Product Portfolio

Analysis
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Product portfolio analysis looks at the range of products and brands

(product portfolio) that a firm has under its control. This type of
analysis can help a firm identify where every single one of its products
is positioned in the market.

Product Portfolio Analysis

Perhaps the most common type of product portfolio analysis that firms
use to analyse their product mix is the BCG Matrix. The AQA
specification states that students need to know this form of product
portfolio analysis.

TATA group runs a business Empire. How many different type

of products does they have under its control?

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2.15 Product
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Product Life Cycles and the BCG Matrix

Product Life Cycle

shows the stages that
products go through
from development to
withdrawal from the
market

Product Portfolio
the range
of products a
company has in
development or
available for
consumers at any one
time

Managing product
portfolio is important for
cash flow
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BCG Matrix

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The BCG Matrix

The BCG Matrix:
A means of analysing the product portfolio and
informing decision making about possible marketing
strategies
Developed by the Boston Consulting Group a
business strategy and marketing consultancy in
1968
Links growth rate, market share and cash flow

What do
these terms mean?
5

BCG Matrix key terms..

Drawing the BCG Matrix

The BCG Matrix - STARS

Stars products in markets experiencing

high growth rates with a high or increasing

share of the market
- Potential for high revenue growth

The BCG Matrix Cash Cows

Cash Cows:
High market share
Low growth
markets maturity
stage of PLC
Low cost support
High cash revenue
positive cash
flows
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The BCG Matrix - Dogs

Dogs:
Products in a low
growth market
Have low or declining
market share (decline
stage of PLC)
Associated with
negative cash flow
May require large sums
of money to support

Is your product starting to

embarrass your company?

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BCG Matrix - ? Problem child

Question mark ???

Or Problem Child:
Products having a low
market share in a high
growth market
Need money spent to
develop them
May produce negative
Problem children worth spending
cash flow
good money on?
Potential for the future?
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The BCG Matrix

Market Growth
HighProblem Children

Dogs

Low

Stars

Cash Cows

Market Share
High
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What stage of the BCG Matrix are

these at?

Put these onto a grid

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BCG Matrix Grid

Market Growth

Problem Children

Stars

Dogs

Cash Cows

High

Video

Low

High
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Market Share

The BCG Matrix

Implications:
Dogs:
Are they worth persevering with?
How much are they costing?
Could they be revived in some way?
How much would it cost to continue to support
such products?
How much would it cost to remove from the
market?
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The BCG Matrix

Implications:
Problem Children:
What are the chances of these products
securing a hold in the market?
How much will it cost to promote them to a
stronger position?
Is it worth it?

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The BCG Matrix

Implications:
Stars:
Huge potential how?
May have been expensive to develop
why?
Is it worth spending money to promote?
What issues are there with product life
cycle?
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The BCG Matrix

Implications:
Cash Cows:
Why are they cheap to promote?
Generate large amounts of cash are these
used for further R&D?
Do you think there are any costs of developing
and promoting these products?
Is there a need to monitor their performance
the long term?
What stage of the PLC are these at?
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The Product Life Cycle and the

BCG Matrix
Importance of
(3)
Cash
from
(2)
Cash
from
B
maintaining
a C
(1)
A
is
at
maturity
The
product
used
support
balance
of
products
used
to
support
stage to
cash
cow.
portfolio

four
growth
of funds
D
and
in
the
portfolio
atfor
Generates
C
through
growth
products
in
the
possibly
toto
finance
different
stages
ofof
the development
stage
and
portfolio
the
PLC D.
BCG
extension
strategy
D
launch
A Matrix
now
helps
with the
for
B?
possibly
a dog?
analysis

Sales
(1)

(2)

(3)

D
A

C
Time
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http://www.authorstream.com/Presentation/Sanjaysks344804-itc-education-ppt-powerpoint/
http://www.slideshare.net/ranjanvarma/bcg-matrix-foritc-ltd

Portfolio Analysis
GE Tool for Analyzing Opportunities &
Ability to Compete

GE Portfolio Analysis

Classification of SBUs/products into nine

cell matrix based on
Market Attractiveness
Multiple Indicators

Business Strength
Multiple Indicators

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Steps In Developing GE Matrix

1. Select Factors & Indicators.
2. Assign each indicator a weight (total = 1)
based on its importance.
3. Rate the industry on industry indicators
and company on business indicators on
scale of 1(weak) 5 (strong).
4. Multiply weight times rating and total for
summary measures.
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GE Portfolio Analysis
Sample Industry/Market Indicators
Market Factors
Size
Growth Rate
Cyclicality
Seasonality

Competition
Type of competitors
Degree of Concentration

Financial & Economic

Contribution Margins
Barriers to Entry or Exit
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GE Portfolio Analysis
Industry/Market Indicators
Technological
Patents & copyrights
Will it become obsolete

Sociopolitical
Social attitudes & trends
Laws & government regulations

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GE Portfolio Analysis
Business Strength Indicators
Market
Companys Market Share
Companys Sales or Share Growth Rate

Competition
Strength of product, promotion, price, distribution,
financial resources, management relative to
competition

Financial & Economic

Companys Margins
Economies of scale
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GE Portfolio Analysis
Business Strength
Indicators
Technological
Companys ability to cope with change
Technological skills
Patent Protection

Sociopolitical
Companys responsiveness & flexibility

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GE Portfolio Example
Market Factor

Weight

Rating (1- 5)

Value

Size
Growth
Profit Margins

.33
.33
.34

5
3
2

Business
Market Share
.33
Product Quality .33
Distribution Net .34

1.65
.99
.68
3.32

1
5
2

.33
1.65
.68
2.66

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Thank You
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