Organizing a Balanced Product Portfolio: a Guide for PMs

A product portfolio is a collection of all the products or services offered by a company. You know that.

However, organizing this portfolio can sometimes be a daunting task, especially in a dynamic market environment. To effectively organize a product portfolio, you need to adopt a strategic and systematic approach.

Organizing a Product Portfolio

Firstly, you need to categorize your products based on their market performance. This can be done using the Boston Consulting Group (BCG) matrix, which categorizes products into four categories: cash cows, stars, question marks, and dogs. Cash cows are the products that generate more revenue than the investment put into them. Stars are high potential products in growing markets. Question marks are products with high growth potential but low market share, while dogs are products with low growth potential and low market share.

Secondly, you need to prioritize the products based on their strategic importance to the company. This can be done using the GE/McKinsey matrix, which evaluates products based on their market attractiveness and business strength.

Finally, you need to align your product portfolio with your company’s strategic objectives. This involves ensuring that your product mix supports your company’s growth strategy, competitive positioning, and financial objectives.

Understanding a Balanced Product Portfolio

A balanced product portfolio optimizes the mix of products to maximize overall portfolio profitability while minimizing risk. It consists of a mix of new products, growth products, mature products, and end-of-life products.

New products are those that are recently launched and are in the introductory phase of the product life cycle. Growth products are those that are in the growth phase and are experiencing rapid sales growth. Mature products are those that are in the maturity phase and have stable sales. End-of-life products are those that are in the decline phase and are experiencing a drop in sales.

A balanced product portfolio ensures that the company has a steady stream of cash flow from its mature products while investing in new and growth products to fuel future growth. It also ensures that the company is not overly dependent on a single product or a single market, thereby reducing risk.

Practical Tips for Managing a Product Portfolio

As a product manager, there are several practical tips you can use to manage your product portfolio effectively.

1. Regularly review your product portfolio: This involves conducting regular portfolio reviews to assess the performance of each product and make necessary adjustments.
2. Use portfolio management tools: There are several portfolio management tools available that can help you analyze and manage your product portfolio effectively. These tools can help you track the performance of each product, identify trends, and make informed decisions.
3. Involve key stakeholders: It’s important to involve key stakeholders in the portfolio management process. This includes sales, marketing, finance, and operations. Their input can provide valuable insights into market trends, customer needs, and operational constraints.
4. Be proactive in managing product life cycles: This involves actively managing the life cycle of each product in your portfolio. This includes launching new products, growing existing products, managing mature products, and phasing out end-of-life products.

Product Portfolio Example

To illustrate, let’s consider the product portfolio of a company like Apple. Apple’s product portfolio includes a mix of new products (like the iPhone 12), growth products (like the Apple Watch), mature products (like the iPhone 8), and end-of-life products (like the iPod).

Apple regularly reviews its product portfolio and makes necessary adjustments. For example, it phased out the iPod as sales declined and invested in the Apple Watch as it saw growth potential. It also uses portfolio management tools to track the performance of each product and make informed decisions. Finally, it involves key stakeholders in the portfolio management process, including sales, marketing, finance, and operations.

To Wrap Things Up

In conclusion, organizing and managing a product portfolio is a critical task for any product manager. By adopting a strategic and systematic approach, you can effectively manage your product portfolio and ensure that it supports your company’s strategic objectives.