Product Portfolio Analysis

Bissmah Mehmud

2005 – 2009: BBA (Hons) NUST Business School

2009 – 2010: MBA NUST Business School
2011 – 2018: Graphic Designer, Digital Content Manager, Creative
Director for Adcom Leo Burnett, Ogilvy Pakistan – Clients I have worked
with are Telenor Pakistan, Jazz, UN Pakistan, Liverpool Football Club etc
2018-2019: MSc Marketing Communications Birkbeck, University of
London as a Chevening Scholar
Advertising, PR, Corporate Communication, Branding, Graphic Design,
Digital Marketing
 What is a product portfolio and what are the
objectives of conducting a product portfolio
analysis?

At what stage of strategic marketing management

is product portfolio analysis conducted?
Learning
Outcomes A model of product portfolio analysis

Pitfalls of portfolio analysis

Portfolio analysis in practice (Case study example)

 A product portfolio is simply a collection of all
Product the products that an organization offers
Portfolio Each product within a portfolio can face:
• Different market dynamics
• Different growth rates
• Different market shares
Consider Pepsico
Pakistan….
In the soft drinks category,
Pepsi dominates the market
followed by Coke

However, in the bottled

water category, Nestle
Mineral water dominates,
followed by Aquafina
 Companies often re-brand or restructure
underperforming and unprofitable products, a
strategy that requires portfolio analysis.
Portfolio analysis therefore allows strategists to:

Objectives • maximize the value of the portfolio

• achieve the right balance between products
• Maintain a strategically aligned portfolio
• Allocate the resources well
 The company’s business should be viewed and managed in
The basis a similar way to an investment portfolio, with each aspect
of the business being closely monitored and decisions
for Product subsequently made on which products or specific parts of
the business should be developed, maintained, phased out
Portfolio or deleted.
Emphasis should be placed upon identifying in detail the
Analysis future profit potential of each aspect of the business
A strategic perspective to the management of each major
element of the business should be adopted. Future
planning should be done on the basis of industry position,
objectives, opportunities and resources.
 The Process of Strategic Marketing
Management

Step 2 Step 5
Step 1
Where do we Step 3 Step 4 How will we
Where are we
want to be? How will we get Which way is ensure arrival?
now? Strategic
Strategic there? Strategic best? Strategic Strategic
and Marketing
Direction and Choice Evaluation Implementation
Analysis
Formulation and control

When is Product Portfolio Analysis conducted?

A model for
conducting portfolio
analysis

The Boston Consulting Group’s (BCG)

growth–share model involves products
being plotted on a matrix according to the
rate of market growth and their market
share relative to that of the largest
competitor
Stars (high share, high growth) Their cash
needs are often high with the cash being spent
in order to maintain market growth and keep
competitors at bay. As stars also generate large
amounts of cash, on balance there is unlikely to
be any positive or negative cash flow until such
time as the state of market growth declines.
Cash cows (high share, low growth) The term
cash cow is derived from the fact that it is these
products which generate considerable sums of
cash for the organization but which, because of
the lower rate of growth, use relatively little.
Question marks (low share, high growth) They
generally require considerable sums of cash
since the firm needs to invest in plant,
equipment and manpower to keep up with
developments. These cash requirements are, in
turn, increased significantly if the company
wants to improve its competitive position.
Dogs (low share, low growth) Dog products
frequently take up more management time
than they justify and there is often a case for
phasing out (shooting) the product.
 Strategic choices- Post portfolio analysis

Build Hold Harvest Divest or Terminate

Pump cash into Maintain market Maximize short Get rid of the
the product. Best share. Best suited term gains. Best product that is
suited to question to cash cows suited to weak draining resources
marks so they cash cows or with no return.
become stars question marks Best suited to
when they can’t dogs and question
be turned into marks
stars, and dogs
What to avoid – Pitfalls of Portfolio Analysis
Investing too heavily in dogs, hoping that their position will improve,
but failing.
Maintaining too many question marks and investing too little in each
one, with the result that their position either fails to change or
deteriorates.
Draining the cash cows of funds and weakening them prematurely and
unnecessarily. Alternatively, investing too much in cash cows, with the
result that the funding available for question marks, stars and dogs is
insufficient.
Seeing models of portfolio analysis as anything more than a contributor
to decision-making.
Portfolio Analysis In Practice – Case Study
Apple, Inc. is responsible for bringing to market such products as the Macintosh desktop,
iPod and iTunes, iPhone.

For firms like Apple with multiple brands or product lines, a product portfolio analysis is
necessary to determine where resources should be applied or reallocated to ensure the
maximum profitability of the corporation
Given the data in the previous slide, how would you classify each of the
Apple product lines (desktop computers, portable computers, iPod, and
iPhone) according to the BCG Growth-Share Matrix?
What is a product portfolio and what are the objectives of conducting a product
portfolio analysis?

At what stage of strategic marketing management is product portfolio analysis

conducted?

A model of product portfolio analysis

Pitfalls of portfolio analysis

Portfolio analysis in practice (Case study example)

Further Reading
Baines, P., Fill, C. and Rosengren, S. (2017). Marketing. 4th ed. Oxford: Oxford University Press.
Day, G. S. (1977). Diagnosing the Product Portfolio. Journal of Marketing, 41(2), 29-38.
Kang, W., & Montoya, M. (2013). The Impact of Product Portfolio Strategy on Financial Performance: The Roles
of Product Development and Market Entry Decisions. Journal of Product Innovation Management, 31(3), 516–
534.
Morrison, A., & Wensley, R. (1991). Boxing up or Boxed in? A Short History of the Boston Consulting Group
Share/ Growth Matrix. Journal of Marketing Management, 7(2), 105–129.
R. G. Cooper, S. J. Edgett, and E. J. Kleinschmidt. (1998) Portfolio Management for New Products. Reading Mass:
Addison-Wesley.
R. G. Cooper, S. J. Edgett, and E. J. Kleinschmidt.(1999) New Product Portfolio Management: Practices and
Performance. Journal of Product Innovation Management, 16:333-351.