Products come in all shapes and sizes, just like the customers who buy them. Consumer products target individuals, while industrial products cater to businesses. Each type has its own classification system based on buying habits or intended use.

A company's product mix is like a buffet of offerings. It's defined by width (variety of product lines), length (total number of products), and depth (variations within each line). Managing this mix is crucial for success, balancing market demands with profitability.

Consumer vs Industrial Products

Characteristics and Target Markets

• Consumer products are goods and services purchased by individuals or households for personal consumption (clothing, food, electronics)
• Industrial products are goods and services purchased by businesses, government agencies, or institutions for use in their operations or production processes (raw materials, machinery, office supplies)
• Consumer products target the general public or specific consumer segments (millennials, pet owners, fitness enthusiasts)
• Industrial products target other businesses, organizations, or institutions (manufacturers, hospitals, schools)

Classification and Buying Habits

• Consumer products are classified based on consumer buying habits
  • Convenience goods are frequently purchased items that require minimal effort (toothpaste, snacks)
  • Shopping goods are items that consumers compare based on price, quality, and style before purchasing (furniture, appliances)
  • Specialty goods are unique items that consumers make a special effort to obtain (luxury watches, designer handbags)
  • Unsought goods are items that consumers do not actively seek out or are unaware of (life insurance, cemetery plots)
• Industrial products are categorized based on their use and purpose
  • Raw materials are unprocessed natural resources used in production (crude oil, timber)
  • Component parts are manufactured items that are incorporated into finished products (computer chips, auto parts)
  • Installations are major capital equipment used in production or operations (assembly lines, generators)
  • Accessory equipment are tools and devices that support production or operations (hand tools, office furniture)
  • Operating supplies are consumable items used in daily operations (lubricants, paper)
  • Professional services are specialized expertise provided to businesses (consulting, legal services)

Marketing Strategies

• Marketing strategies for consumer products focus on creating brand awareness, influencing consumer perceptions, and driving sales
  • Promotional activities include advertising, sales promotions, and public relations (social media campaigns, in-store displays, celebrity endorsements)
  • Emphasis is placed on creating an emotional connection with consumers and differentiating the product from competitors
• Marketing strategies for industrial products emphasize building long-term relationships, demonstrating product performance, and providing technical support
  • Personal selling and trade shows are common promotional methods to reach business customers
  • Customization and after-sales service are important to meet the specific needs of each customer
  • Technical specifications, case studies, and testimonials are used to demonstrate product performance and reliability

Product Mix Dimensions

Width, Length, and Depth

• A product mix, also known as a product assortment, refers to the total set of all product lines and individual products offered by a company
• The width of a product mix represents the number of different product lines a company offers (a consumer electronics company may have product lines for smartphones, laptops, and televisions)
• The length of a product mix refers to the total number of individual products across all product lines (a clothing retailer may offer 100 different products across its various clothing lines)
• The depth of a product mix indicates the number of variations, such as sizes, colors, or models, within each product line (a shoe company may offer its running shoes in multiple sizes, widths, and colors)

Consistency and Expansion

• Consistency refers to how closely related or complementary the various product lines are in terms of their end use, production requirements, distribution channels, or target markets
  • A company with high consistency may offer product lines that share similar technologies, materials, or customer bases (a skincare company offering cleansers, moisturizers, and serums)
  • A company with low consistency may offer product lines that are unrelated or serve different markets (a conglomerate that owns a food company, a media company, and a real estate company)
• Companies can expand their product mix in several ways
  • Increasing width by adding new product lines (a clothing retailer adding a line of accessories)
  • Increasing length by introducing new products within existing lines (a smartphone manufacturer releasing new models)
  • Increasing depth by offering more variations of existing products (a beverage company introducing new flavors)

Product Mix Changes Impact

Expansion and Diversification

• Expanding the product mix by adding new product lines or products can help a company diversify its offerings and reach new market segments
  • Diversification reduces dependence on a single product or market and spreads risk (a computer manufacturer adding a line of smart home devices to capture a new market)
  • Expansion may require additional resources, expertise, and marketing efforts to develop and promote new products
• Streamlining the product mix by eliminating underperforming or inconsistent product lines or products can help a company focus on its core competencies and allocate resources more effectively
  • Eliminating low-margin or low-demand products frees up resources for more profitable or strategic offerings
  • Streamlining may limit market coverage and growth potential by reducing the breadth of offerings

Customization and Consistency

• Altering the depth of the product mix by introducing new variations or customization options can help a company cater to diverse customer preferences and differentiate its offerings
  • Offering customized or niche products can command higher prices and build customer loyalty (a jewelry company offering personalized engravings)
  • Increasing depth may increase production and inventory costs and complicate the marketing message by presenting too many choices
• Enhancing the consistency of the product mix by ensuring that all product lines and products are complementary and aligned with the company's overall brand image and target market can create synergies and cross-selling opportunities
  • Consistent product lines can reinforce brand identity and make it easier for customers to navigate offerings (a outdoor gear company offering tents, sleeping bags, and backpacks that are designed to work together)
  • High consistency may limit flexibility to respond to changing market trends or enter new markets that do not fit the existing brand image

Managing Product Mix for Success

Market Alignment and Competitive Positioning

• Companies should regularly assess market demand and customer preferences to ensure that their product mix delivers the desired benefits and value
  • Conducting market research and gathering customer feedback helps identify unmet needs and emerging trends (surveys, focus groups, social media monitoring)
  • Aligning the product mix with the target market increases relevance and customer satisfaction
• Monitoring the competitive landscape helps identify gaps, opportunities, or threats in the market and informs product mix decisions
  • Analyzing competitors' product offerings, prices, and market share reveals areas for differentiation or improvement
  • Adjusting the product mix to maintain a competitive advantage may involve introducing unique features, targeting underserved segments, or phasing out products that are losing ground to competitors

Profitability and Product Life Cycle Management

• Analyzing the financial performance and resource requirements of each product line and individual product helps prioritize investments and optimize overall profitability
  • Allocating resources to high-margin or high-growth products maximizes return on investment
  • Regularly reviewing product profitability and discontinuing or reformulating underperforming products keeps the product mix lean and efficient
• Managing the product mix dynamically over time in response to changing market conditions, technological advancements, or customer preferences keeps the product portfolio fresh and relevant
  • Introducing new products to capitalize on emerging trends or replace declining products maintains market share and growth (a smartphone manufacturer releasing a new model with advanced features)
  • Modifying existing products to improve performance, reduce costs, or meet changing customer needs extends their life cycle and competitiveness (a food company reformulating a snack to be gluten-free)
  • Phasing out obsolete or declining products frees up resources and avoids the perception of being outdated or irrelevant