Ever bought a tech item you loved so much you upgraded with the same brand? Maybe you’ve marveled at how Amazon seems to have something for everyone? Or perhaps you’ve wandered into a certain Swedish homestore for light bulbs, only to leave with 100 tealights, new curtains, bedding, and a hotdog?
There’s a secret behind these success stories: a well-thought-out product mix. Let’s take a closer look at this business strategy essential.
What is a product mix?
A product mix, also known as product assortment, represents the total number of product lines that a company offers to its customers.
Imagine walking into a giant supermaket with a range of product aisles to choose from — you’ve got groceries, electronics, furniture, and more. The array of products under each category, the breadth of each category, and the different variations — it all represents the store’s product mix.
The product mix is essentially the physical embodiment of a company’s business strategy. Take a close look at both what those products are and how they’re organized and marketed. You’ll soon work out how it differentiates itself from its competitors, the company’s focus, its target customers, and its market positioning.
For this reason, sussing out your competitors’ mix is an essential part of your own product analysis process. More on that later!
Who’s in charge of the product mix?
Creating and managing the product mix is a collaborative effort, but at the heart of it all, you’ll find the product manager. They’re the researchers, planners, prioritizers, motivators, vision-crafting decision-makers.
But there’s backup from the likes of marketing, offering insights on what the audience gels with; sales, with their real-time feedback from the market situation; CEOs defining business objectives; and developers/manufacturers setting the pace. So, while the spotlight might be on the product managers, the entire product team works together to shape the product mix into what it is.
Who needs a product mix?
The short answer? Every business, regardless of its size or industry, should consider its product mix.
Start-ups and small businesses can use it to carve a niche in the marketplace, while established firms can use it to diversify and hedge against market volatility. Retailers, manufacturers, and service providers alike benefit from a well-structured product mix. It’s instrumental for businesses looking to expand geographically or tap into new customer segments. Even sole proprietors and freelancers can utilize this concept by diversifying their services or product offerings.
The four dimensions of a product mix
Think of your product mix as a multi-layered cake, with each layer giving us a better picture of the products a company offers. There are four main layers or dimensions to this cake — width, length, depth, and consistency. Let’s slice into each layer to get a better taste:
Imagine the variety of product lines a company has. This is the width. For example, a cosmetic brand could have everything from skincare to makeup, haircare, to perfumes. Each of these categories represents the breadth of the brand’s offerings.
Now, let’s count the total items in these product lines. This count is the length. Using our cosmetics brand, think of each individual product group — a specific line of moisturizer, a particular type of lipstick, that unique range of hair dyes — and add them up. That’s the length.
Depth is all about the choices within a single product category. Take our cosmetics brand’s makeup line; depth would be the range of lipstick shades in a particular line or the variety of mascara types it offers. It shows how a brand tries to cater to everyone’s unique tastes.
What’s the difference between a product mix and a product item?
The product mix is the big picture. It’s everything a company offers. This can be narrow, with few product lines, or wide with many. The depth varies too. From just a few versions of each product to many types.
A product item is more specific. Think of it as a unique version of a product within its line, different because of size, color, features, and so on. For example, a smartphone with a specific storage, color, and screen size is a product item.
In short, product items are the tiny details in the grand scheme, forming product lines. And all these product lines? That’s your product mix. While the product mix gives you a broad look at a company’s offerings, a product item zooms in on one product’s unique traits.
What is the difference between a product mix and a product line?
A product line is like a family of products. They’re related and usually sold under one brand or to similar customers. Take Coca Cola. It sells Coca Cola Classic, Coke Zero, Diet Coke, Vanilla Coke, and so on. This is its product line.
A product mix, on the other hand, is the entire collection of a company’s product lines. So, if we stick with Coca Cola, their product mix isn’t just Coca Cola; it also owns Sprite, Fanta, Innocent Smoothies, Nestea, Schweppes, and more, all of which have their own product lines.
Simply put, a product line is just one part of a product mix. It’s important to know the difference because companies make decisions based on both. Deciding to launch a new beverage falls under product line decisions, while adding or dropping an entire category, like bottled water, is a product mix call. Both play a big role in shaping a company’s product strategy.
Why are product mixes important?
Navigating the business scene, product mixes stand out as more than just an organizational measure. They’re pivotal in shaping a company’s strategy. Here’s the lowdown on their importance:
Brand identity boost
An effective product mix doesn’t just house products; it tells a story, creating a strong and cohesive brand narrative. Using Apple as an example, its curated offerings, ranging from iPhones to tablets to watches, exemplify modern, minimalist, aspirational tech. Through consistently sleek, high-quality products, it sells a lifestyle that’s bigger than the individual items in its mix.
