Product Mix 101

A 'Product Mix' aka Product Assortment or Merchandise Mix refers to the variety of merchandise that a business sells. Specifically, the product mix refers to the number of product lines that a business offers.

The Importance of Product Assortment.

From the perspective of a business, well balanced product assortment management minimizes the risk of overall business failure. This is because it reduces dependence on single products.

How Much Product Line Stretching or Filling?

A product line is a group of products that are closely related on at least one shared basis (like a single function, target market, location or price range). A brand may have one or multiple product lines.

Example A: A product line of clothes for women. (a target group) like 'product line X for women' by the brand 'Gap'.

Example B: A product line of cosmetic products with a single functional mission to deeply clean the skin (a function) ... that is oily. (a target group / niche) like 'Detoxology'

Breadth. The variety of product types determine the breadth of a product line. Conversely, depth refers to the number of variations of a single product type. Depth allows brands to cater to unique needs that exist within your target market and therefore allows for greater personalization. 

Example A1: Product line X of clothes for women (above) is said to have a "breadth of 3" types of product

1. Shirts
2. Shorts
3. Caps

Example A2: A product type of women's shirts with a depth of 2 variations.

1. Green, large
2. Green, small
3. Khaki, large
4. Khaki, small 

Example B: Product line Detoxology of personal care products (above) is said to have a "breadth of ...." types of product

1. Soaps
2. Moisturizers
3. lip balms

Example A2: A product type of women's shirts with a depth of 2 variations.

1. Long Dressy shirts
2. Short Casual shirts

Merchandise managers must strike a balance. On one hand, they must have a sufficiently broad (aka wide) assortment. However, they must also avoid overextending themselves with unnecessary products. Excessive depth can confuse the brand story or even cause 'sales cannabalism', ie create competition within the brand. Sometimes, too many variations simply become overwhelming to producers regarding R&D, opportunity costs and marketing mix costs and overwhelming for even customers regarding analysis paralysis. Here are some ways of deciding.

1. Consider the level of specialization that your business desires for its area. For instance, if you specialize in an area (like a pharmacy versus a supermarket or vegan restaurant versus a regular restaurant), aim to have 'low breadth' but "higher depth". This is especially the case for products that can be classified as being 'specialized'. Consumers expect a low breadth assortment. Given your high level of specialization (of production or niche marketing), consumers expect you to be an expert of one ... or only a few products or types of consumer pain points. They expect high quality. Strategically speaking, products that offer a high level of quality and specialization have the potential for higher prices and profitability.

Conversely, large, non-specialized stores are better off featuring a 'high breadth', ie wide array of product types but having "low depth" to avoid too many specialized items they can not sell. After all, larger stores are meant to be more like Jacks of all trades without mastering any. 

2. Consider seasonal demands that can align with your branding. Stretch and shrink your merchandise mix accordingly. Research tentpole marketing opportunities in your field. 

Regardless of your currrent decision, the best decision is always to remain agile and responsive to changing market behavior.

3. Fill gaps in your product line to keep out the competition. Example A. Gap may include clothes for teenagers and or children. 

4. Businesses should consider the impact that stretching can have on the marketing mix, like additional costs associated with production and distribution channels. A company is said to have greater 'product mix consistency' when the products in the product mix are more closely related and do not require much or any special treatment in the marketing mix. In short, greater consistency will be easier and cheaper to manage.  

CONTENT RELATED TO PRODUCT ASSORTMENT MANAGEMENT

• New Product Development
• You will need more barcodes for each variation. Learn how to get authentic barcodes at an affordable price.
• See the demand matrix. The demand matrix should not only help marketers to know where customers will buy their products but also allow marketers to look at competing brands in the desired quadrant for product mix ideas (and packaging design ideas and ideas for pricing accordingly).
• A planogram is a schematic drawing, a drawing that uses graphic sumbols of shelves and product (types) to represent the 'system' of product placement. It considers various variables to inform the process of inventory planning. These variables include shelf capacity (like number of product units of a certain size), foot traffic, display heights and so on.