Product mix

Product mix is the full range of offerings that a business sells. This is critical to the ability of an organization to generate sales. Product mix can refer to both physical products and services of all types. It can also refer to the mix of features and functions that are available to customers. The product mix of an entity can be evaluated in terms of the following factors:

  • Width. This is the number of product lines being offered to customers.
  • Length. This is the total number of products being offered to customers.
  • Depth. This is the number of variations in which products are offered.
  • Consistency. This is the extent to which the product lines being offered relate to each other.

A business can generally achieve a higher sales level on a per-unit basis if it offers a broad product mix. By doing so, it can cross-sell customers on more than one item. For example, a customer that wants to buy a software package might also be interested in add-on software that extends the usability of the basic package. For this reason, companies tend to increase their product mix over time, to bolster their growth.

Extending the product mix of an organization is one of the chief reasons for an acquisition. The acquiree may have one or more products that will fill an unaddressed spot in the product mix of the acquirer.

Similar Terms

Product mix is also known as product assortment.