In the vast sea of competition, a unique product mix is a company’s signature. It offers them a chance to carve a niche, create a distinct value proposition, and lay down markers for long-term success.
Reaching diverse customers
Oh, you like your Amazon Echo? Perhaps you’d be interested in Amazon speakers, earbuds, and smart plug to go with it?
A well-curated product mix is like a company’s way of speaking different consumer languages. This variety speaks to an array of preferences, building a direct connection between the brand and diverse market segments. This also opens doors to avenues like cross-selling and up-selling, all while cementing customer loyalty.
Think of a diversified product mix as a company’s safety net. If sales of one product take a hit, others in the lineup can bolster overall performance, offering a cushion against market unpredictability.
While a wide product range is beneficial, a product mix ensures companies maintain a laser focus on their offerings. This concentration helps businesses channel resources appropriately, aligning with both core strengths and market demands.
Meeting customer needs
As a business, your most important job is to give the customer what they want. A strategic product mix helps you answer their needs more directly and widen the net by meeting more diverse needs. It also serves as a company’s ear to the ground, ensuring you pivot, adapt, and remain relevant in a changing marketplace.
How to perform a product mix analysis
Before you launch into your chosen strategies, you need to know what you’re currently working with. Here’s how to do that.
1. Identify all products and product lines
Make a detailed list of all the individual products and product lines your company offers. For each product, jot down crucial characteristics such as its primary function, unique selling propositions, and the customer needs it fulfills.
Take note of the target market of each product, their specific needs, buying behaviors, and how the product caters to them. Also consider the competitive positioning of your products and how they stack up against similar offerings from rival companies in terms of price, features, and perceived value.
2. Collect sales data
Next, collect as much quantitative data as you can. This should ideally include sales volumes, revenue, and profit margins for each product over a significant period. With longitudinal data, you can identify trends, spot patterns, and observe the ebb and flow of product performance over time. It’s equally important to scrutinize the costs associated with each product — raw materials, manufacturing, marketing, distribution, and after-sales service — to understand the total cost and subsequent profitability accurately.
3. Evaluate product performance
With the sales and cost data at your disposal, you can now delve into the performance assessment of each product.
Study the sales trends. Are they increasing, decreasing, or fluctuating? Measure the profitability of each product by subtracting the total cost from the total revenue generated.
Next, evaluate market share to gauge the product’s relative competitiveness. Use performance metrics like the Boston Consulting Group’s Growth-Share Matrix, which classifies products into categories like ‘stars’, ‘cash cows’, ‘question marks’, and ‘dogs’, based on market growth and market share.
4. Examine market trends
Your product performance doesn’t exist in a vacuum. It’s influenced by market trends, customer preferences, and competitive dynamics. Pay attention to customer tastes, emerging trends, and new tech developments that could impact your products. And keep an eye on your competition — the products they’re offering, their pricing strategies, and how they’re perceived in the market.
5. Analyze product portfolio balance
A well-balanced product portfolio mitigates risk and ensures sustainable growth. Look at your product mix holistically and consider its balance. Do you have a mix of high-revenue mature products (‘cash cows’) and promising new ones (‘question marks’ or ‘stars’)? Is your revenue concentration spread across multiple products, or are you overly reliant on a single product or product line?
6. Perform a SWOT analysis
A SWOT analysis gives you a comprehensive view of your product mix by highlighting its strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are typically internal factors, such as a product’s unique feature or a gap in your product line. In contrast, opportunities and threats usually arise from external factors, such as a growing market trend or a new competitor.
7. Decide on strategic actions
The insights gleaned from the steps above should inform your next moves. If a product is underperforming and showing no signs of improvement, it might be prudent to discontinue it. Conversely, a product showing promising growth might be a candidate for further investment. If your SWOT analysis uncovers a significant opportunity, it could be the impetus to develop a new product or modify an existing one.
How to analyze a competitor’s product mix
Learn from those who have boldly gone before! Analyzing a competitor’s product mix helps you understand their movements and identify potential gaps in the market. Here’s the process:
1. Identify competitors
Start by identifying your primary competitors. These can be direct competitors who offer similar products or services to similar markets or indirect competitors who may not offer the same products but compete for the same customer base.
2. List their products
Once you’ve worked out who you’re up against, compile a list of all their products. You can generally find this information on their website or marketing materials. Pay attention to how they group and present their products because this can give you a sneak peek into their marketing strategy.
