Product Portfolio

Management
• Product Portfolio can be defined as the
compilation of products and services offered
by the company to the target market.
• 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 is comprised of all the
products which an organization has.
• A product portfolio may comprise of different
categories of products, different product lines
and finally the individual product itself.
• Management is needed on all the three levels
of a product portfolio.
• You need managers for managing individual
products, managing product lines and finally
the top level management which manages the
complete portfolio.
• As an organization is comprised of different
products, it becomes difficult to manage all of
them.
• Thus there needs to be a hierarchy. This is
where product portfolio management steps in.
 Breaking-down Product Portfolio and its management :

• Product Portfolio management is one of the

most crucial elements of the entire business 
strategy as it helps the company to attain its
overall business objectives and plan the
future line of products accordingly.
• It works as a significant tool for the corporate
financial planning of the firm and also for the
investors conducting the equity research
analyzing the return on investments.
• The thorough analysis of the Product Portfolio can
provide the management of the company with
crucial information such as
• stock type,
• 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.
• Many a time, there are too many projects
 underway and there are seldom that is right
for the company to attain the profits.
• And here is 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.
 Importance of Product Portfolio to business :

1) Innovation
It helps in defining the types and nature of
products that are liked and preferred by the
customers and with the experience and
knowledge, launch the new line of products
that are not only innovative and novel in
ideation but matches the taste and
preferences of the target market.
2) Tax benefits
Managing and analyzing the Product Portfolio on
the regular basis helps to structure the
investments and all the other financial elements of
the company resulting in the various tax benefits.
3) Aligns projects with the business strategy
Having the proper management of the Product
Portfolio helps the management to align the
existing and projects in the pipeline with the
overall business strategy and vision of the
company.
4) Visualize the entire portfolio
But with the Product Portfolio in place, all the
key members of the management are able to
visualize the entire portfolio of the all the old,
existing, and future products having a broader
spectrum.
5) Effective allocation of resources
Having and managing the Product Portfolio helps
in allocating the various resources of the firm
such as finances, human resources, and
manufacturing plants amongst others in an
effective manner.
6)Data for the key members of the management
• Data related to performance of the products
in the market,
• revenue generation by the each product,
• market share, customer preferences, and
• requirement of any sort of innovation in any
products amongst others that helps with the
planning and execution of the next plans and
strategies of the business.
7) Cash flow management
8) Synergy within the internal team
with the proper Product Portfolio in place, there are
various team meetings and discussions resulting in all the
members on the same page and well aware about the
overall business strategy and operations of the firm having
a required synergy to attain the long-term business aims
and objectives.
9) Proper selection of the target market
Product Portfolio helps the management to figure out on
why the certain lines of products are performing extremely
well working as the cash cows for the firm whilst some of
them not matching the required and envisioned plans and
objectives. 
 How do we classify the products in a product portfolio?

• Product classification is done on the basis of the 

BCG matrix. 
• The BCG matrix classifies products on the basis
of the market share of the product as well as the
growth rate which a product may have.
• On the basis of this classification, a product
manager can decide what level of investments a
particular product might need and what would
be the returns from such a product.
• As the other goal of product portfolio
management is cash flow management, the
BCG matrix propagates balancing the cash
flow between all products equally. In harsh
words – no extra revenue should be given to
products which cant give the revenue back to
the organization.