Product Mix

The product mix encompasses all the products and services offered by a marketer. The aspects of the organization's product mix include diverse topics such as assortment creation, profitability, research and development, growth, and branding strategies. Product mix is often, however, thought to have four dimensions: width, depth, length, and consistency, with the first three also being characteristics of the organization's product line. (See the entry for Product Line Extension for a discussion of width, depth, and length.) Consistency, as a dimension of the product mix, is a measure of the appropriateness, in both the customer's mind and the producer's mind, of the quality level and relatedness of the offering. It would be inconsistent, for example, for Cadillac's product mix to include inexpensive in-line roller blades or, some would suggest, for a physician's office to sell cosmetics.

The idea of assortment creation, credited to W. Alderson, suggests that a successful marketer puts together a heterogeneous group of goods into a collection that makes sense to customers. This collection becomes that organization's product mix and can be most readily seen in the assortment available in many retail stores. Facial tissues, soft drinks, motor oil, and ballpoint pens have little in common except that most consumers expect to find them at a nearby gas station or convenience store. These unrelated items, along with magazines, cigarettes, and small boxes of laundry soap, make up the store's offering or product mix.

The profitability of the individual items that make up the product mix has a tremendous impact on the nature of the mix. Most marketers seek a balanced approach to profitability, based on the idea that some items will contribute more to the organization's overall profitability than will others, either because of the per unit profit contribution or the percentage of total profit with which they are associated. A fast-food chain makes a larger per unit percentage [Page 453]contribution (profit) on its beverages than on its hamburgers or french fries, but the overall product mix is priced to achieve a target contribution (profit) based on the expected sales of the component items. (See also entries for Complementary Product and Substitute Product.)

Research and development activities are related to the product mix as an organization seeks growth. H. Igor Ansoff is generally given credit for developing the product–market matrix approach to classifying various growth strategies a marketer might pursue in terms of a product mix. Ansoff identified and labeled each of four possibilities in terms of sources of growth: existing or new products in existing or new markets. Pursuing growth through existing products in existing markets is called market penetration. Growth from bringing existing products to new markets is called a market development strategy. Growth by creating new products for existing markets is known as a product development strategy, and developing new products for new markets is called growth by diversification. Successful marketers probably have a product mix in which sales growth has been based on research and development activities leading to ventures of all four strategies.

Branding strategies are also a part of an organization's product mix and include a number of possibilities for both manufacturers and distributors. A brand's value, sometimes called brand equity, is created by customer loyalty to the brand. A manufacturer's brand, often called a national brand, is owned by a manufacturer or producer, and extreme loyalty (brand insistence) is seen when a customer goes to a different store or supplier because the desired brand is not available. For example, a customer may want only Lenox china and will not accept a substitute. A dealer's brand, sometimes called a private label or store brand, is owned by a retailer or wholesaler and thus the loyalty is to the outlet where the item is available. For example, Road Handler shock absorbers or Craftsman tools are only available at Sears Roebuck stores. Most general-line retailers have a product mix that consists of a combination of brands (their own and those owned by manufacturers) to provide products at different quality levels or at different prices for a broad range of customers.

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