Assuming you are trying Start an e-commerce jewelry brand Leverage your success selling handmade earrings at art fairs across the country. You’ve developed a growing following on social media, where you’re known for your five main earring styles, each with different colorways and patterns. when you look at Online scaleyou start creating a line of handmade bracelets to cater to those who don’t wear earrings.
This is a perfect example of determining your product mix. You can also employ proven strategies like product line expansion to help build a successful brand image and strengthen your overall business strategy.
What is product portfolio?
Product portfolio refers to the comprehensive range of products and services your company offers to consumers. This is the strategic mix of merchandise you offer across all product lines and brands in response to: market demand and competition. You may also hear product portfolios referred to as “product assortments” or “product bundles,” but no matter which term you use, it’s all about having complementary product and/or service assortments.
Why is product mix important?
Your product portfolio plays an integral role in building your product portfolio brand identity and develop competitive advantages. Having a diverse product portfolio that reflects your brand image can increase your brand awareness customer satisfaction Because consumers have a variety of options to choose from. Designing a product portfolio is also an opportunity to differentiate yourself from your competitors by offering a package that others cannot copy. A successful, well-curated product portfolio can transform you from a company known for its great products to a brand known for its approach.
To help you decide on the right product classification, conduct market research and regular internal product portfolio analysis, examining sales data and other factors to assist you in determining which products or product lines to keep, change, or delete.
Product Portfolio vs. Product Line: What’s the Difference?
A product portfolio includes every product a company offers, while a product line refers to the specific categories or brands that a company sells. In other words, you will have a single product portfolio, but it may contain multiple product lines, each containing countless products.
For example, consider a typical large home furnishings retailer. The company has multiple product lines, each catering to different interior design and home furnishing needs, such as furniture, storage and organization, lighting, decor, home electronics and kitchenware. The collective items of these multiple product lines make up the product portfolio.
Product portfolio dimensions
- width
- length
- depth
- consistency
Just as physical objects have their own dimensions, so does your product portfolio. Product portfolio dimensions can have numeric values, including:
width
Width or breadth covers the total number of product lines within a company. For example, Nestlé’s product breadth includes beverages, breakfast cereals, chocolate and confectionery, dairy products, food and nutrition, with a width of seven.
length
Length refers to the total number of products in a company’s product portfolio. In the case of Nestlé, this includes the total number of items sold in each of its seven product lines (about 10,000 units in total).
depth
Depth reflects changes in product types within one of a single product line. For example, within Nestlé’s beverage product line, the company sells dairy beverages, coffee and bottled water – a depth of three.
consistency
Consistency refers to how your product lines relate to each other in terms of end use, production methods, and production methods. distribution channel. If the items are similar or closely related, then you have a consistent product mix. This can help you keep your production and distribution processes efficient and help you establish a strategic market position against your competitors. An inconsistent market portfolio can help you diversify, but it also carries the following risks: brand dilution.
product mix strategy
There are several approaches you can take when building an effective product portfolio strategy. Here are six key product mix strategies to consider:
expansion
Expansion involves adding new product lines or product variants to increase the depth of existing product lines and create a broader product portfolio that helps market penetration. You might implement expanded functionality to keep up with market trends or target a specific audience.
For example, a company that sells reusable water bottles might expand its existing product line by introducing new sizes or styles of water bottles. Or it might expand its product portfolio by launching a coffee cup designed to keep hot drinks hot.
shrink
Sometimes less is more. Just as your company might expand its product line or depth, you might decide to remove products in response to market trends, declining sales, poor financial performance, or customer feedback. Eliminating unsuccessful products can help streamline your product line, increase sales More successful products that allow your brand to better meet the needs of your target market. create an effective Inventory management Staying ahead of market changes helps develop a smart contraction strategy.
modernization
Modernization refers to updating and innovating existing products to include new features such as upgraded technology, enhanced style, and improved materials. You can do this based on emerging trends, changing market dynamics, customer feedback, and/or customer preferences. For example, you can add generative artificial intelligence Provide you with quality tools customer relationship management (CRM) software that enables mass automation of personalized emails to subscribers.
filling
Filling involves adding a new product or products to fill a gap in the product line. For example, a hair care brand might add a leave-in conditioner and hair mask to complement its existing shampoo and conditioner products.
trade up
Upgrading is one of two pricing strategies that involves adding more expensive items to a product line to increase brand awareness. Adding more expensive products may shift your brand to a more premium image while increasing demand for the company’s cheaper products.
trading down
As opposed to trading up, the trading down pricing strategy involves adding lower-priced product lines to be sold alongside more expensive items. Include more accessible products Competitive pricing Can help expand your audience reach and reach new customer segments, ultimately translating into more sales. For example, your enterprise CRM company might offer a streamlined subscription for small businesses. It may only include the essentials, but the monthly price is lower than a premium subscription.
Product Portfolio FAQs
What does product portfolio mean?
The product portfolio encompasses all products and services offered by the company, including all of its product lines and brands. Companies can determine their product portfolio to build their image and attract their target audience.
What is a product portfolio example?
Apple Technology’s product portfolio includes iPhone, iPad, MacBook, Airpods, Apple Watch, Apple TV, Vision Pro, HomePod and branded accessory products. Each individual form of technology also serves as a product line, with Apple offering multiple versions of iPhone, iPad, MacBook, etc.
What are the four dimensions of product mix?
The four dimensions of product portfolio are width, length, depth and consistency. Width refers to the total number of product lines within a company. Length is the total number of products in a company’s portfolio, including all items across product lines. Depth reflects the variation in product types within each product line. Consistency refers to how product lines relate to each other in terms of end use, production processes, and distribution methods.
