PRODUCT PORTFOLIO ANALYSIS





Definition


Product portfolio analysis is the process of evaluating all of the items that your company sells in terms of performance, growth potential, and market share. Portfolio studies are performed to assist firms in understanding how their many goods contribute to cash flow. The data generated by a product portfolio analysis can be utilized to determine where and when resources should be allocated.




Why is a Product Portfolio vital for growth?


The primary goal of a product portfolio is to assist organizations in identifying their best and worst-performing items in terms of long-term business success. This does not always imply your top and worst sellers or even your products with the highest margins. Product portfolio goals are to provide various items with varying degrees of growth potential and market share.

Product portfolios are essential components of financial analysis because they provide context and granularity to a company and its major operations. Investors might distinguish long-term value stocks and short-term asset growth prospects.

It aids management in the product development decision-making process. Its advantages include spreading risk, enhancing cash flow, adhering to corporate strategy, optimum resource allocation, and brand awareness.




How does a Portfolio Analysis work?


In a Portfolio Analysis, all of a company’s product/market combinations are investigated on their function one by one.

  • Is there a target audience?

  • Why is this product available?

  • Is a product profitable, for example?

  • Which fixed goal does this product achieve?

  • How long can it continue to do this function?

  • For example, are there any changes to be expected in the position relative to competitors?


  • There are several approaches available to provide answers to these issues.




    How does a Portfolio Analysis work?


    In a Portfolio Analysis, all of a company’s product/market combinations are investigated on their function one by one.

  • Is there a target audience?

  • Why is this product available?

  • Is a product profitable, for example?

  • Which fixed goal does this product achieve?

  • How long can it continue to do this function?

  • For example, are there any changes to be expected in the position relative to competitors?


  • There are several approaches available to provide answers to these issues.




    The Purpose of a Portfolio Analysis:


    The market is constantly changing, and you must keep up. Estimates and assumptions cannot be used to build a successful business. Competitive intelligence allows you to comprehend your competitors’ motivations and behavior. Understanding their mindset and goals allows you to shape your product development, pricing, and brand positioning. The foundation of your company’s strategy is competitive intelligence.

  • Identify the mutual relationships between product/market combinations and vitality.

  • Compel people to make decisions.

  • Create support for the changes.

  • Investigate and contrast the performance of product/market combinations.


  • Methods for Product Portfolio Analysis:


    Regardless of size, market, or sector, the finest product portfolio methodologies and procedures require real-time data collection and consistent analysis as opposed to annual or quarterly. There are numerous forms of data analysis and approaches to data, including:

  • Evaluation of Business Cases

  • Analysis of Product Scenarios

  • Product Sensitivity Testing

  • Analysis of Portfolio Variance

  • Product Risk Assessment Portfolio Management





  • What exactly is a Product Portfolio strategy?


    Product portfolio strategy refers to the plan and initiatives made by management to generate goods that align with the company’s objectives, coordinate with existing offerings and market demands, and assist the organization in meeting its objectives. It focuses on allocating resources to diverse product development projects while maintaining proportionality with priority. An excellent plan increases revenue profitability potential while decreasing product failures.


    Methods for Product Portfolio Analysis:


  • Evaluation of the present product portfolio:

  • Assessing your company’s present product portfolio is the first step in building a product portfolio strategy. This includes assessing each product’s market performance, customer satisfaction, profitability, and strategic fit with your overall goals. Consider the product lifecycle stage as well as any impending product launches or retirements.



  • Product opportunities must be identified:

  • After you’ve evaluated your present product portfolio, you may start looking for new product opportunities. Conducting market research, understanding client wants and preferences, and staying current on industry trends and technical breakthroughs are all part of this. You should also think about the competitive landscape and any prospective disruptors that might affect your product line.



  • Alignment with the business goals and achievements of the organization:

  • Following the identification of possible product opportunities, it is critical to align them with your organization’s business goals and outcomes. This entails assessing each product opportunity in terms of its strategic fit with your business goals, potential for growth and profitability, and alignment with your overall product vision and roadmap.



  • Product prioritization based on strategic fit and potential for growth and profitability:

  • After you’ve assessed your present product portfolio and found possible product prospects, you can start prioritizing products based on their strategic fit as well as their potential for growth and profitability. Considerations include market size, customer demand, income potential, and development cost.



  • Resource allocation for product development and maintenance:

  • After you’ve determined your product priorities, you may devote resources to product development and maintenance. Determine the proper degree of investment for each product, establish development timeframes, and allocate resources across product management, engineering, and marketing.



  • Portfolio monitoring and adjustment throughout time:

  • It is critical to monitor and change your product portfolio continuously. This entails monitoring product performance, assessing market trends and consumer input, and altering product priorities and investments accordingly. You can guarantee that your product portfolio strategy stays effective and connected with your organization’s business goals by frequently analyzing it and making improvements as needed.




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