Product mix decisions - Marketing Management

Product Mix Decisions Example

The product mix constitutes all individual product items and product lines the company markets. The product mix is described in terms or ‘width’ and ‘depth’. This enables an analysis of the ‘constituency’ of the product mix to be made. A company that manufactures and markets three separate product lines: fountain pens, cigarette lighters and wrist-watches. Within each product line the company offers a number of separate product items. This is typical of diversified companies with multiple product lines. Here, the product mix represents the sum of the firm’s products – in this case, 30. The number of product lines is three. Line depth refers to the number of products in each line – 9, 13 and 8 respectively – with the average depth being 10. Line width refers to the number of product lines offered.

By using the product mix concept a strategic assessment of the company’s product offerings can be made e.g. product line three could be extended (and hence the product mix) by adding digital watches. The company can also assess the extent to which products in the same line are complementary to, or compete with, each other and hence which might be deleted. Decisions about new products should reflect consistency with existing product lines. Conversely, is any one product so valued in terms of image and reputation that its deletion will damage the product mix? As Lancaster and Massingham1 point out, ultimately the addition to the width of the mix and the depth within each product line should be compatible with long-term marketing strategy. Short-term opportunist decisions may be damaging the company’s market position in the longer term.

Product mix analysis is a vital part of strategy review. In the case of Personal Products Ltd, the following are possible strategic options:

  1. Augment the product line by adding rollerball pens. This would remove some measure of exclusivity and represent a strategy of being ‘all things to people’ in a bid to serve the whole market for ink-based writing implements.
  2. Delete all but the most expensive men’s lighters from line two. This would have the effect of making the company a market specialist in men’s lighters, aiming at an exclusive market segment.
  3. Delete lines one and two and become a specialist in a single product line i.e. wrist-watches, and options one and two would still be available to the company.
  4. Delete all but one product and become expert in its marketing and production.
  5. Add another product line. In the case of Personal Products Ltd, it could be a new line of pens aimed at the graphics market.

Given the existing product mix and the options available, the company must begin to take product decisions that are in line with long-term strategy and are consistent with that mix. The introduction of ball-point pens could influence the perception the consumer has of the company as a whole. Low-cost disposable pens might not be consistent with the firm’s reputation for high quality lighters.

Similarly, the firm may be technically capable of producing an industrial line, but lacks marketing expertise required to serve this new market effectively.

Analysis of the product mix examines every aspect of the company. Each decision has financial, technical, marketing and market implications. The critical nature of product strategy becomes more apparent when one considers the consequences of failure and the need for success. Strategic choice options that relate to product mix decisions should be carefully considered through a set of evaluation criteria, so decisions taken are rational and not emotional or opportunistic.

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