3. Categorize the products
Organize the listed products into relevant categories or product lines. Look for patterns and themes. Are there specific categories where they offer a wide range of products? Are there categories where they only offer a few? This can give you a sense of their focus areas and priorities.
4. Understand the features and benefits
For each product, take the time to understand its key features and benefits. How does the competitor position the product? What needs does it fulfill for the customer? This will help you understand how the competitor differentiates their products.
5. Evaluate pricing strategy
Consider the price points for each product. Is the competitor following a cost leadership strategy, where they aim to be the lowest-cost provider? Or are they pursuing a differentiation strategy, where they charge higher prices for products perceived to be of higher quality or unique in some way? Depending on which, you’ll either want to undercut them, or offer a higher quality product (or both!).
6. Assess product performance
If possible, assess the performance of the competitor’s products. You might be able to find sales data in industry reports or financial statements. Customer reviews also provide insights into how well the products are received in the market.
7. Review promotional activities
How does the competitor promote their products? What channels do they use? How do they communicate the value of their products? This gives you usable info about how they market and engage with customers.
8. Identify gaps and opportunities
Finally, based on your analysis, identify gaps in the competitor’s product mix where your company could potentially succeed. Alternatively, you might find areas where the competitor is strong and you need to improve.
10 essential product mix marketing strategies
Analysis? Check. Now it’s time to put that data to work. To make the most of your product mix, you’re going to want to take a specific marketing approach.
1. Product differentiation
Stand out in the crowd! By emphasizing what makes your products unique, you’re not just selling an item — you’re offering an experience. It’s like wearing a vibrant color in a room full of neutrals; it naturally draws attention and sets you apart.
Why choose it?
It gives your product an edge, capturing attention and loyalty.
How to get started
Pinpoint what sets your product apart. Maybe it’s sleek design, innovative features, or top-tier customer service. Highlight this in your marketing efforts.
- Understand your competition: Before you differentiate, you need to know what you’re differentiating from. Study your competitors closely.
- Customer feedback: Talk to your customers. Understand their needs, preferences, and pain points. Sometimes, differentiation is simply addressing a common complaint in the market.
- Innovation: Consider new technologies, designs, or functionalities that can elevate your product.
- Quality enhancements: Make your product more durable, user-friendly, or efficient than others in the market.
- Brand story: Beyond the product, a compelling brand narrative or ethos can create a strong differentiation. People love to buy products with a story or cause they can connect to.
2. Product development
Freshen up your product range. By innovating and branching out, you keep your product mix lively and relevant. It’s like adding a new, exciting chapter to a book that keeps readers eagerly turning the pages.
Why choose it?
It drives growth and keeps your brand modern.
How to get started
Research market trends, identify gaps, and brainstorm how your brand can fill them.
- Research and insights: Start with understanding what your customers want. Engage in market research, feedback sessions, and trend analysis.
- Prototyping: Before fully developing a product, create a prototype or a minimum viable product (MVP). This helps you test your concept and refine it based on initial feedback.
- Collaborate: Work closely with various teams, from design to manufacturing to marketing, to ensure the product is not only well-made but also marketable.
- Seek feedback: Once you’ve developed a version of your product, share it with a select group of users. Listen to their feedback and make necessary adjustments.
- Launch and iterate: Roll out your product to the broader market but remain agile. Be ready to make improvements as you gather more data and feedback.
3. Market penetration
Dive deeper into your current market. It’s like squeezing more juice out of an orange you already have. Why let that good stuff go to waste? This could mean getting your current customers to buy more or attracting new customers from within the same market.
Why choose it
Maximized sales without overstretching resources.
How to get started
Improve what you already offer — better quality, competitive pricing, or enhanced marketing campaigns.
- Understand your current market: Gauge the size of your current market and figure out how much more of it you can realistically capture.
- Boost product quality or service: Sometimes, a simple upgrade or enhancement can make your product or service more appealing to existing customers.
- Revise pricing: Consider whether a price adjustment, whether it’s a discount or a bundled offer, can incentivize more purchases.
- Enhance distribution channels: Ensure your products are easily accessible. This could mean partnering with more retailers, improving your online store, or even offering faster delivery.
- Ramp up promotional efforts: A targeted marketing campaign, special promotions, or loyalty programs can create more buzz and draw more customers.
