Product mix, also known as product assortment, encompasses the range of products that a company provides to its clients. For instance, a corporation may provide various product lines that are somewhat similar, such as toothpaste, toothbrushes, mouthwash, and other amenities. All of these are under the same brand banner. However, a corporation may possess diverse and unique product lines that are starkly different from one another, such as pharmaceuticals and textiles.
The term “product mix” refers to the comprehensive range of products and services provided by a company. A product mix comprises an assortment of product lines, which are interconnected things that a consumer buys.
- What is the significance of a product mix?
The composition of products is crucial for both major corporations and small enterprises. Product mix enables organizations to broaden their consumer base by introducing a greater variety of items across various market segments. Gaining a comprehensive comprehension of the fundamental principles of product mix and effectively utilizing them can be advantageous for firms. The significance of product mix lies in the following reasons:
- Product Mix Influencing Factors
The following elements can be used to grow, contract, or modify the product mix:
- Making a profit: The goal of any business is to maximize profits, and one way to do this is to experiment with different product mixes to see what works best. In order to increase profits, the corporation would rather add new product lines or products to its current ones. Meanwhile, there is a continual effort to maximize earnings by adjusting the product mix.
- Company Policy and Objectives: The product mix is formed in order for the company to achieve its goals. Consequently, the organizational goal dictates the expansion, contraction, or replacement of product lines or products. So, an organization’s policies dictate how the product mix is created and adjusted.
- Ability to Produce: There is a strong correlation between the company’s production capacity and marketing mix decisions. With an eye toward maximising output, the business formulates its product lineup.
- Demand: Decisions about the product mix are typically made in relation to demand. If a marketer wants to know how popular their items are, they should look at customer behavior. A company’s product mix needs to be flexible enough to adapt to customers’ ever-changing tastes in fashion, hobbies, habits, and more. Products with more demand are, of course, given more priority by the corporation. If demand drops, a corporation has to progressively pull low-quality products off the market. In this way, the product mix can be modified to suit the changing demands of the market.
- Costs of Production: Depending on the production costs of the individual commodities, the product mix is either expanded or contracted. Products that can be manufactured within the allocated budget will be given preference by the company. When a company’s production expenses for an established product start to climb, it may opt to discontinue making that product. Equally important is striking a balance between production expenses, profit margin, and selling price.
- Government Regulations and Boundaries: Businesses typically make items that governments do not prohibit or limit. A corporation may be forced to discontinue specific items or variations if they are found to be in violation of the law. Protests based on religion and social issues are equally important in this context. In light of the current legislative framework, the product mix’s size and composition are directly impacted.
- Variation in Demand: Demand changes for a variety of reasons, not the least of which is changes in customer behavior. Whether it’s a change in the seasons, a lack of suitable alternatives, a rise in population, a conflict, a drought, a flood, or some other unforeseen event, demand is always impacted. The corporation has to change its product mix in order to keep up with the fluctuating demand for specific items.
- Level of competition: The product mix is significantly impacted by it. Companies strive to construct their product mixes in a way that can be strongly countered by competitors. The company’s product mix is greatly affected by the product mix strategy that its competitors use.
- Other Elements of the Marketing Mix and Their Effects: Product mix design gives similar weight to other marketing mix components, including pricing, promotion, and distribution. For the sake of efficient and effective marketing, the organization strives to keep all of these components consistent.
- Economy as a Whole or State of Businesses: The state of the economy both at home and abroad is also taken into account. As a result of liberalization and globalization, no company can afford to ignore the global economy as a whole. The state of the domestic economy as it relates to the global economy is, hence, more important for a corporation engaged in international trade to consider.
- Product line lifecycle
Introduction
The product life cycle refers to the steps that a product goes through from the time it is launched to the market until it exits the market. A product life cycle has four stages: introduction, growth, maturity, and decline. Many products persist in the long-term maturity stage. However, as with all product life cycles, the product will eventually phase out of the market. This could be due to a variety of circumstances, including saturation, competition, decreased demand, and even reduced sales. A product life cycle analysis can assist businesses in developing strategies that allow them to maintain the durability of a product while also adapting to market situations.
- Development
This is the first step in the life cycle of a product. In the development part of the product life cycle, you work on improving your idea, testing your product, and planning how you will launch it.
An important part of the creation step is testing the idea with real people who might use it. Concept testing lets you know how your target market feels about your idea so you can make changes based on what they say, all before you start making anything.
In the beginning, you’ll have to pay a lot of money for this new product without making any money from it. You could pay for this stage yourself, or you could look for partners. It’s risky in either case, and it’s often hard to get money from outside sources.
A quick sketch or a full-fledged sample of your product can be part of market development. Just enough to show investors and buyers is all you need. Early on, test the size of your possible market so you can start raising money to launch.
