Last Updated 27 Jul 2020

Product mix strategies

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A company has several major strategies at its disposal, with respect to the width, depth and consistency of its product mix. One major management aspect involved in product policy is the decision concerning product mix. The following strategies are generally employed by the producer or wholesaler of the product. Expansion of Product Mix: It is also referred to diversification. A firm may expand its present product mix by increasing the number of product lines or increasing the number of product items within the same line. New lines may be related or unrelated to the present products.

Contraction of Product Mix: In certain circumstances, the management has to drop the production of unprofitable products. A firm may either eliminate an entire line or simplify the assortment within a line; this is termed as contraction of product mix. This is also known as simplification. Alteration of existing products: As an alternative to developing a completely new product, management should take a fresh look at the company’s existing products. Often, improving an established product can be more profitable and less risky than developing a completely new one.

Positioning the Product: When a product offers satisfaction to the buyer, it gets a strong position created in the market. The product’s position is the image which that product projects in relation to rival products. A product’s features will attract the customers or prove attractive to the customers. This can be attained by product differentiation, market segmentation and market aggregation. Trading Up and Trading Down: Trading Up refers to adding of higher priced and more prestigious products to their existing line, in the hope of increasing the sales of the existing low priced products.

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Trading Down is opposite to trading up. A company is said to be trading down, when it adds a lower priced item to its line of prestige products in the hope that people who cannot effort the original products, will want to buy the new one, because it carries some of the status of the higher priced products. Product Differentiation and Market Segmentation: Product differentiation involves developing and promoting an awareness of differences between one company’s product and those of others.

This strategy enables the company to remove itself from price competition so that it may compete on non price basis, that is, its product is different from and better than competition models. This differentiation is done either in quality, design, brand or packaging. Market segmentation is a natural reflection of the diverse and constantly shifting needs of the population. By dividing the whole market into a small number of specific markets, which has different wants and motivations, a marketing organization can tailor its offerings to fit to the carefully defined needs of specific markets.


Moon, Youngme and John Quelch (2004), “Starbucks: Delivering Customer Service,” HBS Case #9-504-016 Kotler, Philip. Marketing Management, Eastern Economy Edition, Prentice-Hall India Ninth Edition, 2004.  Goold and Campbell, "Strategies and Styles", Pearson Edition  Michael Goold and Andrew Campbell "Making Matrix Structures Work: Creating Clarity on Unit Roles and Responsibility ", European Management Journal, June 2003

Product mix strategies essay

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