4. Market expansion
Grow beyond your comfort zone. There are more customers out there waiting to discover your products! Market expansion means taking your existing products into new arenas, whether that’s new geographical regions, different demographics, or finding new uses for what you offer. It’s a smart move if you’re aiming to grow without necessarily adding to your product lineup.
Why choose it
Untapped markets mean fresh revenue streams.
How to get started
Research potential markets, understand their nuances, and adapt your products to fit.
- Assess current product fit: Before making a move, see how your product aligns with the new market’s needs. It might be perfect as it is, or it might need a few tweaks.
- Develop a market entry plan: Do you grow into this new market on your own, or might partnerships, joint ventures, or even acquisitions pave a smoother path?
- Adapt marketing and sales tactics: Tweak your marketing and sales strategies to fit the new audience. Remember, what works in one region or for one demographic might not resonate in another.
- Monitor and iterate: Once you’ve made the leap, keep a close eye on how things are going. Track performance metrics, listen to feedback, and be ready to make changes if needed.
5. Product positioning
It’s all about perception. It’s the art of creating a unique space in the consumer’s mind for your product, shaped by its attributes, benefits, quality, and more. Place your product just right in the market and watch its value soar.
Why choose it?
It ensures customers perceive your product in the intended light.
How to get started
Analyze market segments, and align your product attributes to meet the specific demands.
- Understand your target audience: Dive deep into who your customers are. What are their preferences, needs, and pain points?
- Analyze competitors: Identify how competitors position their products and look for gaps or opportunities where you can stand out.
- Define your unique selling proposition (USP): What makes your product different and better? This will be the cornerstone of your positioning.
- Craft a positioning statement: This brief statement captures the essence of your product’s value and its place in the market. It’s primarily for internal use to guide marketing and product decisions.
- Validate with the audience: Before rolling out any major campaigns, test your positioning with a segment of your target audience. Adjust based on feedback to ensure it truly resonates.
6. Brand extension
Your brand has more potential than you think. Using the power of an established name to venture into new product categories can be a strategic way to capitalize on recognition and loyalty.
Why choose it?
It leverages existing brand equity, making market entry smoother.
How to get started
Identify sectors where your brand ethos aligns and dive in.
- Evaluate brand equity: Understand the strengths of your existing brand. What do customers associate with your brand, and what sentiments and trust levels does it evoke?
- Identify complementary categories: Look for product categories that align with your brand’s values, ethos, and customer expectations. The extension should feel natural and not forced.
- Conduct market research: Before diving into a new category, understand the market dynamics, competitor landscape, and potential customer demand in that space.
- Test and iterate: Before a full-scale launch, consider pilot launches or limited edition runs to gauge customer reactions and gather feedback.
- Integrate feedback: Use the insights from pilot launches or test markets to refine the product, positioning, and marketing strategies for the new category.
7. Pricing strategy
The price tag matters. Tailor it according to the market, competition, and your objectives. Setting the right price for your products or services isn’t just about covering costs or making a profit. It’s about sending a message, creating perceived value, and aligning with your brand’s identity and your audience’s expectations.
Why choose it?
It directly impacts sales, profits, and brand perception.
How to get started
Study your market. Choose between penetration, premium, competitive, or bundle pricing strategies.
- Conduct market research: Dive into what your competitors are charging and where your product stands in comparison. Understand your customers’ willingness to pay and what value they see in your offering.
- Know your costs: Before setting any price, you need to know what it costs to produce, market, and distribute your product. This provides a foundation ensuring you’re not pricing below your costs.
- Determine your positioning: Do you want to be seen as a luxury brand, a cost-effective solution, or somewhere in between? Your positioning can help steer your pricing approach.
- Test different price points: Before settling on a final price, consider testing various price points to see what maximizes revenue without turning customers away.
- Stay adaptable: Economic factors, competitor moves, or shifts in consumer behavior can affect the effectiveness of your pricing. Review and adjust as necessary.
8. Promotional mix strategy
Raise the curtain on your product mix. Make noise using varied promotional tools. By coordinating efforts across advertising, personal selling, public relations, and direct marketing, you can craft a message that resonates.
Why choose it?
Visibility boosts sales and solidifies brand presence.
How to get started
Design a balanced promotional campaign with advertising, PR, direct marketing, and personal selling:
- Assess your current promotional activities: Start by looking at what you’re already doing. Are you focusing too much on one method and overlooking others? Finding gaps can help you design a well-rounded approach.
- Understand your audience: Figure out where they hang out and how they like to receive information. If they’re mostly online, maybe boost your digital marketing; if they’re local, consider in-person approaches or local media.
