Understanding Product

Portfolios
 PRODUCT PORTFOLIO
• A PRODUCT PORTFOLIO IS THE
COLLECTION OF ALL THE PRODUCTS OR
SERVICES OFFERED BY A COMPANY.

• 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.
 The Concept of the Product Portfolio

• PURPOSE BEHIND DEVELOPING PRODUCT PORTFOLIO IS TO

ALLOCATE THE FIRM’S RESOURCES SO AS TO OPTIMIZE ITS LONG
TERM GROWTH AND PROFITABILITY.

• PRODUCT PORTFOLIOS WILL TEND TO BE DIFFERENT FOR MATURE

VERSUS YOUNGER GROWTH COMPANIES.

• THE CONSTRUCTION OF A PRODUCT PORTFOLIO WILL DEPEND

UPON THE OVERALL OBJECTIVES OF AN ORGANIZATION AND ITS
ATTITUDE TOWARDS THE BASIC TRADE – OFF BETWEEN RISK AND
RETURN
 PETER DRUCKER’S 7 CATEGORY OF
PRODUCT PORTFOLIO ANALYSIS
STRENGTHS OF
THE COMPANY WEAKNESSES OF
THE COMPANY EITHER STRENGTH
OR WEAKNESS
• Today’s
breadwinner • Investments in
Managerial Ego • Developments
• Tomorrow’s • Sleepers
Breadwinner • Failures
• Yesterday’s
Breadwinner
 FACTORS INFLUENCING THE PRODUCT
PORTFOLIO

• MARKET SHARE
• SALES
• PORTFOLIO ANALYSIS
 THE BOSTON CONSULTING GROUP(BCG)
GROWTH – SHARE MATRIX

• THE BOSTON CONSULTING GROUP(BCG) GROWTH – SHARE

MATRIX WAS DEVELOPED BY BRUCE HENDERSON,IN THE
LATE 1960’S.

• IT IS AN ANALYTICAL TOOL USED TO ASSESS COMPANY’S

PRODUCT LINES. IT AIMS AT HELPING TH COMPANY TO
MAKE THE BEST POSSIBLE ALLOCATION OF ITS RESOURCES.
 Quadrant 1 represents a product being introduced
into a market which is perceived to have high growth
potential. But as it has yet to perform successfully and
has only a low market share, it is regarded as a
QUESTION MARK.

Quadrant 2 represents a successful product with a

high market share in a rapidly growing market. It is
undoubtedly a STAR.

Quadrant 3 represents an established player in a

mature market. It has survived the shake – out and is
now benefiting from experience effects in a stable and
not particularly aggressive market. It has become a
CASH COW
BGC MATRIX DIAGRAM
Quadrant 4 defines the product in the decline phase.
There is a little or no market growth and the product’s
low share means that it lacks the cost advantages
enjoyed by cash cows. In BGC nomenclature it is DOG.
 IMPORTANCE OF GROWTH – SHARE MATRIX

• IT REINFORCES THE INEVITABILITY OF CHANGE IMPLICIT IN THE PLC

CONCEPT

• IT UNDERLINES THE IMPORTANCE OF HAVING A PORTFOLIO OF

PRODUCTS AT DIFFERENT STAGES OF DEVELOPMENT

• IT REQUIRES FORMAL CONSIDERATION OF THE COMPETITION AND

THEIR RELATIVE STANDING.

• IT IS INTUITIVELY APPEALING AND SIMPLE TO IMPLEMENT

CONCEPTUALLY, DESPITE THE DIFFICULTY OF OPERATUONALIZING IT
IN PRACTICE.
 SHELL’S DIRECTIONAL POLICY MATRIX

• SHELL’S DPM IS BASED UPON TWO KEY PARAMETERS :

COMPANY’S COMPETITIVE CAPABILITIES

PROSPECTS FOR SECTOR PROFITABILITY
THE DIRECTIONAL POLICY MATRIX
PROSPECTS FOR SECTOR PROFITABILITY

UNATTRACTIVE AVERAGE ATTRACTIVE

COMPANY’S COMPETITIVE CAPABILITIES

WEAK
AVERAGE
STRONG
 THE DIRECTIONAL POLICY MATRIX

• BUSINESS SECTOR PROFITABILITY INCLUDES THE SIZE OF THE

MARKET, EXPECTED GROWTH, LACK OF COMPETITION, PROFIT
MARGINS WITHIN THE MARKET AND OTHER FAVORABLE POLITICAL
AND SOCIO-ECONOMIC CONDITIONS. ON THE OTHER HAND
COMPANY’S COMPETITIVE CAPABILITY IS DETERMINED BY THE SALES
VOLUME, THE PRODUCTS REPUTATION, RELIABILITY OF SERVICE AND
COMPETITIVE PRICING.