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Unlock This CourseEvery successful business needs to offer the right products and services to meet customer needs. The collection of all products and services a company offers is called its product mix. Getting this mix right is crucial for business success!
Key Definitions:
Products are physical, tangible items that customers can see and touch. Examples include smartphones, clothing and food.
Services are intangible activities or benefits offered to customers. Examples include haircuts, insurance and streaming subscriptions.
A well-designed product mix helps businesses:
A product mix has three key dimensions that businesses need to consider:
The number of different product lines a company offers.
Example: Tesco sells food, clothing, electronics and financial services - a wide mix.
The number of variations within each product line.
Example: Apple offers multiple versions of iPhones (standard, Pro, Pro Max) in different colours and storage options.
The total number of products across all product lines.
Example: A supermarket might stock 40,000+ individual products.
Businesses develop their product mix through careful planning and by responding to market needs. Here are key strategies they use:
Adding new products to an existing product line, usually with different features, sizes, or flavours.
Adding premium products to a line that previously had only basic options.
Example: Skoda (originally a budget car brand) introducing luxury models like the Superb.
Adding lower-priced products to a premium line.
Example: Mercedes-Benz introducing the A-Class as a more affordable option.
Adding more product variations within the current price range of a product line.
Example: Cadbury adding different flavours to their chocolate range, like Dairy Milk with Oreo or caramel.
Creating entirely new product lines that are different from existing ones.
Example: Amazon expanding from an online bookstore to offering electronics, streaming services and cloud computing.
Coca-Cola has masterfully developed its product mix over time:
This extensive mix allows Coca-Cola to target different market segments, from health-conscious consumers (with zero-sugar options) to those seeking unique flavours.
Successful businesses develop their product mix based on careful market segmentation. This ensures they create products that meet specific customer needs.
Creating distinct products for different market segments.
Example: Unilever offers Dove for premium skincare customers and Simple for those seeking basic, sensitive skin products.
Focusing resources on serving one or a few segments extremely well.
Example: Rolls-Royce focuses exclusively on the ultra-luxury car segment rather than trying to serve multiple price points.
Netflix has developed its service mix to target different segments:
This approach has helped Netflix grow to over 200 million subscribers worldwide by ensuring their service mix appeals to diverse customer segments.
Products go through different stages (introduction, growth, maturity, decline) and businesses must adjust their product mix accordingly.
During these early stages, businesses often:
During later stages, businesses typically:
When developing their product and service mix, businesses must consider:
LEGO demonstrates excellent product mix development:
By carefully expanding their product mix based on market segmentation, LEGO has remained relevant and profitable for decades.
Developing the right product and service mix is essential for business success. By understanding market segments and creating products that meet their specific needs, businesses can maximise their appeal to customers and increase their chances of long-term growth.
Remember that product mix development is an ongoing process. Successful businesses constantly review and adjust their offerings to keep up with changing market demands and stay ahead of competitors.