Product Mix Strategy: How to Manage & Optimize Your Product Portfolio
How to structure, optimize, and manage your product mix effectively. Google case study and a free Product Mix Strategy Template.
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In October 2024, we discussed an example product strategy for Google Maps.
Today, I’d like to zoom out. After all, Google Maps is not the only Google product.
As explained in the Product Strategy Canvas, strategy is singular, even though it has many levels. For that reason, managing multiple products can be challenging.
A well-structured product mix strategy can make managing multiple products easier.
But most popular sources you can “google” describe a product structure or hierarchy at best, not what we might call “product mix strategy.” I'll explain that in a moment.
This guide will help you organize, refine, and manage your product portfolio effectively.
We discuss:
What Is a Product Mix
Why Product Mix Strategy Matters
The Four Product Mix Dimensions and What’s Missing
Case Study: Google Product Mix Strategy Example
Free Product Mix Strategy Template
Conclusion
1. What Is a Product Mix
Your product mix is the full set of products and services your company offers.
For example, Google’s product mix includes Search, Gmail, Android, Chrome, Pixel devices, Google Cloud, and YouTube.
Each product addresses unique market segments and user needs while reinforcing the entire product ecosystem.
What is often overlooked is the strategic aspect of the mix - managing and optimizing the entire product portfolio.
2. Why Product Mix Strategy Matters
When managing multiple products, you need a clear product mix strategy to ensure your entire product portfolio works together:
Single vision: Can you glue everything together rather than having products that pull your organization in different directions?
Strategic alignment: How choices across the product portfolio fit together and reinforce each other. This is a classical Michael Porter’s “Fit” test.
Prioritization: Considering limited resources, which products and initiatives should you prioritize? And, more importantly, what are the tradeoffs?
Risk reduction: A balanced mix reduces dependence on a single product.
Innovation: To balance innovation (new products) with exploiting and expanding existing products.
If you ignore this, you risk unclear priorities within the organization, spreading resources too thin, confusing users, or missing growth opportunities.
3. The Four Product Mix Dimensions and What’s Missing
When discussing the product mix strategy, most sources list four dimensions:
Width (also called Breadth): How many product lines (groups of related products) do you have? For example, Google has a “Google Workspace,” a “Pixel Smartphone,” and a “Google Marketing Platform,” among others.
Length: The total number of products across all lines. For example, Google has over 100+ products such as Gmail, Google Docs, NotebookLM, or Pixel 9.
Depth: How many products exist in each product line. For example, the Android product line has Android OS (Mobile), Android Auto, and Android TV.
Consistency: How well do product lines integrate with the entire portfolio.
A consistent mix (like Google’s ecosystem) simplifies operations.
A scattered mix (like Amazon’s e-commerce, AWS, and Prime Video) can be harder to manage but might capture broader markets.
But this classification is far from what we can call a strategy. It has several issues:
It lacks Company Vision, an integral part of every strategy (also see Roger Martin’s article). Vision glues everything together. How can you motivate your employees to wake up every day and go to work?
It misses what I call “Fit.” When managing a portfolio, it’s essential to understand how your products align with user needs (think Product-Market Fit) and business goals.
It completely misses a Product Phase, the concept described, e.g., in The Invincible Company by Alexander Osterwalder and Yves Pigneur, in which authors distinguish between exploration and exploitation. For product portfolio management I suggest three phases:
Explore: These are innovative products in the early stages of development, often requiring significant investment with little or no immediate revenue. They represent the future growth potential we hope will drive the company forward.
Transform: These products are moving from early innovation to broader market acceptance. They are starting to contribute to revenue and show promise for becoming major players.
Exploit: These are mature, well-established products that currently generate significant revenue and profits.
In practice, Product Lines and Options often form a hierarchy. Simplifying this to just two levels is insufficient for many companies like Google, Microsoft, Amazon, or Apple. I suggest considering one additional level, Product Category.
We should also keep in mind that individual product strategies should be considered integral parts of the overall strategy.
4. Case Study: Google Product Mix Strategy Example
Let's take Google as an example.
Google Product Mix
In the graphic below, I included the recommended classification for Google:
Product Class: The broadest category (e.g., Search & Information, Hardware).
Product Line: A subset within a class (e.g., Google Search, Pixel Smartphones).
Product: Specific product (e.g., Google Search Web, Pixel 9).
We could further complicate this with the product variants (e.g. Pixel 9 Pro), but if this classification is good enough for Google, it might work for your product, too.
Google Product Mix Strategy
Now, let’s convert our portfolio into a Google Product Mix Strategy.
We need to include:
Vision: Google's winning aspiration. I don’t like separating vision and mission, which I explained here, but made an exception for Google as this is how the company defines it.
