The Product Mix — Transcript

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1. 0:03In this video, we're going to look at
2. 0:04the concept of the product mix. When we
3. 0:07talk about the product mix, what we're
4. 0:08really looking at is conceptualizing a
5. 0:11way to see all of the different products
6. 0:14that a company produces and makes
7. 0:17available for sale to customers.
8. 0:22Now, the product mix has four
9. 0:24dimensions.
10. 0:25First of these is width. This is the
11. 0:27number of product lines in a company.
12. 0:31And we'll go through an example here in
13. 0:33a second, which will make some of these
14. 0:34terms make a little bit more sense, I
15. 0:36think.
16. 0:37After width, we have length. This is the
17. 0:40number of items within a product line.
18. 0:45Then we have depth, so the number of
19. 0:47versions of each product in the line.
20. 0:51And our fourth and final dimension of
21. 0:52the product mix is consistency.
22. 0:55This is a characteristic of the product
23. 0:58mix, which basically
24. 1:00um
25. 1:01identifies how closely related these
26. 1:03product lines are in end use, so how a
27. 1:06consumer is going to use them, in the
28. 1:08distribution channels that we use to
29. 1:10sell them, how they're produced, the
30. 1:11materials that go into them, etc., etc.
31. 1:14So, a product mix could have high
32. 1:16consistency, meaning the products are
33. 1:17very much alike, or low consistency,
34. 1:20meaning products are not really related
35. 1:23at all.
36. 1:25Now, these terms might seem a little odd
37. 1:26right now. Let's take a look at an
38. 1:28example using Apple as uh to look at
39. 1:31their product mix.
40. 1:34So, a basic example for Apple Apple's
41. 1:37product mix, we would look at the width,
42. 1:39which is the number of product lines in
43. 1:41this company.
44. 1:43Let's say, for example, that Apple only
45. 1:45sells iPods, iPhones, computers, so
46. 1:48MacBooks, and Apple Watch. This is a
47. 1:50simplified example of Apple's product
48. 1:52mix. These are all different product
49. 1:55lines. iPods are different than iPhones,
50. 1:58which are different than computers,
51. 1:59which are different than watches.
52. 2:01These are the different product lines,
53. 2:02and when we put them side by side, this
54. 2:04is the width
55. 2:05of Apple's product mix.
56. 2:09Now, when we go into length, this is the
57. 2:10number of items within a specific
58. 2:12product line. Let's look at the iPod
59. 2:15product line as an example.
60. 2:18You could have you could buy the iPod
61. 2:20Shuffle, the iPod Nano, the iPod Touch,
62. 2:22the iPod Classic, etc., etc. So, within
63. 2:26this product line, the length refers to
64. 2:30the number of of items, how long it is.
65. 2:34Next up is depth. So, this is the number
66. 2:37of versions of each product in the line.
67. 2:39So, when we look at a very specific
68. 2:41product in a product line, how many
69. 2:43different versions of of that product
70. 2:46are there?
71. 2:47So, you might notice that for iPhones,
72. 2:50let's say the iPhone 11, for example.
73. 2:52There are different versions of the
74. 2:54iPhone 11 based on screen size,
75. 2:57how much memory is offered, maybe
76. 2:59there's 64 GB version, 128 GB version,
77. 3:03or even color. These are different
78. 3:05versions of what is essentially the same
79. 3:07product.
80. 3:09And then looking at the consistency of
81. 3:11Apple's product mix, how closely related
82. 3:13are these products in terms of end use,
83. 3:15distribution channels, production, you
84. 3:17could argue that this is a very this
85. 3:20product mix has high consistency.
86. 3:22All of these products are electronic
87. 3:25devices.
88. 3:26Um, the way consumers use them is very
89. 3:28similar.
90. 3:30Uh, where we go to purchase them is very
91. 3:33similar.
92. 3:34Um, and so you could say that this
93. 3:36uh this product mix has high
94. 3:38consistency.
95. 3:40Let's take an a
96. 3:41look at another example uh to sort of uh
97. 3:44reinforce the idea of a product mix. In
98. 3:48this case, we're going to use a donut
99. 3:49shop.
100. 3:51So, the width of this donut shop's
101. 3:53product mix, what see at the top here.
