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Great products make great companies, and as enterprises scale, they often add more products and services to their lineups, diversifying their product portfolios to reach more customers and better serve existing ones.
Learn the in’s and out’s of product portfolios, including their benefits and how they vary between mature companies and growth companies. Plus, discover how Productboard can help you best manage your own collection of products.
Think of a company’s product portfolio as its menu; it’s a collection of every product, service and brand that a company offers.
A range of companies, from tech corporations to consumer goods enterprises, maintain product portfolios. While some companies may have a concise portfolio with just one or two product offerings that reach a particular niche, others have nurtured expansive portfolios with products that target a wide customer base throughout various markets.
Sometimes, a company’s range of products are tied to a single industry and has different product lines. For instance, Coca-Cola sells a slate of beverages—and while the iconic company may be associated most commonly with its namesake soft drink, its wider portfolio also includes coffee and tea, juices, water, sports drinks and a recent expansion into the canned cocktail market.
Meanwhile, other companies have a selection of products that span industry sectors and are made up of various categories. Take a look at The Virgin Group, which has a portfolio that includes entertainment, including a music label; health clubs; wireless communications; hotels and a cruise line; plus a commercial space line.
A product portfolio provides companies with a snapshot of which products and services are generating revenue or meeting other business objectives.
The products and services within a company’s product portfolio will differ when it comes to growth rate and market share. This means that products with higher profit margins can help to offset other products that may not generate as much profit, but are still valuable to the company overall , whether that’s because of factors like its growth potential or the fact that a particular product increases the sales of other products within the portfolio. As a result, organizations can decide which products and services to invest in as well as determine how resources should be reallocated.
Product portfolios also allow companies to keep tabs on market trends and pinpoint where there may be existing gaps in your product lines, as well as areas that are ripe for innovation. For instance, let’s say a hair care company that sells shampoos and conditioners has built customer loyalty with its existing products. The company may consider expanding the product line to include scalp scrubs, heat protectants and serums.
A multitude of products can also help a company reach different market segments. As an example, an appliance company could have different brands at different price points with different labels , reaching a range of customers no matter if they’re looking for a luxury product or a more budget-friendly model.
Having lines of products is also essential for product management as it can help companies see how their products and services align with business strategies. This analysis can ultimately help companies determine which products and services are in high demand and deserve more resources, which products could benefit from a rebranding or upgrade and which products should be eliminated altogether because they are losing money and not contributing to other business goals.
By considering relative market share and expected market growth, businesses can use the BCG Portfolio Model to classify their products in one of four categories: Stars, cash cows, question marks, or dogs. Developed by the Boston Consulting Group, this widely used quadrant includes a y-axis that represents industry growth that’s either high or low and an x-axis that shows the number of relative market shares, also with a high or low range. Market share is the percentage of the market that the product serves while the market growth is how fast that market is growing.
By plotting products on the quadrant, product managers and leaders can get a holistic overview of their product profile and determine where to invest.
Here’s what each of the quadrants mean:
Mature companies have been doing business for a long time and tend to have lots of stars and cash cows in their range of goods. This positions these companies to find areas where they can expand and launch products that will meet the growing or changing demands of clients as well as create synergies between their products and services.
Mature companies can also analyze their catalogue and streamline their product lines to maximize profits. Case-in-point: The evolution of Procter & Gamble’s product line. Brothers-in-law William Procter, a candle maker, and James Gamble, a soap maker, founded the consumer goods company Procter and Gamble in 1837. Over the years, the company grew and began selling dozens of products. In 2014, though, P&G strategically streamlined its product portfolio, dropping about 100 of its brands and focusing on the remaining 65 that raked in 95% of the company’s profits. Today, P&G’s portfolio is made up of 10 focused categories with products that range from oral care to laundry care to grooming and baby care.
Managing a product scope for a company that’s in a growth stage can present some unique challenges as there’s a natural tension between innovating and developing new products while also continuing to invest in the top-line, revenue-generating products.
While startup companies have some uncertainties as to how their products will perform once they hit the market, companies in the growth stage have product portfolios that can be evaluated. They likely have a smaller range of offerings than mature companies, and they may not have as many products that have reached star or cash cow status, which makes allocating resources and investing in the right products and services even more imperative.
Many entities launch with a straightforward portfolio, offering a single product, but then diversify to offer a larger selection of goods and services as the company scales.
Take, for instance, Apple, which is today one of the most recognized consumer electronic brands. Steve Wozniak, Steve Jobs, and Ronald Wayne founded Apple (originally Apple Computer Company) in 1976 with the release of a personal computer. It wasn’t until 2007 that Apple released its first-generation iPhone.
Throughout its evolution, the company has expanded the hardware products in its product portfolio—i.e. iPods, iPhones, iPads, Apple TV, etc. But Apple has also added software to its offerings, including operating systems (OS X and iOS) and iTunes and also has services including the App Store for Mac and iOS and the iCloud.
Kodak also has a success story. Customers have associated Eastman Kodak with imaging products since 1984. With the emergence of digital photography, Kodak’s family of products has expanded to include digital photo frames, smartphone accessories, memory cards, photo printers as well as smart home products like baby monitors and security cameras.
Having a well-balanced product scope is good for business and cash flow within an organization. The products that are considered cash cows, for instance, can help enterprises finance other products that might fall into the star or question mark categories. Similarly, those up-and-coming star and question mark products can help replace cash cows should they lose steam.
A diverse product portfolio allows companies to spread risk, generating revenue from different market sectors. Also, when companies offer a wide variety of products, there’s potential to boost brand awareness among existing and new customers, which can increase market share and sales.
Productboard helps product managers understand what customers need, prioritize what to build next, and rally everyone around the roadmap.
If your organization is managing multiple products, you have options with Productboard.
Companies that have interrelated product offerings that have overlapping user bases can manage all products out of a shared Productboard workspace. The Productboard workspace has features like a Shared Insights board, where you’ll have a common repository of product ideas, requests and feedback from customers and colleagues and a Shared Roadmap in which you can visualize all products’ features in a single portfolio roadmap.
Organizations that have product offerings with distinct users and unique prioritization processes for different products will benefit from using multiple Productboard workspaces. Features include granular user permissions so everyone can only access data for the products that matter to them plus discrete insight boards, which have separate repositories of product ideas, requests and feedback from colleagues and customers.
Learn more about how Productboard can help manage your company’s product portfolio.