Product Portfolio

Definition
• Product Portfolio can be defined as the
compilation of products and services offered by
the company to the target market.
• A product portfolio is comprised of all the
products which an organization has.
• It comprises of all the set of products offered
right from the ones that were launched and
offered during the inception of the brand to the
ones that are launched currently along with ones
that are in the pipeline.
• A product portfolio may comprise of different
categories of products, different product lines
and finally the individual product itself.
• Product portfolio management refers to the
practice of managing an organization’s entire
product portfolio, which consists of all the
products the organization has.
 Importance of Product Portfolio
management
• Product Portfolio management is one of the most
crucial elements of the entire business strategy
• It helps the company to attain its overall business
objectives and plan the future line of products
accordingly.
• The main role of Product Portfolio management
to analyze which projects are well aligned with
the overall strategy and objectives of the business
and will be the cash cows and the ones that don’t
feel relevant is taken off from the portfolio.
• The thorough analysis of the Product Portfolio
can provide the management of the company
with crucial information such as growth prospects
of the brand, products that are high on profit
margins, income contribution by each and every
product offered to the market, market share of
every product, operational risks, and market
leadership
• It works as a significant tool for the corporate
financial planning of the firm
 Product Portfolio Analysis
• The strengths and weaknesses of a company
determine its internal capabilities to compete
in a market and fulfil customer expectations.
One of the tools to identify the strengths and
weaknesses of a company is a Product
Portfolio Analysis.
• The Product Portfolio Analysis was proposed
in 1973 by Peter Drucker as a way to classify
current and expected profitability.
The Product Portfolio Analysis classified various
offerings of a particular company into seven
categories:
• Today`s Breadwinners - These products are most profitable to
the company. The company should support these products
and maintain current investment levels.
• Tomorrow`s Breadwinners - These products have the potential
to contribute to the company`s profit in the future and thus
the company should support these products and perhaps
increase investments in them.
• Yesterday`s Breadwinners - These were the most profitable
products of the past but do not currently contribute
significantly to profits. The company needs to maintain a
minimum level of support and investment for these products
until the time they resume generating substantial profits.
After that, the company may decide to discontinue such
products.
• Developments - These products are under development and
need greater investment to achieve a level on which they start
generating profits. A decision on whether to invest more
resources needs to be made after a thorough analysis of the
market potential and Return on Investment (ROI) for these
products.
• Sleepers - These products have been around for some time
but have failed to establish themselves.
• Investments in Managerial Ego - These products, backed by
influential managers, have little proven demand in the market
and typically waste many functional resources.
• Failures - These products have failed in the past and have no
future in their current form. They should ideally be
discontinued unless there is a way to successfully reposition
• Products in the first three categories, "Today`s
Breadwinners," "Tomorrow`s Breadwinners,"
and "Yesterday`s Breadwinners," are strengths of
the company.
• Those in the last two categories, "Investments in
Managerial Ego" and "Failures," are weaknesses.
• The "Developments" and "Sleepers" need to be
analyzed in greater detail to classify them as
either strengths or weaknesses.
A product portfolio analysis for a company in the phone manufacturing
industry may categorize its entire product as follows:
• Today`s Breadwinners: Touch screen cell phones
• Tomorrow`s Breadwinners: Hybrid tablet-cell phones
• Yesterday`s Breadwinners: Home phone handsets
• Developments: Wearable technology
• Sleepers: Imbedded, bio-technology
• Investments in Managerial Ego: Extendable keyboards
• Failures: In-ear receivers

After the classification exercise, the marketing team is able to pinpoint

products that contribute to the company`s strengths and those that
do not. Accordingly, the Marketing Strategy to be followed for each
product can be decided.
STP Model
 Market Segmentation
• Segmentation refers to a process of dividing a
large unit into various small units which have
more or less similar or related characteristics.
• A market segment is a small unit within a large
market comprising of like minded individuals.
• One market segment is totally distinct from the
other segment.
• The individuals from the same segment respond
in a similar way to the fluctuations in the market.
 Basis of Market Segmentation
• Gender
• Age Group
• Marital Status
• Income
• Occupation
 Types of Market Segmentation
• Psychographic segmentation
• Behaviouralistic Segmentation
• Geographic Segmentation

Why Market Segmentation?

Not all individuals have similar needs.
-For example A male and a female would have varied
interests and liking towards different products.
-A kid would not require something which an adult
needs. A school kid would have a different requirement
than an office goer.
-Market Segmentation helps the marketers to bring
together individuals with similar choices and interests
on a common platform.
 Targeting
• Once the marketer creates different segments
within the market, various marketing
strategies and promotional schemes are
devised according to the tastes of the
individuals of particular segment.
• This process is called targeting. Once market
segments are created, organization then
targets them.
• Targeting is the second stage and is done once
the markets have been segmented.
• Organizations with the help of various marketing
plans and schemes target their products amongst
the various segments.
• For Example: Nokia offers handsets for almost all
the segments. They understand their target
audience well and each of their handsets fulfils
the needs and expectations of the target market.
 Product Positioning
• The process of creating an image of a product in
the minds of the consumers is called as
positioning.
• Positioning helps to create first impression of
brands in the minds of target audience. In simpler
words positioning helps in creating a perception
of a product or service amongst the consumers.
• Example
– The brand “Bisleri” stands for purity.
– The brand “Ceat Tyre” stands for better grip.
 Steps to product Positioning
• Know your target audience well
• Identify the product feature
• Unique selling Propositions
• Know your competitors
• Ways to promote brands
• Maintain the position of the brand
 New Product Decision

