Explain the factors influencing the changes in product mix.
Explain the factors influencing the changes in product mix.
Or
What factors influence the changes in product mix ?
Or
What are the determinants of product-mix?
Ans.
Determinants of Product-mix
Or
Factors Influencing the Changes in Product Mix
Following factors affect product mix-
1. Long-term Objectives – There is found interdependent relationship between long-term objectives and its product-mix. Long-term objectives include enhanced profit, stability of sales and increase in sales. Marketing strategies adopted for sales promotion and adjustments will affect the product-mix. Normally, a business concern can adopt market penetration, market development, product diversification marketing strategy to increase sales. These strategies will change product mix time to time.
2. Technical Research and Development- Several new researches and technical developments made the business concerns bound to change their product mix. Scientific and technical research has open the ways for product development and establishment of new production technique. Business concerns want to take advantages of these techniques and due to it they change their product mix.
3. Changes in Market Demand- Product mix by the business concern is also changed when demand of products is changed. Following are the main causes of change in demand –
(i) Change in interest, fashion, trend, nature, attitude, income of the consumer change the variety, type, design, quantity to be purchased by the consumer. In such case business concern changes his product mix.
(ii) Sometimes customers demand such product which are not produced by the concern. In such a case business concern become bound to change product mix.
(iii) Change in localisation of customers also requires change in product-mix. If demand decreases, the firm will decrease his product-mix. Firm will have to adopt product diversification to increase his sales.
(iv) Market demand also changes in the case of change in the cost of material or tools and equipments. In case in increase of cost or non availability of raw material or tools business concern will adopt substitute goods, which bring changes in product-mix.
(v) Where business firm is unable to make accurate market demand, it will change its product mix.
(vi) Changes in manufacturing process or level of business activities also effect product mix.
4. Reduction in Production and Distribution Cost- Every business concern makes effort to minimize production and distribution cost. To achieve this object firm changes its product mix. Decision to make by products to reduce cost of production will expend product line and consequently it will affect product-mix. Thus business concerns commence the marketing of various products. Due to it product mix changes.
5. Changes in the Product-mixes of Competitors – When competitors include new products in their product mix, other concerns also include new products because clubbing of new products by the competitors generates direct competition. This is the cause due to which product mix of competing firm also affect product mix.
6. Government Controls and Policies- Government controls, policies, rules and regulations also affect product mix of the business concern. According to government orders price, quantity, name of product, date of manufacturing, expiry date should be indicated on the packet. Due to it concern changes its product mix.
