Datta Meghe Institute of Management Studies Product & Brand Management Unit 1 Lecture 3 Product portfolio decisions. 1

Datta Meghe Institute of Management Studies Syllabus Unit 1 - product portfolio decisions 2

Datta Meghe Institute of Management Studies Learning objectives 3 What are product portfolio decisions

Datta Meghe Institute of Management Studies Product Portfolio  Product portfolio is the set of different products that an organization produces, ideally balanced so that some products are mature, some are still in their growth stage while others are waiting to be introduced.

Datta Meghe Institute of Management Studies Product Portfolio  Portfolio Management has become one of the hot topics in industry over the last 3-5years  Today emphasis comes primarily assigned to “new product development’’ & “product innovation” over the last few years because of increasing competitive pressures inmost industries  Portfolio Management has become one of the hot topics in industry over the last 3-5years  Today emphasis comes primarily assigned to “new product development’’ & “product innovation” over the last few years because of increasing competitive pressures inmost industries

Datta Meghe Institute of Management Studies Product Portfolio  Portfolio Concept : The portfolio of any unit or an entire company should be viewed in four quadrant model, which depicts a normal progression of typical portfolio stages in anti clockwise order starting from upper left corner  Portfolio Concept : The portfolio of any unit or an entire company should be viewed in four quadrant model, which depicts a normal progression of typical portfolio stages in anti clockwise order starting from upper left corner

Datta Meghe Institute of Management Studies Product Portfolio UPPER LEFT QUADRANT (I) Long term product planning Example : Maruti - Capricorn UPPER RIGHT QUADRANT (IV) Products either in decline or exit phase of life cycle Example : Maruti – 800 LOWER LEFT QUADRANT (II) New products in pipeline Example : Maruti – Gemini, Taurus LOWER RIGHT QUADRANT (III) Products already introduced and announced Example : Maruti – SX4, Swift, Swift-Dzire, Ritz, A-star, Zen-Estilo, Wagon-R, Alto

Datta Meghe Institute of Management Studies Product Portfolio  1. Upper Left Quadrant : Represents products in long term planning. These products and projects are in “vision” state, 3-5 years out in time They are being projected against the corporate strategy, goals and objectives, customer needs, market research exercises, competitors behaviors etc.  1. Upper Left Quadrant : Represents products in long term planning. These products and projects are in “vision” state, 3-5 years out in time They are being projected against the corporate strategy, goals and objectives, customer needs, market research exercises, competitors behaviors etc.

Datta Meghe Institute of Management Studies Product Portfolio  2. Lower Left Quadrant : Covers new product development projects which are in pipeline This is the portfolio management quadrant where most of the emphasis has been placed in recent years by academics and consultants as well as by most businesses which have more recently just begun implementing portfolio management disciplines  2. Lower Left Quadrant : Covers new product development projects which are in pipeline This is the portfolio management quadrant where most of the emphasis has been placed in recent years by academics and consultants as well as by most businesses which have more recently just begun implementing portfolio management disciplines

Datta Meghe Institute of Management Studies Product Portfolio  3. Lower Right Quadrant : Represent all products already announced and introduced. These are products undergoing active life cycle management in order to optimize the revenues and margins The individual life cycle phases of products in this quadrant are typically called growth and maturity  3. Lower Right Quadrant : Represent all products already announced and introduced. These are products undergoing active life cycle management in order to optimize the revenues and margins The individual life cycle phases of products in this quadrant are typically called growth and maturity

Datta Meghe Institute of Management Studies Product Portfolio The object of portfolio management activities in this quadrant is to optimize the revenues and profits of all products such that maximum amount of funding for new product projects can be continually made available to the project managers and developers of new products

Datta Meghe Institute of Management Studies Product Portfolio  4. Upper Right Quadrant : Products in this quadrant are in either the decline or exit phase of their life cycles While they may still be revenue and margin producing until final exit from market place, their returns are usually are considerably lower at this stage than those products still in previous quadrant  4. Upper Right Quadrant : Products in this quadrant are in either the decline or exit phase of their life cycles While they may still be revenue and margin producing until final exit from market place, their returns are usually are considerably lower at this stage than those products still in previous quadrant

Datta Meghe Institute of Management Studies Product Portfolio  Logic for portfolio approach : Portfolio management has been studied, documented and discussed for decades. Some companies have done an excellent job of establishing and maintaining core competencies in this key business function  Logic for portfolio approach : Portfolio management has been studied, documented and discussed for decades. Some companies have done an excellent job of establishing and maintaining core competencies in this key business function

