A product mix is an important consideration for any firm. It offers the ability to expand your customer base by offering more products in more niches. Understanding the basics of a product mix will help you understand why it is so important to your organization.


Product mix is an important consideration for businesses that have large product or service lines. The proper product mix can increase sales by offering a product or service that will meet the demands of almost any consumer. A firm's product mix is particularly important in a competitive industry where there are multiple competitors competing for different customer segments, such as the hotel industry where different hotels are aimed at budget travelers, business travelers and vacationers.


The function of a product mix is to provide or advertise one type of product to as many consumers as possible. A good product mix will have a variety of products that will fit each person's needs. Using toothpaste as an example, you might have a basic, budget product, an expensive teeth-whitening version and an organic, environmentally friendly product.


In general, the larger a product mix is, the better it will function. There are some exceptions, however. If a product mix includes many products that are unpopular or redundant, it will actually harm sales. The goal should be to have as many products in your product mix as the market demands.


The effect of a good product mix is increased sales because you are able to capture consumers from across the market and avoid a consumer switching to a competitor. If you operate several chains of restaurants under one umbrella organization, for example, you can provide different dining experiences to the same customer who is looking for different things at different times--a romantic dinner, a family friendly dining experience or a place for a business dinner.


One misconception about a product mix is that it is simply a group of products that are put out by a single company. A product mix is a group of products put out by a single company, but it is much more. A product mix needs to be designed with the role of each product carefully considered.


If you use a product mix, be sure to use it properly. Simply making as many products as possible will result in redundancies where your own products are competing with each other rather than complementing each other. You also need to be careful to adequately differentiate your products or you risk cannibalizing your markets, where your cheaper product steals business from your premium product.