It’s possible to make the creation stage of a product better by following these three tips:
- Testing messages and claims: Use A/B tests to compare different messages, surveys to get feedback on each option, and different marketing channels to see which ones work best.
- Ad testing: Run a concept test on every ad you want to run with different groups of people.
- Pay attention to good research. In-depth market research will help you figure out what the market wants, needs, and likes.
- Introduction
It is during the introduction part of the product life cycle that you put your product on the market. Your marketing team’s main job will be to get your goods in front of your target market and raise awareness of them. Most of the time, content marketing and viral marketing are used to promote products.
You might spend more time than you planned on this step, depending on your product’s complexity, the competition, how new and different it is, and other things. When you market your business well, you’ll move on to the next level of growth, which is good news.
Here are three ways to make the early stages of a product’s life cycle better:
- Focus on big marketing campaigns: Invest in marketing campaigns that reach people through a lot of different channels to get more exposure as soon as possible.
- Get your customers involved. Get your customers involved to build a base of loyal customers who will tell others about your product.
- Change campaigns: Change your campaigns based on what you learn from the data.
- Growth
The introduction part of the product life cycle is when your customers become familiar with your products and buy into your marketing. Demand and profits are growing, and the competition is looking to stop your success.
Marketing in this stage moves from getting consumers’ attention to establishing a brand presence. Make them want to pick you over the others. As your business grows, you may add new features to your product, make your customer service better, and find new ways to sell your products. All of these things will be a big part of your marketing.
Now that the product is in its growth stage, here are three ways to make it better:
- Use what customers say: Get feedback from customers and use it to improve what you offer and make customers happier.
- Scale to meet demand: Accelerate your growth by scaling up marketing initiatives and reaching more customers.
- Adapt to competitors: Keep an eye on competitors with market research to identify new opportunities for growth.
- Maturity
When sales begin to level off from rapid growth, you’re entering the maturity stage. You may have to reduce prices to stay competitive.
Now, your marketing campaigns focus on differentiation instead of awareness, pointing out your superior product features. During this stage, production costs decline and sales are steady. It’s tempting to sit back and enjoy the steady sales, but you must make ongoing improvements to your product and let consumers know that it’s continuing to get better.
At this point, market saturation can occur. Competitors have begun taking a share of the market. Although many consumers are using the product, there are too many rivals. To become the brand of choice, the only way out of this dilemma is to focus on your strengths—differentiation, features, brand recognition, price, and customer service. If not, you’ll decline.
Here are three tips to improve the development stage of the product life cycle:
- Cut costs: Reduce cost expenditure where possible to keep and even increase your profitability.
- Continue market research: Focus your market study on identifying potential opportunities to break into new markets or renew customer interest in your products.
- Focus on customer relationships: Enhance customer relationships with a Voice of the Customer Program.
- Decline
If your brand experiences fierce competition or loses market share, you may experience the decline stage of the product life cycle. Sales will typically decrease in the face of rising competition.
Market decline may be related to:
There are too many products on the market that have similar features. If you can’t make your product stand out, it won’t be able to compete. Think about how the release of Facebook as a social media app led to the demise of MySpace.
Outdated or replaced product: This could be the case if your product has reached the end of its useful life and can’t be sold anymore. This is where VHS tapes were when DVDs came out, and this is where DVDs are now that more people are streaming entertainment. Blockbuster, which was the biggest video store in the US, had a bad day in the end.
Loss of customer interest: Heinz, a company that makes sauces and condiments for food, came out with EZ Squirt colorful ketchup in 2000. At first, it was a huge hit, but after a while, people stopped being interested, and the product failed.
McDonald’s fast food restaurants lost support for their “supersize” menu after a documentary showed how the chain’s food can hurt your health.
When a business sees a drop in sales, the leaders may decide to stop making the product, sell the business, or come up with new ways to make the old product better. In the meantime, your marketing may try to foster nostalgia or the superiority of your product to extend its life cycle.
Here are five strategies a company in decline can use to attempt to move out of this product life cycle stage:
- Extending the product line, like soda brands Coca-Cola or Pepsi, by adding cherry, vanilla, and other flavors.
- Repackaging the product, as in the example of Listerine, which was formerly a surgical antiseptic,. Listerine was then repackaged and rebranded to become a mouthwash that cures bad breath.
- Trying new pricing strategies as Dollar Shave Club did. The company uses subscription pricing as well as pricing based on the number of blades in each razor.
- Launching new versions of the product like Apple, which maintains the hype with every new iPhone release,.
- Moving into new product categories would mean moving back to the beginning of the product life cycle. Sometimes, that’s what it takes to survive. Nintendo is a great example of this. They went from making video arcade games to video game systems for personal use.