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Product Portfolio Management for Marketing


In the modern business world, people have to deal with several tasks and duties to achieve their goals, comprehend their abilities, and investigate outside sources and competitors. Any ordinary business model includes such processes as the selection of customers, the definition of products and services, the creation of values, the investigation of the market, and the evaluation of the competitors and existing policy prices (Hill, Schilling & Jones 2016). However, these steps are not enough to succeed in strategic management.

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Therefore, it is necessary to think about other aspects of strategic management that could be offered to companies with different goals and orientations. The process of strategic management should include such concepts as personal and professional commitment, decision-making activities, thoughtful actions that help to pursue competitiveness and gain benefits (Hitt, Ireland & Hoskisson 2016). Competitive advantage is a crucial factor for any company because it proves or disproves the possibility of an organisation to create a strategy and cooperate with customers at a high level.

There are many ways to achieve this kind of advantage, and the development and management of a product portfolio are the possible options. In this paper, the attention to product portfolio management and its main characteristics will be paid. Cooper (cited in Tajvidi & Kamari 2016) teaches managers that two things matter in successful product development: “doing the project right” and “doing the right project” (74). Therefore, product portfolio management has to be properly organised by companies to choose appropriate allocations, effective marketing activities, and working strategic decisions that help to gain market positions.

As a rule, organisations have more than one product and services, and the idea to use the product portfolio seems to be the best management solution in different fields (Hollensen 2015). This paper aims to discuss product portfolio management as one of the key concepts of strategic management and prove its vitality for different companies regardless of their age, location, and size using theoretical perspectives and practical foundations.

Strategic Management Basics

Strategic Management Background

Strategic management is the process that is based on the identification and implementation of the goals. This process may be organised by one person or several people gathered in one team. To comprehend the essence of any strategic management action, it is better to learn the roots of the word “strategy” and its development through the ages. In Ancient Greece, the word “strategy” had the meaning of an army or the responsibilities a leader had to complete (Prasad 2015). With time, a strategy became the definition of military activities that are used to win a competitor.

Today, people use the word “strategy” in different contexts. In business, a strategy is a step taken by a person or a group of people to keep in business and succeed (Prasad 2015). Strategies are used not only when a goal should be achieved, or an enemy should be defeated. Strategies are used by companies to develop their products and services and investigate their opportunities. The nature of strategies may vary considerably including political concerns, business concepts, and ethical aspects because leaders, as the main developers and supporters of strategies, may be interested in all above-mentioned points (Ratcliffe 2013).

Modern Value of Strategic Management

Nowadays, people have access to numerous strategies in the field of management. Sometimes, it is easy to choose due to the presence of such crucial factors as employees’ interest, company’s positions, customers’ identification, and competitors’ achievements. However, it also happens that people need to deal with numerous challenges before introducing a new strategy and the ways how the ideas may be applied. Many companies struggle with strategy execution, and more than 70% cannot even meet the required results without even speaking of unexpected benefits and financial returns (Huy, 2016). Therefore, modern business and strategic management have to be thoroughly investigated to clarify the nature of changes that occur in business and make people use different strategies which help to stabilise the environment and achieve all organisational goals.

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Modern strategic thinking is characterised by the possibility of a company to orient on the internal and external environment at the same time. The analysis of the company’s internal environment helps to recognise company’s technical, economic, and organisational components which could be used in the external environment to conquer the competitor and provide customers with the best services. Companies hire people so that they could develop new methods of gathering information, analysing strengths and weaknesses of the companies, and introduce the ways to improve the current state of affairs. Strategic managers have access to different sources. The recent studies prove that any kind of evaluation promotes a new strategy being used to meet the needs of stakeholders. In this paper, the attention to the value of a product portfolio as one of the possible strategies in management is paid.

The Essence of Product Portfolio Management


A product portfolio is a strategy within the frames of which all products and services that could be offered by the company are collected and explained clearly and effectively. There is no necessity to spend much time and search for the required portion of the material but rely on the system where enough information is given. Management of production is crucial for any company because it is characterised by certain outcomes (Scherling 2016). Though not all products and services may perform important functions in a company, there is always a list of several points which predetermine the quality of work and the level of competitive advantage.

Product portfolios may be compared to different portfolios of bonds and stocks (Scherling 2016). They are usually introduced as a mix of products which are united by one or several mutual goals and help companies achieve their benefits and promote the returns. Product portfolio management is a complicated process that makes people think of the best approaches to select projects, resource allocation, and investigate possible risks, returns, growth, and challenges.

Main Characteristics of a Product Portfolio

Though it is hard to be sure that all projects, products, and services are chosen properly, this type of management is used to define the steps that make the completion of this goal possible. It is wrong to believe that one or two people may be involved in this procedure. A whole company is usually taken into consideration when product portfolio management has to be developed. It is also necessary to underline that product portfolios are not about the selection processes only.