- Allocate budget: Determine where to funnel resources based on what resonates with your audience. If digital campaigns offer better ROI, think about directing more funds there.
- Coordinate efforts: Make sure all your promotional activities echo a consistent message. When every channel reinforces the same message, your brand becomes more memorable.
- Measure and adjust: Keep an eye on how your promotions are doing. Use analytics and feedback to refine and adjust your strategy over time.
9. Distribution strategy
Get your products where they belong — in the hands of your customers. An effective distribution strategy ensures your product is accessible, visible, and available in the right places at the right time.
Why choose it?
Accessibility boosts sales and enhances customer experience.
How to get started
Strategize distribution channels — consider eCommerce, retail outlets, or direct sales as part of your marketing mix.
- Know your audience: Understand where your target customers shop and how they prefer to purchase. Is it online? In local boutiques? Large retailers?
- Choose your channels: Based on your product and audience, you may opt for:
- Direct distribution: Selling directly to customers, maybe through your own website or store. You’ll have more control over your site, pricing, and profits. The downside is you’ll have to do all your marketing yourself.
- Indirect distribution: Using intermediaries like wholesalers, retailers, or distributors. Less control, but direct access to a giant market, with little to no marketing spend needed.
- Online platforms: Leveraging eCommerce sites or online marketplaces. The same pros and cons as indirect distribution. Both are ideal for smaller businesses with small audiences (so far).
- Hybrid models: Combining multiple channels for a wider reach.
- Build relationships: Establish strong ties with retailers, wholesalers, or online platforms. They’re your gateways to customers.
- Monitor and adjust: Regularly assess the performance of your distribution channels. Adapt based on what’s working and where there’s room for improvement.
10. Product lifecycle management (PLM)
Every product has its journey. It encompasses the series of stages a product goes through: introduction, growth, maturity, and decline. Each phase presents unique challenges and opportunities. Understand it, manage it, and make the most of every stage.
Why choose it?
It maximizes profit and ensures sustained relevance.
How to get started
- Product analysis: Begin by evaluating where each of your products stands in its lifecycle. Is it a new introduction? Or perhaps it’s in its growth or maturity stage?
- Tailored strategies: Depending on the phase —
- Introduction: Focus on raising awareness and building a market presence
- Growth: Optimize marketing strategies to expand the customer base and fend off competitors.
- Maturity: Explore differentiation or cost-cutting measures to maintain profitability.
- Decline: Consider phasing out, rebranding, or pivoting the product.
- Continuous monitoring: Regularly review sales, customer feedback, and market trends to gauge where your product is in its lifecycle.
- Team collaboration: PLM requires collaboration across departments. Ensure your product, marketing, sales, and support teams are aligned in their understanding and approach.
Two real-world examples of a great product mix strategy
Apple masterfully crafts its product mix, building an ecosystem spanning hardware, software, and services. Their lineup features iPhones, iPads, Macs, and Apple Watches, each with its own operating system and enhanced by apps like iCloud, Apple Music, and the App Store.
These interconnected offerings not only boost revenue but also promote loyalty. But what unites them is the brand’s commitment to innovation and style. Thanks to this, Apple has moved beyond simply a tech supplier into a lifestyle brand with a cult-like following.
From its roots as an online bookseller, Amazon has boomed into a multifaceted giant. Its product mix now includes consumer gadgets like Kindle and Echo, streaming platforms like Prime Video, and even the business-focused Amazon Web Services (AWS).
Beyond retail, they’ve ventured into private-label brands and enticed customers with the bundled benefits of Amazon Prime. AWS, catering to businesses, showcases Amazon’s reach across both B2C and B2B markets, balancing out its broad portfolio. The uniting factor? Unmatched convenience and choice, paired with super-easy buying options.
Collaboration tools were made for product mix planning
When you’re juggling a wide range of products, staying organized and in sync with your team is not easy, to say the least. This is where collaboration tools shine. They offer a centralized place for teams to discuss ideas, share feedback, and track progress on product changes or launches. Instead of endless email chains or scattered notes, you have all your discussions and documents in one easily accessible space.
Being able to chat in real-time via chat apps, share updates immediately via project management tools, and even hold virtual brainstorming sessions on a virtual whiteboard can speed up decision-making processes. These tools maintain clarity, especially when you’re making choices that affect multiple products or departments. Plus, the convenience of having a platform where everything is up-to-date helps reduce misunderstandings and miscommunications. All in all, using these tools is a real game-changer for busy product managers. Try them for free today!