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How can the product mix help the company?

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simratveer | Student, Undergraduate | eNotes Newbie

Posted April 18, 2008 at 3:34 AM via web

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How can the product mix help the company?

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pmiranda2857 | High School Teacher | (Level 1) Educator Emeritus

Posted April 18, 2008 at 5:57 AM (Answer #1)

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A product mix can help a company to access different customer bases by offering a wide range of styles, sizes and price ranges.  For instance, very often a company, like a car company makes a line of vehicles ranging from high-end, like Lexus, to satisfy customers who are high income earners and want to purchase luxury vehicles, as well as manufacturing a lower end product line, like Toyota to appeal to young people and lower income customers. However, sometimes the customers change and grow, so a company needs to be able to satisfy a wide range of customer tastes and price ranges. 

Students for instance might have a price range that allows for one or two models in the lower-end product line. But once they graduate, and get a job, they may want to purchase a more expensive car.  Therefore, to keep that customer it is beneficial for the company to have a diversified product mix to satisfy changing customer needs. 

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krishna-agrawala | College Teacher | (Level 3) Valedictorian

Posted May 12, 2009 at 1:52 PM (Answer #2)

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Product mix refers to the range of different products offered for sale by a company. Nature of the product mix of a company has substantial bearing on the overall performance of the company. It affects the internal operations of the company in matters such as manufacturing operations, distributions, and costs. It also affects customers' perception of the company and its products.

Nature of range of products manufactured by a company has major impact on the ability of company to benefit from economy of scale and scope in manufacturing. Similarly, the product mix will have impact on the nature of distribution channels to be used and the cost of distribution. When a new product added to a distribution channel can be marketed through the existing distribution channels of the company, the additional cost and efforts involved will be only marginal.

The product mix also impacts the image of a company and its products. If a company selling a premium brand of cosmectics als starts selling a cheap and inferior quality perfume, the overall image of the company will suffer.

The product mix decision can be very important in retail business. A retail store that offers a wide variety of merchandise offers greater convenience to the shoppers and therefore is preferred over other stores with limited range.

Thus right product mix will help company substantially in achieving economical operations. It can also improve the the image of the company and its products. However, a poorly designed product mix can become wasteful and damage the image of company and its products.

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