well the company's product mix
represents the entire portfolio of
different goods and services that it can
offer to its customers now this can be
anything from a few products to hundreds
if not thousands of different variations
and in this video what we're going to
talk about are some of the implications
associated with a rather large product
mix and some of the terminology related
to that so as you can see here I've got
a couple of different products ranging
from a through E now these actually
represent what we call a product line
and the reason for that is that
everything within this particular
category here is all focused on
targeting a similar consumer which means
that the problem the customer has is
largely similar but we solve them in in
different ways and so you could look at
this from a company like Apple computers
product a could be the the iPod product
B could be an iPad product C could be an
iPhone and you can go on and on and on
this was a car company you know product
a could be you know a sedan product B
could be a coupe and product C could be
a truck and those particular products
obviously are targeted towards a
specific consumer right they serve a
specific need and they're a little bit
different now the benefit here of having
a what we call a wide product mix and
what that means is that we offer a wider
amount of products we have more than a
limited selection is is really that we
kind of cater to more consumers and so
you have more opportunities to sell your
products if you have a wider product mix
look at a company like Procter & Gamble
that has a enormous ly wide product mix
and solves everything from Old Spice
deodorant to shampoos and to potato
chips and really everything in between
is they want to increase the chances
that they appeal to a broad consumer in
every product line that we offer gives
an opportunity to go after another
customer so if a company only had a few
different products what you would say is
you would classify that as a narrow
product mix and there are certainly
advantages to that now within each
product line you have what we call depth
and the depth of a product line
represents all of the different
variations within that product line so
we talked about one product line being
the iPod well I can also offer a number
of different variations to kind of cater
to the unique needs within that customer
group so I can vary it based upon the
storage size which is a common example
for iPad I can vary it based upon
storage size based upon the ability
connect to data without having being
near Wi-Fi and a number of different
things with the phone we typically vary
by data size as well also model and
those types of things so within a
product line we have all these different
variations that are designed to appeal
to the unique needs of our customers now
developing a deeper product line can
produce a number of different things one
of the big concerns by having a product
line that has too many variations is you
produce what we call cannibalization of
sales and what happens is you're no
longer competing with other companies
now your products are competing with one
another and so that's the primary
concern by having too many different
variations within a product category is
you're not necessarily attracting new
customers you're merely making it
difficult for your existing customers to
purchase products that can also happen
when we have a very wide product mix if
we offer too many different products it
could be a matter where our products now
compete with one another which is a very
significant issue of course now there's
a couple of reasons why having a wide
product mix might not be the way to go
and we've seen case studies of companies
that have really shied away from adding
too many products the first thing is is
it can actually over commit you in terms
of resources and what that means is that
product lines are very expensive to
support you need advertising dollars you
set up distribution channels there
product development cost there's
potentially sales teams involved they're
very expensive to create and of course
support and by doing so not only are we
having an expenditure of money but
there's also expenditure of effort and
then we're also encouraged and atures
could go to another category so by
having a ton of different variations as
far as product lines we're going to have
too much commitment of resources
potentially the other issue is it can
complicate production and we've seen
this with companies like McDonald's that
have chosen to expand their product mix
rather significantly getting into some
of the healthier items and that really
has complicated production for them
because now staff have to remember all
of these different ingredients and
recipes and it's very difficult for one
person to manage and that's resulted at
least in part in reduced service times
just because of the fact that some of
the healthier offerings take more time
to produce the other issue especially
with the restaurants has to do with
always perishable goods whenever you're
dealing with something that of course
has a limited shelf life and then you're
adding additional things to it the
concern would be is that are we going to
have more food waste as a result of
trying to appeal towards a broader set
of consumers which is the problem so
we've seen as a result of that companies
that stick to a very narrow product mix
and that is in large part not only for
consistency but also just for quality
purposes if you have only a few products
that you offer it's a lot easier to
train your staff and to produce those
and a high level of quality you can look
at companies like in-and-out for example
that has a very small limited selection
there is the secret menu that is not so
secret but in terms of their actual menu
it's fairly limited and they focus on
being really good at a very few things
Chipotle also is a company that kind of
utilizes that same structure only giving
consumers a limited number of options to
help speed up the ordering process but
also it makes the backend of it which is
the fulfillment of the actual order and
cooking
and preparing the food makes it much
easier so ultimately it becomes a matter
of trying to have the right product mix
not only the types of products that
appeal to our consumers but also as
companies attempt to grow what they want
to do is try to do is add additional
product lines and what that does is that
provides them access to more customers
but always the thing to remember is in
doing so are you potentially taking away
from existing products in terms of sales
and then are we over committing
ourselves which can have some very
negative effects in terms of our
production process