Product Portfolio
Matrix
Alinsob, Amodia, Batino, Sy, Tolentino P.
Product Portfolio Matrix
is a handy tool that helps you make the right
product portfolio decisions
also called growth–share and BCG matrix,
wants to help you achieve the right blend of
young and established products in order to
maximize the overall value a portfolio creates.
The Matrix Reloaded
Question marks - are products with high growth
that don’t yet deliver significant business
benefits—be it generating revenue, selling other
products or services, enhancing the brand equity,
or saving money.
Stars - show high growth and deliver the desired
benefits.
Cash cows - are products characterized by low
growth, but they offer plenty of business
benefits.
Pets - exhibit low growth and offer few benefits.
The Matrix Reloaded
When you apply the
product portfolio matrix
You also need sufficient Finally, you’d like
cash cows that
to the offerings in an
generate the desired to minimize the
established company,
you’d like to see a
business benefits at a number of pets,
comparatively low cost
healthy, balanced
and are therefore able
as they incur
portfolio with enough
question marks and
to help fund the cost but deliver
development of new
stars that have the only limited
products, question
potential to become
cash cows.
marks, and stars. benefits.
Question Mark to Cash Flow
Your product portfolio therefore
requires regular adjustments, and
portfolio management should be
a common activity.
As a rule of thumb, review your
product portfolio once per
quarter and initiate the necessary
changes.
Product Portfolio Matrix and Product
Life Cycle
As you may have noticed, the development sequence
is correlated with the product life cycle: Question
marks tend to be products in the introduction stage;
stars are products in growth; cash cows are mature
offerings; and pets are declining products.
Note that the picture shown does not account for life
cycle extensions—prolonging the life expectancy of a
product by adding new features, optimizing existing
ones, creating variants, or taking it to a new market or
market segment, for instance. Such a measure extends
the product’s status as a star and prevents it from
prematurely becoming a cash cow.
AVOID THESE COMMON MISTAKES
Don’t Focus too much on Stars and Cash Cows
The first mistake is focusing too much on cash cows
and stars and neglecting question marks and new
product development initiatives, something
particularly bigger companies are prone to in my
experience. This is due to their tendency to optimize
structures and processes for managing existing,
successful assets, which makes it hard to deal with
the amount of innovation and risk present in new and
young products. But focusing too much on stars and
cash cows leads to an unbalanced, ageing portfolio
that stifles future growth, as shown in the picture.
AVOID THESE COMMON MISTAKES
Don’t Keep Pets for too Long
The second mistake is clinging on to pets
even if their benefits are rapidly declining.
You should, of course, do the opposite:
retire products that are no longer
sufficiently beneficial. Take the iPod
Classic, Apple’s original and iconic MP3
player. The product was rightly
discontinued in 2014 after it had
experienced a continued decline in sales.
AVOID THESE COMMON MISTAKES
3. Don’t Cling to Question Marks
To over-invest in question marks and to hold on to
them for too long: Not every question marks will
become a star. Some just die prematurely. Take, for
example, Google Wave, a product that combined
e-mail, instant messaging, and wikis. Wave was
discontinued about a year after its launch in 2009.
It never experienced stardom and died as a
question mark. The following picture shows that
retirement is not the only exit point in the portfolio
matrix but that products may have to be
discontinued as question marks.
Thank
You!
REFERENCE:
Pichler, R. (2017, June 6). The Product Portfolio Matrix. Roman Pichler.
https://www.romanpichler.com/blog/balance-your-portfolio-with-the-product-portfolio-matrix/