In addition to the evaluation and selection of products, certain decision-making processes have to be considered. In case these aspects of product portfolio management are defined, an organisation gets all chances to increase its returns, succeed in product innovation, and choose the investments that are beneficial in the future. In other words, today’s new products and services can decide tomorrow’s market profiles of companies (Product development institute 2017).

Importance of Classifications

Product portfolio management has to be thoroughly learned as a strategy, a process, and a concept because it introduces the possibilities to succeed in cash and human resource managing (Hollensen 2015). Any portfolio has to be balanced and categorised because products may vary in the same company considerably.

As a rule, companies are offered to focus on three main layers of products and services segmentation. First, there are different groups of products which are separate categories where numerous products and services could be located. Second, there are specific product lines which are present in each category and have peculiar features. Finally, there are individual products and services which are usually offered to people to earn money and other important benefits. Management turns out to be a crucial process because it helps to make choices and select products which are most appropriate for a particular company.

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However, not many companies are aware of the peculiar features of successful product classification. As a rule, they know that certain classification should be developed to clarify what products are beneficial for an organisation and should be put in the first place, and the production of which products may be reduced due to low demand or inappropriate pricing.

There are many ways to succeed in classifications for a product portfolio. Still, the idea to use the BCG matrix turns out to be one of the most reasonable and effective steps (Bhasin, 2016). First, it helps to define the basis of the market in terms of which products may be produced, developed, and offered. Second, it may be used to clarify the conditions under which productivity growth is possible (Bhasin, 2016). Finally, neither much time nor many efforts are required to succeed in the development of such a matrix and understand the level of its competitive advantage over other companies in the same sphere. The analysis of the company and the market based on the BCG matrix shows the relationships between the cash flows of all products separately and together and describes the ways of how the data could be changed to achieve the required value and advantage.

Conceptual Perspectives of Product Portfolio Management

To understand how companies could benefit from product portfolio management, it is necessary to identify the main concepts of this process and describe its crucial points. For example, it is obligatory to know the goals of product portfolio management, the types of management, and the needs of portfolio managers. These are three concepts for consideration in this paper.

Needs for Product Portfolio Managers

A product portfolio helps people recognise what kinds of products are available and what kind of work should be done to meet the needs of a company. At the same time, any product portfolio has to be managed properly. Therefore, product portfolio managers have to understand their needs to clarify the goals of this process.

Product portfolio managers need:

  • Good investment plans which identify income, budget, risks, and abilities;
  • Risk minimisation because it is hard to guess the outcomes of the choices made by the team;
  • Understanding customers’ needs and expectations using the products that are offered by a company and its competitors;
  • Effective solutions could be made based on the analysis.

It is wrong to believe that product portfolio managers cannot understand their needs. Still, as soon as they are recognised, another stage of management could be considered.

Goals of Product Portfolio Management

Product portfolio managers understand their goals. It is high time to investigate how product portfolio management can help managers find solutions to their problems. The goals of product portfolio management are:

  • To underline the value of all products that could be developed or obtained by a company. Managers have to answer one simple question: “Does the product portfolio has an appropriate structure to contribute to the value of products?”;
  • To minimise the risks of having inappropriate products in a company. Managers are obliged to answer the following question: “Are all products important and beneficial for a company?”;
  • To allocate all organisational resources properly to make the necessary limitations and be able to invest in the right products. The question to be answered is “Has everything possible been done to minimise the financial and human resources of a company?”;
  • To identify the most optimal solutions for a company in choosing products. There is one question that has to be posed: “Is the company ready to invest in products and gain benefits?”.

All these goals help managers to understand what they can do in their companies when they choose product portfolio management as the main strategic tool in the working process.

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Types of Product Portfolio Management

The effectiveness of product portfolio management is determined by the analytical model (or models) offered by managers, as well as by the methods managers want to use.

  • Product portfolio management may be active (when managers use products to develop new categories where all products meet the including criteria);
  • Product portfolio management may be passive (when managers have to put the already chosen product in the already defined categories);
  • Product portfolio management may be dimensional (there are two dimensions in the matrix used for the analysis, product-market attractiveness and competitive advantage).

In general, all these characteristics and concepts help to clarify the nature of product portfolio management and its importance in organisations. Managers use product portfolios to find out the best and cheapest methods to define and deliver products and meet the expectations of customers before competitors take the same steps.

Theoretical Perspectives of Product Portfolio Management

In addition to a conceptual framework, it is also necessary to develop a theoretical framework for the topic to clarify what different theories may say about product portfolio, the importance of its management, and the methods of integrating new products in product portfolios. Clark and Wheelwright, Cooper, and Patterson investigated the theme of product portfolio management thoroughly in different decades (Jugend & Silva 2014).

