- Product mix
In many businesses, the product mix is a very important consideration. It is
usually not a particular product or product line that results in a business being
profitable. Rather, it is the way all of the product lines carried by the business
and the product mix complement one another that result in a profitable
business.
In these two examples, the machine or the suit is sold at a very low gross
margin to meet advertised competition. Having a good selection of
complementary accessory products and a salesperson who can effectively
present these options to the customer is very important. It will often determine
whether the business is profitable.
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The nationally advertised brand name product may have brought the customer in
the door. However, by offering the customer a choice of the brand name
product and other competitive products with different or specialized features,
the sales of all products are enhanced.
Offering products at different price points and complementary or accessory
products is often as important or even more important to the profit of a
business. These products often yield much higher gross margins compared to
the high-profile brand name product.
In the case of a tool or a machine, some accessory sales might be:
Attachments Protective covers
Adapters to interface with other tools Lubricants
Replacement parts Cleaners
In the case of a clothing item, like a suit, accessory sales might be:
Co-ordinated shirts Belts
Ties Topcoat Matching socks