Product Mix


Question - What is Product Mix? Explain product mix decisions.

Answer

Meaning of Product Mix

Product mix or product assortment refers to the number of product lines that an organization offers to its customers. A product line is a group of related products manufactured or marketed by a single company. Such products function in a similar manner, sold to the same customer group, sold through the same type of outlets, and fall within the same price range.

Product mix consists of various product lines that an organization offers,  an organization may have just one product line in its product mix and it may also have multiple product lines. These product lines may be fairly similar or totally different, for example - Dishwashing detergent liquid and Powder are two similar product lines, both are used for cleaning and based on the same technology; whereas Deodorants and Laundry are totally different product lines.


An organization's product mix has the following four dimensions:-
  1. Width,
  2. Length,
  3. Depth, and
  4. Consistency.
Diagram to Explain Hindustan Unilever Limited Product Mix
Width
The width of an organization's product mix pertains to the number of product lines that the organization is offering. For example, Hindustan Uni Lever offers wide width of its home care, personal care, and beverage products. The width of the HUL product mix includes Personal wash, Laundry, Skincare, Haircare, Oral care, Deodorants, Tea, and Coffee.

Length
The length of an organization's product mix pertains to the total number of products or items in the product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products, hence, the length of the product mix is 23. 

Depth
The depth of an organization's product mix pertains to the total number of variants of each product offered in the line. Variants include size, color, flavors, and other distinguishing characteristics. For example, the Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of the Close-up brand is 3*3 = 9.

Consistency
The consistency of an organization's product mix refers to how closely related the various product lines are in use, production, distribution, or in any other manner.

Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing product from the product mix, adding a new product line, lengthening an existing line, or bringing new variants of a brand to expand the business and to increase the profitability.
  • Product Line Decision - Product line managers take product line decisions considering the sales and profit of each item in the line and comparing their product line with the competitors' product lines in the same markets. Marketing managers have to decide the optimal length of the product line by adding new items or dropping existing items from the line.
  • Line Stretching Decision - Line stretching means lengthening a product line beyond its current range. An organization can stretch its product line downward, upward, or both ways.
  1. Downward Stretching means adding low-end items in the product line, for example in the Indian car market, watching the success of Maruti-Suzuki in the small car segment, Toyota and Honda also entered the segment.
  2. Upward Stretching means adding high-end items in the product line, for example, Maruti-Suzuki initially entered the small car segment, but later entered the higher-end segment.
  3. Two-way Stretching means stretching the line in both directions if an organization is in the middle range of the market.
  • Line Filling Decision - It means adding more items within the present range of the product line. Line filling can be done to reach incremental profits or to utilize excess capacity.
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