Product Portfolio Management: 4

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 Introduction
Portfolio management: is steering the process that should
result in a well-balanced and well-aligned set of services,
offered to the connected institutions.
Product Portfolio Management (PPM) involves:-
1) Project selection for the most feasible product
2) Resource allocation
3) Control of;
 Risks
 Maintenance
 Planning horizon

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 Benefits of PPM

 Only the right product project implemented

 Several product portfolios are involved
 Documentation maintained for the entire organization.

Strategic portfolio management

- Considers how resources are split across products
- Methods:-
 Strategic lots
 Strategic road maps

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 Strategic road map
 Ensures that the scheduled project portfolio contributes to
the business strategy and goals
 Strategic road map
- Product road map
- Technology road map
Portfolio review
Involves a holistic process looking at:-
• All products in auction
• Right priorities
• Right mix
• Sufficiency
• Resource adequacy
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 Objectives of the PPM?

 Maximize the value of portfolio i.e., NPV, scoring

model……
 Achieve balance in the products portfolio,
 Select the right number of projects to undertake
 Ensure collection sufficiency vs developmental
goals.

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Product Life Cycle (PLC)
1.Introduction:
The product is launched
2. Growth Stage:
Growing level of adoption
3. Maturity stage:
High, stable level of acceptance
4. Decline stage:
Declining sales - Declining sales.

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February 12, 2023
 Portfolio management Product Life
Extension Strategies
Option 1. Try to get current customers to use the product
more often and, thus, buy more of it
Option 2. Find new customers (users) for the product, as
Johnson & Johnson have done by marketing their baby
powder, shampoo and lotion to all the family, not just as
suitable for babies and small children.
Option 3. Find new foreign customers for the product.
Many companies look for overseas markets for their
products to extend the PLC.

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Portfolio management Strategies at “decline stage”
 Withdrawing the product immediately: No further
production and no sell-off of inventory.
 A slow withdrawal: where production halts but the
inventory is pushed through the distribution chain.
 A phased withdrawal: where the elimination of the
product is milked to maximize returns. This often
involves changing the marketing mix strategy to reduce
costs whilst seeking to increase returns from a core
target market.
 Sell the product: off to a competing company.
 Drop the product: from the standard range an
reintroduce it as a special product.
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 Difficult to locate industry position over the PLC
 Difficult to identify competitors position over
the PLC
 Different product can be entered at different
stages
 No criteria to determine when a product moves
from one stage to another
 Not all products go through the Life Cycle

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 Ansoff’s Growth Matrix – 4 Ways to Grow
Business

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 Portfolio management: Ansoff’s growth
matrix
Four possible growth strategies a company can pursue:
1. Market Penetration strategies- (increasing sales with
your present products in your present markets)
• Buying competitors' customers through special sales
promotion programs.
• Convincing current clients to use more of your
product/service
2. Product development strategies (developing new
products for your existing markets)
• Improved version of existing product
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 Portfolio management: Ansoff’s growth
matrix
3. Market development strategies (developing new
markets for your existing products.
Advertising in a new medium
geographical expansion
new uses for an existing product
4. Diversification (selling new products or services to new
people or markets).
Related and unrelated diversification

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1. Cost leadership- Identify and control cost drivers in
order to achieve cost advantage. Sources of cost
leadership include:
 Economies of scale: learning curve benefits
 Timing: Stocking for prompt delivery
 Location issues: procurement source
 capacity utilization : linked with production
2. Differentiation - Identify and add cost to areas
widely valued by customers and charge premium price
in excess of the added cost.

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 Porter’s Generic Strategies

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1. Cost leadership is where a company achieves lower
cost than its rivals and competes across a broad
range of segments.
2. Differentiation occurs when the company has a
range of clearly differentiated products which appeal
to different segments of the market.
3. Focus strategies are where a company decides to
concentrate on only one segment or few.

February 12, 2023