What is a product mix?

The product mix is the total number of product lines a company offers. Many companies sell multiple product lines, which can be similar or vastly different.

All product mixes consist of the following four elements:

• Consistency: Shows how closely the company's product lines are related 

• Width: The number of product lines a company sells

• Length: The total number of products in a company's product mix 

• Depth: The total variations, such as size, flavor, and other distinguishing characteristics, for each product 

The product width is different product lines from a company. An example would be Kellogg's four product lines:

1. Cereal

2. Breakfast snacks and pastries

3. Crackers and cookies

4. Frozen/organic/natural goods

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A product mix's depth is the number of variations a company's product line has. An example of a car company with a 3-series product line may consist of many variations, like sedan, coupe, truck, and convertible, for a total product depth of four for the product line. 

A well-maintained product mix benefits a business in multiple ways:

• Effectively meets customer needs

• Builds a familiar business image

• Provides focus when growing your business

• Better inventory management

• More diversification for reduced risk of dependence on a single product or product line

Apple

Apple offers several product lines to meet various customers' needs. For a simple product mix example of Apple, let's assume the company offers four product lines—iPhone, iPad, Mac computers, and AirPods for a product width of four. 

In this simplified example, iPhones have the following variations: iPhone X, iPhone 11, iPhone 12, iPhone 13, and iPhone 14, resulting in a product depth of five. iPads come in the following variations: iPad Air, iPad Mini, and iPad Pro, resulting in a product depth of three. The Macbook product line includes Macbook Air, MacBook Pro, Mac Mini, and iMac for a product depth of four. AirPods are available in 2nd Generation, 3rd Generation, and Max for a product depth of three. 

In this simplified example, Apple has a product mix length of 15 with an extremely high consistency because all the products share similarities. 

Deciding to expand or change a product mix can depend on the factors listed below because each can positively or negatively affect a company. 

1. Financial position

A large company in good financial health will likely include multiple product lines in its product mix because they have the resources to create and introduce new products. 

In contrast, startup companies don’t always have the budget to produce multiple new products immediately and focus on a smaller product mix until they become more established. 

Another scenario is companies reducing the number of products or product lines they offer because they’re struggling financially. 

2. Area of operation

A company's industry is a significant determinant of the size of a product mix. Companies will have a larger product mix in industries where it’s feasible and easier to create more products. 

The smartphone vs. chip industry is an excellent example of how a company could have a larger product mix because of the industry's demands. The chip industry includes fewer variations than the various smartphone features needed to meet consumer preferences. 

3. Production costs

Companies won’t continue producing nonprofitable products. Therefore, production costs can widen or narrow a company's product mix. 

For example, suppose the manufacturing cost of a certain product rises or falls outside of the set budget. Then, the company may stop offering the product to help reduce costs, especially if the product is not in high demand.

4. Brand identity

Companies establishing themselves as well-known brands are more apt to continue adding new items or product lines, whether related or unrelated to their current products. 

The rapport built by the company results in loyal brand followers. These followers are often more accepting of trying new products from their loved brands, resulting in the brand having a larger product mix. 

5. Objectives and policy of the company

Developing a product mix depends on the company's established objectives and policies. Therefore, the company's plans or policy adjustments can result in modifying or adding product lines or products to the product mix. 

6. Demands of the consumer

Consumers' preferences directly relate to a company's product mix because companies prioritize products with high consumer demand over products with low demand. Often, if a product's demand falls, the company removes the product from its product mix. 

7. Fluctuation in demand due to other factors

While consumer preferences majorly affect product demand, other factors can result in demand fluctuations. For example, increased population, non-availability of substitutes, seasonal effects, natural disasters, war, and other scenarios can change consumers' preferences or needs. Therefore, a company is bound to adjust its product mix to meet the demand changes. 

A good example of companies adjusting their product mix due to demand fluctuation was during the COVID-19 pandemic. The demand for masks greatly increased, resulting in more companies changing their product offerings to include personal protective equipment. 

8. Government rules and restrictions

Legalities greatly impact a product mix's size because companies only produce products not restricted by the government. Therefore, if a product is declared illegal or harmful, companies must stop its production, resulting in a narrower product mix. 

Knowing the differences between product mix and marketing mix is crucial when diving into the business world. 

The basic difference between the two is that product mix refers to a company's complete range of products, whereas a marketing mix refers to the controllable variables used to increase demand for their product. Therefore, the product mix is a part of the marketing mix, which consists of a broad range of marketing tactics. 

A marketing mix is critical to business growth and success, while the product mix only defines the company's multiple product lines. 

Although people use product mix and product line interchangeably, each has distinct qualities. 

A product line refers to a singular line of similar products offered by a company, whereas a product mix includes all the product lines sold by a company. Companies with multiple product lines will have a large product mix. A company may feature many product lines but always has only one product mix.

As a large, well-known company, Samsung has a large product mix. Samsung's product mix includes smartphones, tablets, watches, Galaxy Buds, TVs, computing, and appliances. There are numerous product depths within each of these product lines, resulting in thousands of products in the company's product length. 

For simplicity, we’ll assume there are three smartphones (Galaxy S, Galaxy Z, and Galaxy A), two tablets (Galaxy Tab S and Galaxy Tab A), four watches (Galaxy Watch4, Galaxy Watch4 Classic, Galaxy Watch5, and Galaxy Watch5 Pro), three Galaxy Buds (Buds Live, Buds2, and Buds2 Pro), three TVs (neo QLED, OLED 4K, and 4K), two computers (Galaxy Book 3 and Chromebook), and seven appliances (refrigerator, range, dishwasher, microwave, dryer, washing machine, and robot vacuum). 

In this example, the Samsung product mix is consistent, with many of the products using the same manufacturing facilities and requiring similar production needs. The width of their product mix is seven, and the length is 22. 

Companies use a product mix pricing strategy to price their products to ensure each plays a specific role within the entire product mix to maximize revenue and achieve business goals. 

The price of a product or service depends on variables of other products or services the company provides, such as influential factors, pricing objectives, promotional pricing, and more. 

Line pricing, bundle pricing, optional pricing, captive pricing, and by product pricing are five commonly used product mix pricing strategies.