Product Portfolio Analysis

• A product portfolio is the complete set of products and services offered by a company 
• it’s a reference point when assessing business performance, growth potential and overall financial health.
• product portfolio analysis evaluates each product’s contribution to revenue, profitability and market presence.
• help businesses make informed decisions about resource allocation, product development and market strategy.
• approach focus on the products that drive growth while identifying underperforming areas that may require adjustment or discontinuation.
• its’ not a a single metric 
• product portfolio analysis involves:
  – sales performance,
  – profit margins
  – market positioning
• Managing a product portfolio = assessment of product performance
  – sales by product, profit contribution and sales mix
  + Competitor intelligence = how each product or service performs within the industry.

Sales by product

• total revenue each product line contributes over a defined period
• Competitor insights = product’s performance aligns with market trends? or adjustments are needed?

Profit contribution

• contribution margin (revenue minus variable costs) for each product = which items are most profitable.
• Understand how competitor products are priced or marketed = optimise your product pricing strategies

Sales mix

• the proportion of total sales each product accounts for within your portfolio = determine focus areas
• are competitors gaining market share in a product category you’ve underinvested in? = a missed opportunity for your sales mix

Competitors Product Portfolio Analysis

• Competitor analysis is a component of marketing intelligence
• evaluate competitors’ strengths, weaknesses, strategies, and market positioning
• collect and analyse third-party data: product offerings, pricing, marketing tactics, and customer reviews
• It’s necessary to review regularly not only your own but also competitors portfolios: products, features and market performance
• identify opportunities for differentiation, anticipate market trends and refine product offerings.
• Identify features or services that competitors lack – innovate by introducing unique products that meet unmet customer needs
• track innovations or new product introductions
• competitor reviews and customer opinions = insights into what works and what doesn’t=enhancements or inspire completely new products.
• identify gaps in your offerings: eco-friendly versions of products + rising consumer demand for sustainability = innovation toward environmentally friendly products.
• Understanding the features and functionalities of competitors = innovate = improve those features or create entirely new ones that add value to your product.
• competitors’ customer satisfaction data (reviews) = determine what customers are asking for and deliver products that meet those needs better.

Refining marketing strategies

• Understand competitor pricing models, promotional strategies, and product offerings allows businesses to position their products more effectively
• competitor has positioned itself as a low-cost leader? = choose to compete through differentiation (offer premium products or exceptional customer service)
• absolute low-cost leader vs a more customer-friendly experience (better service and flexible options), without straying far from budget pricing = attract customers willing to pay slightly more for enhanced convenience and service, while still competing in the low-cost market

Identifying market opportunities

• uncover market gaps or underserved customer segments = innovate and develop new products or services = meet unaddressed customer needs
• competitor analysis reveals that no other company in the market is focusing on smth? capitalise on growing consumer demand for this = introduce products=create a unique value proposition. = launch initiatives appealing to such consumers

Guiding strategic decisions

• Competitor analysis = broader market trends and shifts
• stay aware of competitor moves = anticipate shifts in consumer demand = reduce the risk of losing market share
• assess the financial performance and growth trajectories of competitors
• competitor is gaining market share through a new distribution channel (direct-to-consumer (DTC) sales, launching e-commerce platform, branded stores, cutting out traditional middlemen like third-party retailers)? adopt similar strategies or explore alternative routes 

Opportunities for differentiation

• through
  – product innovation,
  – unique value propositions,
  – targeting niche market segments
• where competitors fall short or fail to meet certain customer needs = distinct offerings that set them apart = stronger customer loyalty and brand differentiation

Positioning and benchmarking

• compare marketing tactics, customer engagement levels, and product performance
• tactical decisions: pricing adjustments, promotional strategies, and customer engagement initiatives

How to maintain market share if competitor launches an aggressive marketing campaign or introduces a new product line?
Respond with:
– promotional offers,
– product upgrades,
– enhanced customer services

Product lifecycle management

• Monitor how competitors handle products in introduction, growth, maturity and decline lifecycle stages = inform your decisions ->
  – product updates,
  – rebranding
  – phasing out.

BCG Matrix

• apply competitor intelligence to the BCG Matrix = better assess product positioning
• categorise products based on relative market share and market growth
• decide where to invest resources, which products to develop and which to phase out

• Stars High growth, high market share products that should be invested in. how competitors manage their “Stars“? => insights into your high-growth products.
• Cash cows Low growth, high market share products that generate steady profits and require minimal investment.
• Question marks High growth, low market share products with potential but needing careful management. “Question Marks” may have potential in the market -> compare the performance of similar products from competitors
• Dogs Low growth, low market share products that may require discontinuation.

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A key aspect of understanding an organization’s resources is to undertake a portfolio analysis of the various offerings it has available on the market. It is clear that different businesses within the company are operating in different markets, with different opportunities and threats, and utilizing different corporate skills and resources. It is therefore important to ensure that appropriate objectives and strategies are formulated for each business unit and that these support each other to ensure the sustainability of the corporate entity. The process of balancing activities across this variety of business units involves portfolio planning.

One of the founding fathers of management theory Peter Drucker identified seven types of businesses that still have resonance today:

Today’s breadwinners – the products and services that are earning healthy profits and contributing positively to both cash flow and profits.

Tomorrow’s breadwinners – investments in the company’s future. These are the products and services that may not yet be making a strong financial contribution to the company, but that are in growth or otherwise attractive markets and are expected to take over the breadwinning role in the future when today’s breadwinners eventually fade.

Yesterday’s breadwinners – the products and services that have supported the company in the past, but are not now contributing significantly to cash flow or to profits. Many companies have a predominance of businesses of this type, indicating that they have been slow to invest in future developments.

Developments – the products and services recently developed that may have some future, but where greater investment is needed to achieve that future.

Sleepers – the products and services that have been around for some time, but have so far failed to establish themselves in their markets or, indeed, their expected markets have failed to materialize. These are allowed to remain in the portfolio, in the hope that one day they will take off.

Ego trips – the products and services that have strong product champions among influential managers, but for which there is little proven demand in the marketplace. The company, because of the involvement of powerful managers, continues to put resources into these products in the hope of their eventually coming good.

Failures – the products and services that have failed to play a significant role in the company’s portfolio and have no realistic chance of doing so. These are kept on the company’s books largely through inertia. It is easier to do so than admit defeat and withdraw or divest them.

As they stand, developments, sleepers or ego trips contribute little to the company, but it is hoped that they may one day do so. The markets they are in may be highly attractive but, because of underinvestment, the company has little ability to serve them. If left alone as they are, with no extra investment, these businesses will follow the death cycle and become failures.

Strategically, a company faces a dilemma with these businesses. If left alone they are unlikely to succeed, so a choice has to be made between investing in them, or getting out.

In even the largest companies it is impossible to pursue all attractive markets, so the first portfolio decision is one of double or quits. 

If the choice is to invest, then the aim is to build the business until it is strong enough to become one of tomorrow’s breadwinners. This usually means achieving some degree of market dominance in a growth sector. 

If successfully managed, the product will mature to become one of today’s breadwinners and, as it ages, one of yesterday’s. 

As with all things, the difficulty in the portfolio is not starting ventures, but knowing when to kill them and when to concentrate resources where success can be achieved.