product portfolio – the range of products offered by one producer/retailer
(Pronounced pro-dukt port-foh-lee-oh)
To remember what product portfolio means use the following mnemonic:
All the products loaded onto the ship in the port were phones so large that it began to lean over (product portfolio). The range of phones were all from one company.
A product portfolio is a collection of all the products or services that a company offers.
Analysis of a portfolio can be used to make decisions about product development, marketing and pricing. There are a number of ways to analyse a product portfolio, including:
- Stage in the product life cycle: Products can be grouped into four stages: introduction, growth, maturity and decline. If a product is in great decline, a company may want to stop producing it.
- Target market: Products can be grouped by the customers they are intended for. If one product in the portfolio isn’t for your target market, it might be beneficial to sell it off.
- Product type: Products can be grouped by their type, such as consumer goods, industrial goods, or services. A company can even add a service to an existing good such as installing the product for the customer.
Some of the benefits of having a well-managed product portfolio include:
- Improved profitability: A well-managed product portfolio can help companies to improve profitability by focusing on products that are in high-growth markets and that are profitable. Proctor & Gamble, a large multinational company, only sell consumer products that are in the top two brands of each of their product categories, leading to large profits.
- Reduced risk: Some companies try to reduce risk with product portfolio management by diversifying their offering and by not relying too heavily on any one product or service. Then again, it’s sometimes better to go all out on only one product that you believe will definitely work (all your eggs in one basket). For example, Crocs only sell one type of shoes, but have been very successful.
However, some of the challenges of managing a product portfolio include:
- Keeping up with trends: The market is constantly changing, so it can be challenging to keep up with trends and to ensure that the product portfolio is aligned with those trends.
- Managing costs: Developing and maintaining a product portfolio can be expensive, so it is important to manage costs correctly.
- Balancing risk and reward: It is important to balance the risks of investing in new products with the potential reward of those products. It might be best to stick to investing in one new product at a time into your portfolio.