Product Mix Strategies
Product mix, also known as product assortment, is the total number of product lines that a company offers to its customers. The product lines may range from one to many and the company may have many products under the same product line as well. All of these product lines when grouped together form the product mix of the company.
The product mix is a subset of the marketing mix and is an important part of the business model of a company.
Product Mix depends on many factors like
- Company Age
- Financial Standing
- Area of Operation
- Brand identity, etc.
Many new companies start with a limited width, length, depth and high consistency of the product mix, while companies with good financial standing have wide, long, deep and less consistency of the product mix. Area of operation and brand identity also affects its product mix.
PRODUCT MIX STRATEGY
The major product mix strategies (given by William Stanton and others) have been discussed briefly as under:
1. Expansion of Product Mix
Expansion of product mix implies increasing the number of product lines. New lines may be related or unrelated to the present products. For example, Bajaj Company adds car (unrelated expansion) in its product mix or may add new varieties in two wheelers and three wheelers. When company finds it difficult to stand in market with existing product lines, it may decide to expand its product mix.
For example, Hindustan Unilever Limited has various products in its product mix such as:
- Toilet soaps, detergent cakes, washing powders, etc.
- Cosmetic products,
- Edible items,
- Shaving creams and blades,
- Pesticides, etc.
If company adds soft drink as a new product line, it is the example of expansion of product mix.
2. Contraction of Product Mix
Sometimes, a company contracts its product mix. Contraction consists of dropping or eliminating one or more product lines or product items. Here, fat product lines are made thin. Some models or varieties, which are not profitable, are eliminated. This strategy results into more profits from fewer products. If Hindustan Unilever Limited decides to eliminate particular brand of toilet shop from the toilet shop product line, it is example of contraction.
3. Deepening Product Mix Depth
Here, a company will not add new product lines, but expands one or more excising product lines. Here, some product lines become fat from thin. For example, Hindustan Unilever Limited offering ten varieties in its editable items decides to add four more varieties.
4. Alteration or Changes in Existing Products
Instead of developing completely a new product, marketer may improve one or more established products. Improvement or alteration can be more profitable and less risky compared to completely a new product. For example, Maruti Udyog Limited decides to improve fuel efficiency of existing models. Modification is in forms of improvement of qualities or features or both.
5. Developing New Uses of Existing Products
This product mix strategy concerns with finding and communicating new uses of products. No attempts are made to disturb product lines and product items. It is possible in terms of more occasions, more quantity at a time, or more varied uses of existing product. For example, Coca Cola may convince to use its soft drink along with lunch.
6. Trading Up
Trading up consists of adding the high-price-prestige products in its existing product line. The new product is intended to strengthen the prestige and goodwill of the company. New prestigious product increases popularity of company and improves image in the mind of customers. By trading up product mix strategy, demand of its cheap and ordinary products can be encouraged.
7. Trading Down
The trading down product mix strategy is quite opposite to trading up strategy. A company producing and selling costly, prestigious, and premium quality products decides to add lower- priced items in its costly and prestigious product lines.
Those who cannot afford the original high-priced products can buy less expensive products of the same company. Trading down strategy leads to attract price-sensitive customers. Consumers can buy the high status products of famous company at a low price.
8. Product Differentiation
This is a unique product mix strategy. This strategy involves no change in price, qualities, features, or varieties. In short, products are not undergone any change. Product differentiation involves establishing superiority of products over the competitors.
By using rigorous advertising, effective salesmanship, strong sales promotion techniques, and/or publicity, the company tries to convince consumers that its products can offer more benefits, services, and superior performance. Company can communicate the people the distinct benefits of its products.
Product Mix Example
Coca-Cola has product brands like Minute Maid, Sprite, Fanta, Thumbs up, etc. under its name. These constitute the width of the product mix. There are a total of 3500 products handled by the Coca-Cola brand. These constitute the length. Minute Maid juice has different variants like apple juice, mixed fruit, etc. They constitute the depth of the product line ‘Minute Maid’. Coca-Cola deals majorly with drinking beverage products and hence has more product mix consistency.