DEFINITION of 'Product Family'
A group of related goods that are manufactured by a single company. Companies benefit from creating product families in that they can leverage the loyalty their existing customers feel toward an existing product to get them to buy additional, related products. Product families also allow companies to attract new customers to their brand by providing an array of products that are similar but meet slightly different needs. Customers benefit from product families because they can rely on their positive experience with an existing brand when choosing a new product.
BREAKING DOWN 'Product Family'
For example, a backyard gardener might have been using the same pesticide for years to control the caterpillars that always try to eat his tomato plants. One year, he decides to try growing sugar snap peas for the first time and discovers that he needs a new product to control a disease, powdery mildew, that is affecting his crop. The company that produces the caterpillar pesticide has an entire family of products to help the home gardener successfully cultivate different crops, so when the gardener goes to the store to purchase a product for his new problem, he looks for one made by the same brand that he is already using. The gardener can shop quickly and get peace of mind by buying from a product family he already has experience with, and the gardening product company gains additional business from an existing customer.
Product mix, also known as product assortment, refers to the total number of product lines a company offers to its customers. For example, your company may sell multiple lines of products. Your product lines may be fairly similar, such as dish washing liquid and bar soap, which are both used for cleaning and use similar technologies. Or your product lines may be vastly different, such as diapers and razors. The four dimensions to a company's product mix include width, length, depth and consistency.
Width: Number of Product Lines
The width, or breadth, of a company's product mix pertains to the number of product lines the company sells. For example, if you own EZ Tool Company and have two product lines -- hammers and wrenches -- your product mix width is two. Small and upstart businesses will usually not have a wide product mix. It is more practical to start with some basic products and build market share. Later on, the company's technology may allow the company to diversify into other industries and build the width of the product mix.
Length: Total Products
The product mix length is the total number of products or items in your company's product mix. For example, EZ Tool has two product lines, hammers and wrenches. In the hammer product line are claw hammers, ball peen hammers, sledge hammers, roofing hammers and mallet hammers. The wrench line contains Allen wrenches, pipe wrenches, ratchet wrenches, combination wrenches and adjustable wrenches. Thus, EZ Tool's product mix length would be 10. Companies that have multiple product lines will sometimes keep track of their average length per product line. In this case, the average length of your company's product line is five.
Depth: Product Variations
Depth of a product mix pertains to the total number of variations for each product. Variations can include size, flavor and any other distinguishing characteristic. For example, if your company sells three sizes and two flavors of toothpaste, that particular line of toothpaste has a depth of six. Just like length, companies sometimes report the average depth of their product lines; or the depth of a specific product line. If the company also has another line of toothpaste, and that line comes in two flavors and two sizes, its depth is four. Since one line has a depth of six and the second line has a depth of four, your company's average depth of product lines is five (6+4=10, 10/2=5).
Consistency is Relationship
Product Market Mix Strategy
Small companies usually start out with a product mix limited in width, depth and length; and have a high level of consistency. However, over time, the company may want to differentiate products or acquire new ones to enter new markets. They may also add to their lines similar products that are of higher or lower quality to offer different choices and price points. This is called stretching the product line. When you add higher quality, more expensive products, it's called upward stretching. If you add lesser quality, lower priced items, it's called downward stretching.
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