Product Portfolios – GCSE Business AQA Revision

Overview of Product Portfolios

A product portfolio is the collection of all the products or services offered by a company.
These products can be differentiated on many bases such as their level of maturity, profitability or their function.

Businesses often use models like Boston Matrix and Ansoff Matrix to analyse their product portfolio.
The Boston Matrix is a model that evaluates products on the basis of their market share and the growth rate of the market.
The Ansoff Matrix is useful in determining whether to introduce new products or adapt existing products to achieve growth.

Companies need to strike a balance in their product portfolio, considering aspects like risk, profitability and growth potential.
This is because different products in the portfolio will be at different stages of their lifecycle, each contributing differently to the overall profitability.
Some products will be in the growth phase, offering potential for increased sales, while others might be in the maturity or decline phase, offering steady or diminishing returns.

Companies often adjust their marketing strategies to match the stage of product in its lifecycle in the product portfolio.
For example, an innovative new product may require a different strategy in contrast to a well-established high-selling product.
It also helps businesses identify spaces for launching new products in the market.

A diverse product portfolio can help to spread risk. If one product fails, others may still be successful.
It provides a variety of sources for profits.
Also, the ability to meet multiple needs of a customer can strengthen the relationship with them.

A larger product portfolio could require more resources and additional management.
It can also confuse customers if not marketed well.
Not all products in the portfolio will necessarily be profitable. However, they might still be necessary to complete the range or to meet certain customer needs.