102. 3:56They offer breakfast items as one
103. 3:58product line, sand- sandwich wraps and
104. 4:01more as another product line, snacks and
105. 4:04baked goods as a product line, coffee is
106. 4:07its its own product line, and then
107. 4:09finally tea as a product line.
108. 4:12Those different product lines make up
109. 4:14the width of this coffee shop's product
110. 4:16mix.
111. 4:18If we were to look at the length of one
112. 4:20of these product lines, so let's look at
113. 4:22perhaps the snacks and baked goods um
114. 4:26product line, we can see that there are
115. 4:27different items in here. So, there are
116. 4:29Tim Bits, there's donuts, there's
117. 4:31muffins, there's cookies, there's
118. 4:32bagels, etc. These are all different
119. 4:34product lines with or sorry, different
120. 4:36products within the product line of
121. 4:39snacks and baked goods. That's the
122. 4:41length.
123. 4:43If we were going into the depth, if we
124. 4:45chose one of those items, for instance,
125. 4:47donuts, this would be the various
126. 4:49flavors or sizes or shapes of of donuts
127. 4:53that the coffee shop uh offers.
128. 4:57And finally, looking at consistency,
129. 4:59again, these are all food items, right?
130. 5:02And they're all
131. 5:04um
132. 5:05produced in in a relatively similar way.
133. 5:07They all um are available at this store.
134. 5:10So, you could argue that there is some
135. 5:13good consistency with with this product
136. 5:15mix.
137. 5:17Now, all of this asks the question, what
138. 5:20is the importance of product mix? Why do
139. 5:21we focus on product mix uh as marketers?
140. 5:25Well, there are several efficiencies
141. 5:26that come along with product mix.
142. 5:29First of all, there are advertising
143. 5:30economies of scale. Several products can
144. 5:33be advertised under the umbrella of a
145. 5:35specific product line or product mix.
146. 5:37So, for example, Campbell's uses their
147. 5:39slogan, "Mm mm good" to uh
148. 5:43um
149. 5:43basically uh promote and and advertise
150. 5:46all of the different products within
151. 5:47their um lines of soups and sauces and
152. 5:51and juices. So, again, we can we can use
153. 5:54that same tagline for all of our
154. 5:56products, make it easy for customers to
155. 5:58to recognize.
156. 6:01There's also package uniformity. So, all
157. 6:03packages in the line can have a common
158. 6:05look with our brand information on it
159. 6:08and still keep their individual
160. 6:10identities.
161. 6:13We can use standardized components. So,
162. 6:15this helps reduce the manufacturing and
163. 6:17inventory costs when we use standardized
164. 6:19components in producing products within
165. 6:21a particular product mix.
166. 6:24There's also efficient sales and
167. 6:25distribution opportunities. This results
168. 6:28because distributors and retailers are
169. 6:30more inclined to stock a company's
170. 6:32products if it offers a full line
171. 6:35because this is what they know that this
172. 6:37is what consumers are looking for. Lots
173. 6:38of different options of of products. So,
174. 6:42if you're a company that only produces
175. 6:44one product, um you're going to have a
176. 6:46hard time convincing distributors and
177. 6:47retailers to stock that that product.
178. 6:50Whereas, if you come with a wide-ranging
179. 6:53mix of products, this is going to be
180. 6:55easier to convince them.
181. 6:57And finally, there's an idea of
182. 6:59equivalent quality. So, consumers can
183. 7:01associate quality to be similar across
184. 7:04product lines. Um if you have a
185. 7:08if you're satisfied with your Apple
186. 7:10product, for instance, and you think
187. 7:12that these products are made with high
188. 7:13quality, when Apple releases their new
189. 7:16Apple Watch, which is a new
190. 7:18product line, you're going to be more
191. 7:20inclined to associate that high quality
192. 7:22with this with this new product. So,
193. 7:24again, when we think of product mix,
194. 7:26think of width, length, depth, and
195. 7:29consistency as the four main dimensions,
196. 7:32but also understand and appreciate why
197. 7:34it is that we conceptualize it like
198. 7:36this,
199. 7:37um and the the different efficiencies
200. 7:38that marketers can realize through their
201. 7:40product mix.