-Quality
-Features
-Style
-Design
 Branding
• Branding is one of the most crucial individual product
decisions
• A brand is a name, term, sign, symbol, design or a
combination of these elements that identifies the products or
services of one seller and differentiates them from those of
competitors. To give an example, look at Coca-Cola. If you buy
a bottle of coke, you do not only buy the pure beverage, you
buy the brand. You buy it because you know and value the
worldwide-known brand.
• Branding adds significant value to a product. A brand is so
crucial because customers can attach meanings to brands and
develop brand relationships. The brand says something about
the product’s quality and consistency.
 Packaging
• Packaging refers to activities of designing and
producing the wrapper or container for a
product. The packaging of a product is a more
important decision than you would expect it to
be.
• Poorly designed packages can harm a lot. For
instance, hard-to-open packages with sticky
labels or sealed plastic containers do not
contribute to the buyer’s satisfaction. Indeed,
customer frustration is often the result.
 Importance of Packaging
• This is a result of increased competition and offer
of products. Packaging must now perform many
tasks, which include attracting attention,
describing the product, and even making the sale.
• In making packaging decisions, companies should
also have environmental considerations. “Green”
packaging, meaning the use of environmentally
responsible packaging materials, becomes more
and more important and adds value to many
products.
 Labelling
• Labels perform several functions and are
therefore one of the important individual product
decisions.
• The most straight-forward function is to identify
the product or brand. But the label can also
describe several things about the product: who
made it, where and when was it made, the
contents, how it is to be used etc. Finally, the
label can promote a brand.
• It supports the brand’s positioning and may help
to connect with customers.
 Important Elements of Label
• Labelling has also been affected recently by
unit pricing (the price per unit of standard
measure must be stated), open dating (the
expected shelf life of the product must be
mentioned) and nutritional labelling (the
nutritional values in the product must be
shown). These elements are required by law.
 Importance of Labelling
• A label should only show and state what is
true and what the customer can rely upon.
Misleading or deceptive labels must be seen
as unfair competition. If labels mislead
customers, fail to describe important
ingredients or even fail to mention required
safety warnings, legal consequences are likely
to follow.
Steps in New Product Development
 Idea Generation
• New idea generation is the systematic search for
new product ideas.
• To create a large number of ideas
• Sources of new-product ideas
– Internal sources refer to the company’s own formal
research and development, management and staff,
and entrepreneurial programs.
– External sources refer to sources outside the company
such as customers, competitors, distributors,
suppliers, and outside design firms.
 Idea Screening & Concept testing
• Idea screening - reviewing new-product ideas in order
to drop poor ones as soon as possible.
• Concept Development and Testing-
– Product idea is an idea for a possible product that the
company can see itself offering to the market.
– Product concept is a detailed version of the idea stated in
meaningful consumer terms.
– Product image is the way consumers perceive an actual or
potential product.
– Concept testing refers to testing new-product concepts
with groups of target consumers. To find out how
attractive each concept is to customers, and choose the
best one.
 Marketing Strategy Development
• Marketing Strategy Development- refers to the initial
marketing strategy for introducing the product to the
market.
• Marketing strategy statement
Part 1:
Description of the target market
The planning product positioning; sales, market share, and
profit goals
Part 2:
Price distribution and budget
Part 3:
Long-term sales, profit goals, and marketing mix strategy
Marketing Strategy
 Business Analysis & Product
Development
• Business analysis involves a review of the
sales, costs, and profit projections to find out
whether they satisfy the company’s
objectives.
• Product development involves the creation
and testing of one or more physical versions
by the R&D or engineering departments.
 Test Marketing
• Test marketing is the stage at which the
product and marketing program are
introduced into more realistic marketing
settings.
• Test marketing provides the marketer with
experience in testing the product and entire
marketing program before full introduction.
 Commercialization
Commercialization is the introduction of the
new product into the market
– When to launch
– Where to launch ◦
– Planned market rollout (the widespread public
introduction of a new product)
Relationship between Marketing and
Product Management
Product life-cycle Strategies
 Product life-cycle Strategies
• Product life-cycle (PLC) can describe a product
class, a product form, or a brand:
Product classes have the longest life cycles, with
sales of many product classes in the mature stage
for a long time.
Product forms have the standard PLC shape:
introduction, rapid growth, maturity, and decline.
Brands have changing PLCs due to competitive
threats.
 Product life-cycle Strategies
• Introduction stage is when the new product is
first launched:
◦ Takes time
◦ Slow sales growth
◦ Little or no profit
◦ High distribution and promotion expense
 Product life-cycle Strategies
• Growth stage is when the new product satisfies the
market.
– Sales increase
– New competitors enter the market
– Price stability or decline to increase volume
– Consumer education
– Profits increase
– Promotion and manufacturing costs gain economies of scale
– Product quality increases
– New features
– New market segments and distribution channels are entered
• Maturity stage is a long-lasting stage of a product that has
gained consumer acceptance.
◦ Slowdown in sales
◦ Many suppliers
◦ Substitute products
◦ Overcapacity leads to competition
◦ Increased promotion and R&D to support sales and profits.
• Marketers consider modifying strategies at the maturity stage
Market modifying
Product modifying
Marketing mix modifying
• Decline stage is when sales decline or level off
for an extended time, creating a weak product:
◦ Maintain the product without change in the hope that
competitors leave the industry
◦ Reposition or reformulate the product in hopes of
moving back into the growth stage
◦ Harvest the product that means reducing various costs
and hoping that sales hold up
◦ Drop the product by selling it to another firm or simply
liquidate it at salvage value
Thank You