What is a Product Mix Strategy?
A successful product mix strategy enables a company to focus efforts and resources on the products and product lines within its offerings that have the greatest potential for growth, market share, and revenue.
Product Line vs. Product Mix?
First, it’s important to note how the product line and the product mix differ.
A product line refers to a product category or brand marketed by a company. Products within a product line all perform a similar function, offer similar benefits, target similar customers, are similarly priced, and follow similar distribution channels. Important product line attributes include line stretching, line filling, line modernization, and line featuring.
A product mix is the total number of product lines and individual products or services offered by a company. Additionally referred to as product assortment or product portfolio. Product mixes vary from company to company. Some have multiple product lines with lots of products in each line. But others are much more limited.
A product mix strategy has four dimensions:
|Width||Total number of product lines a company offers.|
|Length||Total number of products in a company’s product mix.|
|Depth||Total number of product variations in a product line.|
||Indicates how product lines relate to one another.|
A company can have multiple product lines with lots of products in each line, but it can only have one product mix.
Key Product Mix Strategies
There are four key product mix strategies:
- Expansion: A company increases the number of product lines or depth (i.e., product variations) within lines.
- Contraction: A company narrows its product mix to eliminate lower-performing products or lines or to simplify remaining products or lines.
- Change an Existing Product: A company improves a current product rather than creating a completely new product.
- Product Differentiation: Without modifying the product in any way, a company positions it as a superior choice to a competitive product.
Additional product mix strategies include:
- Deepening Depth: A company keeps existing lines but expands them.
- Developing New Uses for Existing Products: A company finds and communicates new uses for current products without disturbing lines or products.
- Trading Up: A company adds a higher-cost product to an existing line to improve brand image and increase demand for its lower-cost products.
- Trading Down: A company adds a lower-cost product to an existing line of higher-cost products.
Using a Roadmap
A roadmap is a high-level strategic plan that defines a goal or desired outcome. It includes the major steps or milestones needed to reach it. Also, a roadmap serves as a communication tool that keeps stakeholders on the same page on all aspects of product development.
A roadmap lays out the product vision and strategy (i.e., the why.) Therefore a roadmap plays a key role in a product’s success and should be part of any product mix strategy.