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Product Mix 1

Product mix refers to the total set of products offered for sale by an organization across various product lines. It has four dimensions: width, length, depth, and consistency. An organization can pursue different strategies for its product mix such as expansion, contraction, or alteration of existing products. Factors influencing an organization's product mix decision include marketing demand, cost of production, quantity of production, advertising and distribution considerations, competitive actions, changes in customer preferences, utilization of marketing capacity, and the organization's reputation and goodwill.

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114 views12 pages

Product Mix 1

Product mix refers to the total set of products offered for sale by an organization across various product lines. It has four dimensions: width, length, depth, and consistency. An organization can pursue different strategies for its product mix such as expansion, contraction, or alteration of existing products. Factors influencing an organization's product mix decision include marketing demand, cost of production, quantity of production, advertising and distribution considerations, competitive actions, changes in customer preferences, utilization of marketing capacity, and the organization's reputation and goodwill.

Uploaded by

Avinash Sahu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Product mix

What is product-mix ?
• Every organization try to get maximum profitability
by capturing maximum market share of its product.
For this, organization try to target maximum
customer of the segment and therefore they deal
with multi-product. This is called product mix.
Or
A product mix (also called a product assortment) is
the set of all products and items a particular seller
offers for sale.
Following is an example of product mix of Hindustan Unilever Limited.

Product Mix of Hindustan


Unilever Limited

Home & Personal Beverages


Care

Personal Hair
Laundry Skin Care Oral Care Deodorants Tea Coffee
Wash Care
Lux Brooke
Surf excel
Fair & Pepsodent Axe Bru
Sunsilk Bond
Lovely
Lifebuoy
Rin Ponds Clinic + Close-up Rexona Lipton
Liril
Wheel
Vaseline
Hamam

Breeze

Dove

Pears

Rexona
• Product Line : The term "product line" includes all the
different things the company is selling in a particular
category. Put them all together and you have the "line."  It
might be a long line, or a short one. A product line is a group
of individual products that are closely related in some way.

• Individual Product : An individual product is any


brand or variant of a brand in a product line.

Thus a product mix is a combination of product lines, which


are combinations of individual products.
• Any company’s product mix has four dimension :
1. Width
2. Length
3. Depth
4. Consistency
• PRODUCT Length
A product mix consists of various product lines. Product mix
length refers to the number of products in a product .A
group of closely related products because either they satisfy
a class of needs or used together or sold to the same
customer group constitutes a product line. For example, car
wash, car polish, car air fresheners that are sold individually
and not as a package.  They would be part of the same line.  A
long line means many different, related products to sell.
• Product width: How many different "lines" the company
produces. Some companies may sell many different
"categories" of items.  Some may not.
• Product Depth : Think of this like subcategories.  If a
company sells face soap, it may have 5 different formulas
depending on skin type. Assortment of size, colour and
models offered in each item of a product line.
• Product Consistency : It refers to the relationship
of various product line either in their end use,
production requirement, distribution channel or
other way.
•
Product-Mix Strategies

Expansion
Expansion
Contraction
Contraction

Alteration
Alterationof
of
existing
existingproducts
products Trading
TradingUp
Upand
and
Trading
TradingDown
Down
Expansion of product mix: It is also referred to
diversification. A firm may expand its present
product mix by increasing the number of product
lines or increasing the number of product items
within the same line. New lines may be related or
unrelated to the present products.

• Alteration of existing products: Alteration may be


made in design, size, color, packaging, quality, etc
of the existing products. Often, improving an
established product can be more profitable and less
risky that developing completely new one.
• Contraction of product mix: In certain
circumstances, management may have to drop the
production of unprofitable products. A firm may
either eliminate an entire line or simplify the
assortment within a line; this is termed as
contraction of product line.
• Trading up and trading down:Trading up refers to
adding of higher priced and more prestigious
products to their existing product line, in the hope
of increasing the sales of existing low priced
products. Trading down refers to adding a low
priced product to its line of prestige products in the
hope that people who can not afford the original
products, will want to buy the new one because it
carries some of the status of higher priced product.
FACTORS INFLUENCING PRODUCT MIX:
• 1. Marketing demand: The change in the demand of a product
affects the decision of product mix. If the demand of a new product
is increasing in the market and the production of that new product is
beneficial to the company considering its cost of production,
utilization of its plant and machinery and labour-force and if it
thinks that it can compete with its competitors then it can start
production of the product. Likewise, if the demand of a product is
declining fast, it can decide to drop its production.

• 2.Cost of production: If the company can develop a new product


with the help of the same labour force, plant and machinery and
techniques, it can decide to start the production of that product at
lower cost. For example, a by-product can be developed by a
company at low cost.

• 3.Quantity of production: If the production of the new product is


considered to be at a large scale then the company can add one more
item to its product line just to get the economies of large-scale
production.
• Advertising and distribution factors: Advertising and distribution
factors may be the one of the reasons for the change in production
mix. If the advertising and distribution organization are the same, the
company may take the decision to add one more item to its product
line. For example, company can produce one more product if the
same raw materials are used in its production. A company producing
suitcases may add production of attache-cases and the advertising
and distribution cost will not increase at all or it may increase
marginally in introducing the product in the market.
• Change in company desire: Keeping in mind the objectives of the
firm, i.e., maintaining or increasing the profitability of the concern,
the firm may eliminate some of its non-profitable products or may
start the process of producing a new product. In this way, the firm
tries to make its product-mix an ideal one and which is suitable to
the company’s objectives.
Competitor’s actions and reactions: The decision of adding or
eliminating the product may be the reaction of competitors’ actions.
If company thinks that it can meet the competition well by adding
new product it can decide to produce the product.
• Change in purchasing power or behavior of the customers: the
number of customers is increased with the increase in their
purchasing power or with the change in their buying habits,
fashion, etc. The company may think of adding one more product
keeping mass production or increase in profitability in the mind.

• Full-utilization of marketing capacity: If the marketing personnel


are not being fully utilized to their capacity, the company may start
the production of another product in order to utilize their marketing
capacity fully. In this way, company may be able to reduce its
marketing cost.

• Goodwill of the company: If the company is of repute, it can


market any new product in the market without much difficulty. It
may take decision of adding new product without any hitch because
it knows that customer will accept any product introduced by the
firm. For example, if a new product is introduced by the Hindustan
lever ltd it will gain favor by the customers over competitors’
product and it is only because of the goodwill of the firm in the
market of consumer products.

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