Datta Meghe Institute of Management Studies Product Portfolio  There are five activities the product manager should perform relative to evaluating the product portfolio  i). Maintain a Database on existing products : The product managers first job related to evaluating the product portfolio is to ensure that product related information is gathered which is useful for analysis and decision making  There are five activities the product manager should perform relative to evaluating the product portfolio  i). Maintain a Database on existing products : The product managers first job related to evaluating the product portfolio is to ensure that product related information is gathered which is useful for analysis and decision making

Datta Meghe Institute of Management Studies Product Portfolio This is called product fact book, where all information is centrally located. The fact book can be in the form of three-ring binder, a manual filing system, or an electronic database

Datta Meghe Institute of Management Studies Product Portfolio  ii) Evaluate product performance : Aspects to evaluate product performance include : sales through customer segment, channel of distribution, seasonable fluctuations in demand, the awareness and preferences level for the product, rate of repeat purchases and the planned-to-actual performance  ii) Evaluate product performance : Aspects to evaluate product performance include : sales through customer segment, channel of distribution, seasonable fluctuations in demand, the awareness and preferences level for the product, rate of repeat purchases and the planned-to-actual performance

Datta Meghe Institute of Management Studies Product Portfolio  iii) Add value to existing products: Both the competitive matrix and profile approaches just described compare the product against its competitors along established factors The typical objective is to improve attributes that are competitively weak. If this also results in price reduction, it can more beneficial from the customers point of view  iii) Add value to existing products: Both the competitive matrix and profile approaches just described compare the product against its competitors along established factors The typical objective is to improve attributes that are competitively weak. If this also results in price reduction, it can more beneficial from the customers point of view

Product Portfolio  iv) Increase Market Penetration: Another tactic the product manager could use is to boost sale volume by increasing the number of users and the usage rate per user The number of users can be increased by making favorable changes in products by studying customers needs and competitors products, analyzing new customer segments and converting non users in to users

Datta Meghe Institute of Management Studies Product Portfolio To increase the number of users, a product manager must collect three types of information : (i) Why customers buy competitors products (ii) What if anything could convince non users to become users of the product (iii) Which market segment is attractive and accessible?

Datta Meghe Institute of Management Studies Product Portfolio  v) Evaluate the product line: Particularly when the line is comprised of fast moving consumer goods (FMCG), first the data needs to be maintained on each item in the line Try to determine whether customers can substitute a filler product if core product is out of stock or they opt to buy a competitive product  v) Evaluate the product line: Particularly when the line is comprised of fast moving consumer goods (FMCG), first the data needs to be maintained on each item in the line Try to determine whether customers can substitute a filler product if core product is out of stock or they opt to buy a competitive product

Datta Meghe Institute of Management Studies Product Portfolio Add the value to the product line by (a) adding products that enhance the competitive positioning and increase brand equity or (b) deleting products that are not important to the target market Finally increase market penetration by generating more usage through a carefully planned marketing communicating strategy Add the value to the product line by (a) adding products that enhance the competitive positioning and increase brand equity or (b) deleting products that are not important to the target market Finally increase market penetration by generating more usage through a carefully planned marketing communicating strategy

Datta Meghe Institute of Management Studies Summary Product portfolio is the set of different products that an organization produces, ideally balanced so that some products are mature, some are still in their growth stage while others are waiting to be introduced. The portfolio of any unit or an entire company should be viewed in four quadrant model, which depicts a normal progression of typical portfolio stages in anti clockwise order starting from upper left corner 24

Datta Meghe Institute of Management Studies Assignment Explain product portfolio in HUL, explain in Details about its Product portfolios? LAQS and SAQS Explain Product Portfolio Explain four quadrants of product Portfolio Explain Market penetration product line Explain product portfolio in HUL, explain in Details about its Product portfolios? LAQS and SAQS Explain Product Portfolio Explain four quadrants of product Portfolio Explain Market penetration product line 25

Datta Meghe Institute of Management Studies Reference Marketing Management – Kotler, Keller, Koshy, Jha Principles of Marketing – Kotler, Armstrong, Agnihotri, Haque Marketing Management – Kotler, Keller, Koshy, Jha Principles of Marketing – Kotler, Armstrong, Agnihotri, Haque 26