Marketing strategy involves connecting a company’s offerings with consumer demand. A foundational element of this strategy is the product mix, which encompasses the totality of what a company sells. This collection of goods and services represents the firm’s complete market offering, influencing brand perception. Analyzing this assortment is necessary for any company seeking sustainable growth and market penetration.
Defining the Product Mix
The product mix, also called the product assortment or product portfolio, is the complete collection of all product lines and individual items a company offers for sale. It is a strategic tool that defines a company’s market position and reflects its overall business goals. This concept differs from a single product line, which is a group of closely related products sold to the same customer groups or marketed through the same channels.
A consumer goods conglomerate like Procter & Gamble (P&G) exemplifies a vast product mix, offering hundreds of distinct products across multiple categories. P&G’s assortment includes Tide laundry detergent, Crest toothpaste, and Pampers diapers, each belonging to a separate product line. The Coca-Cola Company’s product mix also extends beyond its flagship soft drink, encompassing waters, juices, and teas under various brand names.
The Four Key Dimensions
The product mix is systematically analyzed and managed by examining four distinct characteristics: width, length, depth, and consistency. These dimensions provide the structural framework for understanding the composition of a company’s offerings. Quantifying these four aspects allows a business to make informed strategic decisions about its market presence.
Width
Product mix width, or breadth, is the total number of distinct product lines a company carries. This dimension reflects the diversity of a company’s business interests and its reach across different consumer needs. For example, a company focused only on men’s shaving products has a narrow width. Conversely, a company like P&G, with lines in Beauty, Grooming, and Health Care, has a wide product mix, allowing it to enter new markets.
Length
The length of the product mix is the total number of individual products within all of the company’s product lines combined. It is a quantitative measure of the items available to the consumer. For example, if a company has three product lines, each containing ten distinct products, the product mix length is thirty. A company increases its length by adding more items to existing product lines to satisfy a wider array of needs within its current target markets.
Depth
Product mix depth measures the number of variations offered for each product within a product line. These variations include different sizes, flavors, colors, ingredients, or models of a single item. For example, the depth of the Coca-Cola product line is shown by the availability of the original drink in multiple sizes and different formulations (Zero Sugar, Diet Coke). Greater depth allows a company to serve specific customer preferences and maximize shelf space.
Consistency
Consistency describes how closely related the various product lines are to one another. This relationship is measured by factors like end use, production requirements, or distribution channels. A company whose product lines use the same raw materials or are sold through the same retail channels has high consistency. Coca-Cola’s product lines—soft drinks, juices, and water—are highly consistent because they are all beverages distributed through the same system. Conversely, a company that sells electronics and owns a chain of restaurants would have a low degree of product mix consistency.
Why Managing the Product Mix Matters
Strategic management of the product mix is necessary for achieving long-term financial stability and market resilience. A diversified portfolio helps mitigate risk, protecting the business from sudden downturns in a single product category. By spreading revenue streams across different product lines, a company is less vulnerable if a specific market segment declines due to new technology or shifting consumer trends.
A carefully managed mix also allows a company to effectively leverage its existing brand equity across its entire portfolio. Established brands can introduce new products with less marketing effort because consumers already trust the brand name. Furthermore, a broad and deep mix enables companies to maximize their access to distribution channels and increase their presence on store shelves. Creating an optimal product mix ensures the company can cater to diverse consumer needs, capturing a larger share of the overall market.
How Companies Adjust Their Product Mix
Companies actively modify their product portfolios using several deliberate strategies to align with market opportunities and business objectives. Product line extension, often called stretching, involves adding new items within an existing product line, such as introducing a new flavor or a different size of a familiar product. This action directly impacts product mix length and depth by targeting a specific segment of the current customer base.
Conversely, product line contraction, or pruning, is the process of systematically removing underperforming or unprofitable products from a line. This action streamlines operations, reduces inventory costs, and allows the company to focus resources on the most successful items in the portfolio. Both extension and contraction are micro-adjustments that affect the existing product lines.
For more dramatic changes to the company’s overall market footprint, managers employ strategies that alter the product mix width. Product mix widening involves introducing entirely new product lines that are distinct from the company’s current offerings, such as a clothing company launching a line of home goods. The opposite action is product mix narrowing, which requires the elimination of an entire product line to simplify the business and refocus on core competencies.