this pay a premium for the right location. The mantra that every successful business chant is 'location, location, location'.
Promotion means all the activities which are undertaken to make the product or service known to the user and known to the trade. This includes advertising, word of mouth, press reports, incentives, commissions, and awards to the trade. This even includes consumer schemes, direct marketing, contests, and prizes.
Dimensions of a Product Mix
Width or breadth, that refers to the number of product lines which is offered by a company to its customers.
The length refers to the total number of products in a firm’s product mix strategy.
Depth refers to the number of variations that exist in a product line.
This refers to how closely the products in a product line are related to each other.
Example of a Product Mix
A popular and classic example of Product Mix is the brand Coca-Cola. For simplicity, let us assume that Coca-Cola oversees only two product lines that are soft drinks and juice (Minute Maid). The Products that are classified as soft drinks are Coca-Cola, Fanta, Sprite, Diet Coke, Coke Zero, and the products that are classified as Minute Maid juice are Guava, Orange, Mango, and Mixed Fruit.
The product mix or the consistency of Coca-Cola would be high, as all the products within the product line fall under this beverage. In addition, these production and distribution channels remain similar for each of these products. The product mix of Coca-Cola in the example is illustrated as follows:
Importance of a Product Mix
The product mix of a firm is important to understand as it has a profound impact on the firm’s brand image. The following are the important points for the firm to expand its product mix:
Expanding the product mix width can provide the company with the ability to satisfy the needs or demands of the different consumers and thus, diversify risk.
Expanding the product mix depth can help the company to cater to the current customers in a better and fulfilling way.
Factors affecting Product Mix
The product mix can be expanded, contracted, or modified depending on the following factors:
Every company has an aim of maximizing its profits and for this, they try to make certain changes in the product mix such that it has a positive impact on the company’s profitability. The company prefers introducing more product lines or product items to its existing product lines to improve profitability. In the meantime, the product mix is constantly adjusted to realize more profits.
Objectives and Policy of Company:
The company formaulates its product mix to attain the objectives it has set. Therefore, the addition, subtraction, or replacement of the product lines or the product items are based on the company’s target. Hence, the product mix is prepared and modified according to a company’s policy.
The decisions regarding the marketing mix, depend on the capacity of the plant or production of the company to a large extent. The company designs its product mix in a way that hails optimum production capacity.
Mostly the Product mix decisions are taken concerning demand. A Marketer should study consumer behavior to find the popularity of their products. The Change in the preferences of the consumers’ especially for fashion, interests, habits, etc., must be reflected in the product mix of the company. The company, naturally, prioritizes the products which have more demand. In case of falling demand, a company must drop poor products gradually. Thus, the product mix is adjusted to meet consumer needs and wants over time.
The product mix is widened or narrowed depending upon the production costs of the respective items. The company will prefer those products, which can be produced within the budgeted limit. At times, the manufacturing costs for existing products rise, then the company decides to drop such products to reduce their production costs. It also tries to balance selling price, profit margin, and production costs.
Government Rules and Restriction-
Companies generally produce products that are not restricted or banned by the governments. At times, a company has to stop certain products or varieties when they are declared illegal. In the same way, social and religious protests also play a vital role in this regard. The size and composition of the product mix is directly affected by the contemporary legal framework.
Apart from the behavior of the consumer, demand also fluctuates due to other reasons as well. Demand is affected more due to seasonal effects, non-availability of substitutes, increase in population, war, situations of drought, flood, or any other reason. To meet the changing demand for certain products, the company has to adjust its product mix.
It is one of the major factors affecting the product mix. All the companies try to formulate their product mix in a way that the competitions can be strongly responded to. The product mix strategy adopted by the close competitors has a direct significant impact on the company’s product mix.
Impact of Other Elements of Marketing Mix-
Other elements of the marketing mix such as price, promotion, and distribution are also equally important in designing the product mix. The company tries to maintain consistency among these all elements to carry out marketing activities effectively and efficiently.
Overall Business Condition or Condition of Economy-
Economic conditions domestically as well as globally are also considered. Due to the process of liberalization and globalization, no business can dare to underestimate the macro picture of the world economy. Therefore, a company must keep in mind the condition of the domestic economy concerning the world economy and is more relevant for a company that is involved in international trade.