Products fall into two broad camps: consumer products (bought by individuals for personal use) and industrial products (bought by businesses for their operations or production). How you classify and market a product depends entirely on which camp it belongs to and how buyers behave when purchasing it.
Beyond individual products, companies manage an entire product mix, the full collection of product lines and items they offer. Understanding the dimensions of that mix, and knowing when to expand, trim, or adjust it, is central to product strategy.
Consumer vs Industrial Products
Characteristics and Target Markets
Consumer products are goods and services purchased by individuals or households for personal consumption: clothing, food, electronics, and so on. They target the general public or specific consumer segments like millennials, pet owners, or fitness enthusiasts.
Industrial products are goods and services purchased by businesses, government agencies, or institutions for use in their operations or production. Think raw materials, machinery, and office supplies. Their target buyers are other organizations: manufacturers, hospitals, schools.
Classification and Buying Habits
Consumer products are classified by how consumers shop for them:
- Convenience goods are frequently purchased items requiring minimal effort (toothpaste, snacks). You grab them without much thought.
- Shopping goods are items consumers compare on price, quality, and style before buying (furniture, appliances). There's an active evaluation process.
- Specialty goods are unique items consumers make a special effort to obtain (luxury watches, designer handbags). Brand identity and exclusivity drive the purchase.
- Unsought goods are items consumers don't actively seek out or may not even know about (life insurance, cemetery plots). These require aggressive promotion because demand doesn't come naturally.
Industrial products are categorized by their role in business operations:
- Raw materials are unprocessed natural resources used in production (crude oil, timber)
- Component parts are manufactured items incorporated into finished products (computer chips, auto parts)
- Installations are major capital equipment (assembly lines, generators)
- Accessory equipment includes tools and devices that support operations (hand tools, office furniture)
- Operating supplies are consumable items used in daily operations (lubricants, paper)
- Professional services are specialized expertise provided to businesses (consulting, legal services)
Marketing Strategies
Marketing consumer products focuses on building brand awareness, shaping perceptions, and driving sales. Promotional tools include advertising, sales promotions, and public relations (social media campaigns, in-store displays, celebrity endorsements). The emphasis is on creating an emotional connection with consumers and differentiating the product from competitors.
Marketing industrial products emphasizes long-term relationships, proven performance, and technical support. Personal selling and trade shows are common ways to reach business customers. Customization and after-sales service matter because each business buyer has specific operational needs. Technical specifications, case studies, and testimonials help demonstrate reliability.
Product Mix Dimensions
Width, Length, and Depth
A product mix (also called a product assortment) is the total set of all product lines and individual products a company offers. It has three key dimensions:
- Width is the number of different product lines. A consumer electronics company with smartphones, laptops, and televisions has a width of three.
- Length is the total number of individual products across all lines. A clothing retailer offering 100 different items across its various lines has a length of 100.
- Depth is the number of variations within each product line, such as sizes, colors, or models. A shoe company offering its running shoes in 8 sizes, 3 widths, and 5 colors has significant depth in that line.
Consistency and Expansion
Consistency describes how closely related a company's product lines are in terms of end use, production, distribution, or target markets.
A skincare company offering cleansers, moisturizers, and serums has high consistency: similar technology, shared customer base, and complementary use. A conglomerate that owns a food company, a media company, and a real estate company has low consistency: the lines are largely unrelated.
Companies can expand their product mix in three directions:
- Increasing width by adding new product lines (a clothing retailer adding accessories)
- Increasing length by introducing new products within existing lines (a smartphone manufacturer releasing additional models)
- Increasing depth by offering more variations of existing products (a beverage company introducing new flavors)
Product Mix Changes Impact
Expansion and Diversification
Expanding the product mix helps a company reach new market segments and spread risk. A computer manufacturer adding a line of smart home devices, for example, reduces its dependence on a single product category. The tradeoff: expansion requires additional resources, expertise, and marketing investment.
Streamlining works in the opposite direction. Eliminating underperforming or inconsistent products frees up resources for more profitable offerings and sharpens the company's focus on its core strengths. The risk is that cutting too much can limit market coverage and future growth potential.
Customization and Consistency
Increasing depth through new variations or customization options helps a company serve diverse preferences. A jewelry company offering personalized engravings, for instance, can command higher prices and build loyalty. But greater depth also raises production and inventory costs and can overwhelm customers with too many choices.
Enhancing consistency across the product mix creates synergies and cross-selling opportunities. An outdoor gear company offering tents, sleeping bags, and backpacks designed to work together reinforces its brand identity and makes it easier for customers to shop. The downside: high consistency can limit a company's flexibility to enter new, unrelated markets when trends shift.
Managing Product Mix for Success
Market Alignment and Competitive Positioning
Companies should regularly assess market demand and customer preferences to keep their product mix relevant. Tools like surveys, focus groups, and social media monitoring help identify unmet needs and emerging trends. A product mix that aligns with what the target market actually wants drives higher satisfaction and stronger sales.
Monitoring competitors is equally important. Analyzing their product offerings, pricing, and market share reveals gaps and opportunities. Product mix adjustments might involve introducing unique features, targeting underserved segments, or phasing out products that are losing ground.
Profitability and Product Life Cycle Management
Not every product in the mix deserves equal investment. Analyzing the financial performance of each product line helps prioritize where to allocate resources. High-margin and high-growth products should get the most attention, while underperforming products should be reformulated or discontinued to keep the mix lean.
The product mix also needs to evolve over time as markets, technology, and customer preferences change:
- Introducing new products capitalizes on emerging trends or replaces declining ones (a smartphone manufacturer releasing a model with advanced features)
- Modifying existing products extends their life cycle by improving performance, reducing costs, or meeting new needs (a food company reformulating a snack to be gluten-free)
- Phasing out obsolete products frees up resources and prevents the brand from appearing outdated