Products come and products go, but businesses stay around for much longer. That’s because most businesses that succeed in the long-run don’t sell a single product or service. Indeed, successful businesses often rely on a unique product mix that keeps their business lively and fresh as the years go on.
What is Product Mix?
“Product mix” is a common phase in marketing parlance, and a useful one too. It’s made up of the sum total of all product and services provided by a particular company. Chron describes product mix as having four dimensions, which are as follows:
- Width: the total number of product lines that a company offers.
- Length: the number of products total offered by a company.
- Depth: the number of variations of each product within a product line.
The right product mix is different for every company. Some companies like Sony are conglomerates, having products ranging from consumer electronics to video games, music, television, film, financial services, and more. Other companies, like Crocs, have one product…Crocs. Most successful companies will fall somewhere in between.
A Primer on Creating Great Products (or Services)
We’ve talked about creating perfect products and services before, but a few points bear mentioning again. There are basically six steps to good product and service design:
- Figure out who your target customer is.
- Learn about your customers and figure out how they behave.
- Determine what you can do to meet their needs.
- Create a prototype.
- Test your prototype.
- Collect and analyze data from testing.
The ultimate intent here is to find people who need something and find a way to meet that need. It sounds incredibly simple when spelled out this way, but it’s the cornerstone upon which great businesses are built. It’s hard to sell a ketchup popsicle, and it’s especially hard to create a product line out of it.
Why Create Product Lines
Many businesses succeed at first because they launch a single successful product or service. No one can doubt that this is a great start! Yet a single good product or service is seldom enough to make a career. Just ask many forgotten-about one-hit wonders who managed to make it into the Top 40, only to be ignored in the years and decades to follow.
A savvy business owner must accept the hard truth that the vast majority of products and services have a lifecycle. Products are introduced to the market, experience a period of sales growth, hit a plateau, and eventually decline. Again, this happens to virtually every product given enough time.
Creating one or more product lines acts as an insurance policy against time itself. Much like diversifying your retirement funds, diversifying your products and services protects you in the long run. If one product falls out of fashion, you won’t care if you have nine more that are fashionable and another five soon-to-be products in the lab.
In addition to diversifying your sources of revenue, you also reduce your risk of getting stuck in a single market position. When you have more than one product or service, it’s much harder to get stuck selling to a shrinking audience.
On top of keeping your business fresh, you can often see far more immediate benefits as well. Having two products to sell instead of one means you have multiple ways to generate revenue. The number of ways you can generate revenue increases with the number products you sell, thereby giving you reasons to make new ones. In short: more products usually means more sales!
Creating Product Lines
All of this raises the natural question: how do you go from selling one product or service to launching a product line?
First, focus on branding. Smart branding is how you will give people a consistent message when they think of your small business. You don’t want people’s perception of your brand to be overly tied up on a single product. Your company and your individual products need to have separate identities!
Once you have a solid brand, you can start using marketing research methods to find related needs that your company is not yet addressing. Some ways you can do this include:
- Attending industry events.
- Reading news headlines.
- Using free online data resources such as:
- Reading trade journals.
- Looking at competitors’ websites.
- Directly asking customers.
Once you’ve identified unmet needs, you can choose to either start selling similar products or sell more variations of a product you already have. If you sell red T-shirts, for example, you could widen your product line by either selling blue T-shirts or by selling red T-shirts in XS and 2XL sizes instead of just S – XL.
Creating Multiple Products Allows You to Start Product Bundling
When you have multiple products and product lines, you gain the ability to create bundles. Product bundling means different things to different people, but I found the definition used by CXL to be particularly useful. Instead of offering a single definition, they provide categories that fall under the umbrella of product bundling.
Bundles. Two or more complementary products added to the cart from the product page or checkout, usually sold at a discount.
Cross-sells. A product that complements an existing purchase but is from a different category (or vendor).
Add-ons. The extras—protection plans, tech-support subscriptions, or product training—that offer peace of mind.CXL, Product Bundling Strategy: How to Get It Right
Why Bundling Products Works
Product bundling is not a silver bullet for increasing sales. It’s tough to do right. Yet if you are able to give customers a bundle that they perceive as a good value, they will often end up spending more than they would have otherwise.
Bundling works because it decreases customers’ hesitation about making a purchase. When you sell multiple products at the same time, consumers have a harder time telling what the right price for each individual item is, which lowers the chance of them overthinking the value of any individual item.
When you buy a car, for example, multiple features are bundled together. A 2020 Hybrid Honda CR-V with EX trim cites a litany of features, some of which are:
- Blind Spot Information (BSI) System with Cross Traffic Monitor
- Dual-Zone Automatic Climate Control System
- Heated Front Seats
- SiriusXM® Radio
All of this is included in the price tag of $30,260. How much am I paying for the blind spot detection? How about the Sirius radio? The heated seats? I have no way of knowing, so I can only look at the overall price and say “this is a good deal” or “this is a bad deal.”
Why Product Bundling Works for Sellers
Reducing price anxiety for consumers by product bundling is good enough on its own, but that’s not the only benefit. Once you have multiple products to sell, you will also benefit from:
- Selling inventory in a more predictable manner.
- The ability to expand product lines based on data gathered from trends observed when selling product bundles.
- Easier marketing since the same marketing approach is used to sell multiple products.
This is true even for add-ons and cross-selling. While a true bundle means products are always purchased together, add-ons and cross-sells have a given percentage change of being added to each purchase, which is something you can account for when planning.
A good product mix is important to the long-term success of your business. Having a single product or service is not typically a sustainable way to operate a business. Creating one or more product lines around a common brand will allow you to reduce risk while boosting sales.
Both risk mitigation and increased sales don’t just happen because you have more products to sell. Being able to sell related products gives you a chance to better serve your customers because you can meet more of their needs at once. At the same time, the very act of creating different products allows you to sell in new, complementary ways.
Have you ever started a business to sell one product or service, but found yourself doing something else along the way? Let us know in the comments below!