For example, Clark and Wheelwright developed the theory that new product development may fail in case the errors in product portfolio management occur. Therefore, the functional integration of the resources is the core aspect of product portfolio management. Cooper and the team promote the idea of conducting planned business strategies to ensure product portfolios (Jugend & Silva 2014). According to these theorists, product portfolio management is responsible for the introduction of new products as well as their revisions and possible updates.

Their achievements help to develop a guide for product portfolio managers and understand what kind of work should be done to clarify what products should be introduced to customers, when, and how. Patterson developed a model with the help of which product portfolio management may be developed. There is a negotiation strategy with strategic planning and systematic revisions companies may rely on (Jugend & Silva 2014). The approach developed by Patterson proves the possibility of making mistakes in product portfolio management but the necessity to make corrections and achieve the required results.

Marketing Models and Industry Examples


Many types of models could be offered to product portfolio managers. In addition to decision-making approaches, new methods deserve attention. For example, there are financial models based on the evaluation of the traditional net present value, internal rates of return, and existing payback methods. There are also scoring and checklist models within the frames of which certain qualitative questions are posed to identify the drivers, market attractiveness, and product advantage. Certain behavioural models are offered to find out a consensus among managers. These activities are based on qualitative information that could be available in the early stages of the company’s development.

Real-Life Examples

Any model developed in terms of product portfolio management aims at promoting the company’s growth and competitiveness. Such companies as Red Bull, Apple, Lego, and Nintendo Wii have already demonstrated several methods and the possibility to achieve the required competitive advantage and become world leaders in the chosen industries (Hollensen 2015). The development of product portfolios helped these companies to identify their full potential and compare it with one of their competitors. Neither the industry the size of the company played a crucial role in the creation of such portfolios. The only thing that mattered was the ability to identify the products, classify them, and use the results to underline the strengths and clarity the opportunities. Product portfolios may also be used as the part of SWOT analysis where much attention is paid to what a company can and cannot do.


Taking into consideration the concepts, theoretical perspectives, and examples demonstrated by different companies, it is possible to develop a list of recommendations with the help of which companies could understand how to succeed in product portfolio management.

  1. It is very important to watch over a working process before the actual creation of a product portfolio. It helps to separate internal and external threats and identify the products that may introduce the worth for the company.
  2. It is recommended for managers to implement as many supportive tools as possible because it is hard to predict what aspect of the work may be at risk. Product portfolio managers have to be ready to improve the work of the company by any means.
  3. It is obligatory to think about product success and take the steps that support the ideas of competitiveness. As soon as people start thinking about the importance of competitive advantage, they are ready to develop interesting ideas and implement them in a short period.
  4. It is never too late to start communicating. It is the main recommendation that can gather all previous suggestions. Even if people have many ideas and tools to promote the development and introduction of new products, not much success could be achieved if these ideas are poorly communicated. Managers have to discuss different aspects of their work, share their opinions, and investigate the market. Constant action and cooperation should be part of product portfolio management.


In general, product portfolio management is a crucial topic for discussion in many leading firms and developing companies that aim at promoting their new products and understand the worth of the already offered project. It is necessary to understand that product portfolio management is not a selection only. It is a process that consists of several steps that should be taken in a certain order. Some many methods and models could be offered to product portfolio managers and developed by the same managers in regards to the needs and possibilities of their own companies. It is also wrong to believe that product portfolio management is something that could be easily completed. Many difficulties and concerns occur regularly in this field. Even the most successful companies may be under the threat of having doubts and shortages in their work. Strategic management and product portfolio management are important processes in many companies, and managers have to be ready to discover new aspects of these processes to achieve the required goals, stay competitive, and properly introduce new products.

Reference List

Bhasin, H 2016, What is product portfolio, Marketing 91, Web.

Hill, CWL, Schilling, MA & Jones, GR 2016, Strategic management: theory: an integrated approach, Cengage Learning, Boston.

Hitt, MA, Ireland, D & Hoskisson, RE 2016, Strategic management: concepts and cases: competitiveness and globalization, Cengage Learning, Boston.

Hollensen, S 2015, Marketing management: a relationship approach, Pearson, Harlow.

Huy, Q 2016, “Five reasons most companies fail at strategy execution’, Forbes, Web.

Jugend, D & Silva, SL 2014, ‘Product-portfolio management: a framework based on methods, organization, and strategy’, Concurrent Engineering: Research and Applications, vol. 22, no. 1, pp. 17-28.

Prasad, K 2015, Strategic management: text and cases, 2nd edition, PHI Learning, Delhi.

Product development institute 2017, Portfolio management, Web.

Scherling, MS 2016, Practical risk management for the CIO, CRC Press, London.

Tajvidi, M & Karami, A 2016, Product development strategy: innovation capacity and entrepreneurial firm performance in high-tech SMEs, Springer, New York.

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