Product Phase: Explore, Transform, or Exploit to manage portfolio while balancing innovation with exploitation.
Consistency (a standard dimension): How well the product integrates with Google’s ecosystem (1-5). I defined that for each product, but you can also assess consistency of the entire product mix.
Fit: How well does the product align with Google’s vision and mission, as well as business and user needs (1-5)?
I used Google Sheets (duplicated values might allow you to create custom reports):
Selected Explanations
Google Search:
Product Phase (Exploit): It’s a mature, well-established product generating significant revenue and profits.
Consistency (5/5): It’s core to Google's vision and mission. Many similar products (e.g. Google Ads) reinforce each other.
Fit (5/5): Directly aligns with Google's vision and mission of organizing information with a strong Product-Market Fit.
Pixel 9:
Product Phase (Transform): Moving from early innovation to broader market.
Consistency (4/5): Growing but less cohesive than software products.
Fit (4/5): Supports AI and Assistant vision but is not core to Google’s vision and mission, with strong but not perfect Product-Market Fit.
AlphaFold:
Product Phase (Explore): An innovative product in the early stages of development.
Consistency (3/5): Limited integration with Google’s broader ecosystem (e.g., Search, Ads, Workspace).
Fit (3/5): Not yet fully aligned with Google’s core vision and mission. AlphaFold aligns with Google’s broader goal of advancing knowledge and technology. Its product-market fit is emerging.
5. Free Product Mix Strategy Template
Here, you can download an empty template:
Notes
Feel free to add “Consistency comment” and “Fit comment” columns.
You can download the template by clicking “File > Download” or “File > Make a copy.”
Conclusion
What we defined in the template is just the tip of the iceberg.
Strategy is a single, integrated set of choices across the entire product portfolio. So, we can’t forget about individual product strategies, for example:
Strategies and Value Propositions (part of strategy) for individual products can be further refined using the Product Strategy Canvas and the Value Proposition Template.
A few pieces of advice
Monitor your strategy:
You need to measure how your product is doing and whether the strategy works at different levels (product mix/products).
One approach you can consider for each product is the North Star Framework.
Keep asking yourself:
What makes us think competitors can’t or won’t copy our strategy?
Do the various elements of our strategy fit together and reinforce each other?
What needs to be true for this strategy to work? How can we validate these assumptions?
Don’t expect complete focus and clarity from the start:
Product strategy can’t be defined during a single workshop. You need to collect insights, formulate hypotheses, and experiment. As time passes, you will gain more knowledge, and your product strategy will become more stable. Still, once in a while a new technology or market shift might force you to adjust.
Product mix strategy, on the other hand, doesn’t have to stabilize. Ideally, you continuously sunset old products while others enter the mainstream market.
Combine top-to-bottom and bottom-to-top discovery:
Even for a single product, it’s not just the CEO or the Head of Product. Involve Sales, Marketing, Success, Stakeholders, and Product Teams.
People closest to the problem offer invaluable insights executives might miss.
Keep identifying hypotheses, performing experiments, and collecting data about the strategy’s performance.
Hope that helps.
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P.S. I’d love to get your feedback!
FAQ: Product Mix Strategy
Q: What is the difference between a product mix and a product line?
A product mix is the full set of products a company offers (e.g., Google’s Search, Gmail, and Pixel devices), while a product line is a group of similar products (e.g., Pixel Smartphones).
Q: Why is a product mix strategy important?
It ensures your portfolio aligns with a single vision, prioritizes resources, reduces risk, and balances innovation with exploitation, as discussed in "2. Why Product Mix Strategy Matters."
Q: What are the four dimensions of a product mix?
They are Width (number of product lines), Depth (products per line), Length (number of products across all lines), and Consistency (integration across the portfolio), as explained in "3. The Four Product Mix Dimensions and What’s Missing."
To talk about “product mix strategy,” we should also consider vision and individual product strategies, since strategy is a single, integrated set of choices. I also suggested including fit, category, and product phase.
Q: What does product mix expansion and contraction mean?
Expansion adds new products or lines (e.g., Google launching Pixel devices), while contraction removes them (e.g., sunsetting Google+).
The former is about innovation. The latter improves your focus by eliminating underperforming or non-core products.
Q: How does vision influence a product mix strategy?
Vision, missing from traditional dimensions, glues the portfolio together, motivating teams and aligning products, as explained in "3. The Four Product Mix Dimensions and What’s Missing."
Thanks for Reading the Product Compass Newsletter!
It’s great to explore, learn, and grow together.
Have a fantastic rest of the week!
Paweł
Thanks for the case study - helps clarify the management of product portfolio pretty well. Google Pay seems to be missing.