Good morning everyone. Today, we’re going to talk about Product Portfolio Analysis, a topic that helps businesses understand how their different products are performing. Think of it like a report card for a company’s products — showing which ones are doing well, which need improvement, and which might be on their way out.
So, what exactly is product portfolio analysis? It’s basically when a business looks at all the products or brands it sells to decide which ones to develop, maintain, or discontinue. This helps the business balance its risks and use its resources wisely. Two main tools help with this: the Product Life Cycle and the Boston Matrix.
Let’s start with the Product Life Cycle, or PLC. This describes the different stages a product goes through — from being new to eventually declining. There are four key stages: introduction, growth, maturity, and decline.
In the introduction stage, the product is new. Sales are usually low because people don’t know about it yet, and marketing costs are high since the business is trying to spread awareness. Then comes the growth stage, where sales rise quickly, profits increase, and competitors start entering the market. After that, we have the maturity stage, where sales reach their highest point, but competition is very strong. Finally, there’s the decline stage, where sales and profits fall, often because customer tastes change or new technology replaces the product.
At each stage, marketing decisions also change. During the introduction stage, businesses promote heavily and may offer lower prices to attract customers. In the growth stage, they try to build brand loyalty and stand out from competitors. During maturity, they use extension strategies to keep the product alive — like changing the packaging, adding new features, or creating new versions. And when the product reaches decline, the business might decide to discontinue it or reposition it in a smaller market.
Now, let’s look more closely at extension strategies. These are techniques businesses use to extend the life of a product. For example, they might release updated versions, target new markets, or use special promotions. A great real-world example is McDonald’s, which regularly adds limited-time items or themed promotions to keep its menu interesting.
Next, we have the Boston Matrix, another useful tool. It helps businesses analyse their products based on market share and market growth. The Matrix divides products into four groups — Stars, Cash Cows, Question Marks, and Dogs.
Stars are products with a high market share in a fast-growing market. They make good profits but need investment to keep growing. An example would be the Tesla Model Y, which sells well in the growing electric car market.
Cash Cows are products that dominate a slow-growing market and make steady profits, like Microsoft Office.
Question Marks, sometimes called Problem Children, have a small market share in a fast-growing market. They might need a lot of investment to succeed — for example, a new plant-based meat brand trying to compete with established companies.
And finally, Dogs are products with low market share in a low-growth market. These are often old or outdated, like MP3 players, which most people no longer buy.
So, how does this analysis help with marketing decisions? Well, it helps businesses decide where to invest and which products to focus on. For example, companies usually invest in Stars and Question Marks, because they have potential for growth. Cash Cows generate money that can be used to fund other products, while Dogs might be discontinued to save costs.
It also affects marketing strategies. Products with high growth may get more promotion, while mature products might rely on pricing or packaging changes. For instance, a company may reduce spending on a Dog product and instead put more resources into developing a Question Mark product, hoping it becomes a Star.
To wrap up, product portfolio analysis is a very useful part of marketing strategy. It helps businesses understand how their products are performing and where they should focus their efforts. The Product Life Cycle shows the stages of a product’s life, and the Boston Matrix helps classify products based on performance and growth potential.
