As modernization grows, consumers’ need for more has risen sharply. No longer satisfied with a single product, variety is now a prelude to something more in the long run. Companies can no longer rake in significant profit for a single product.
On the contrary, organizations must create a wide range of products to capture and captivate consumers for sustainable revenue. With an extended product line, corporations need to understand which product works through a data-driven approach.
This is when product portfolio management comes in.
Organized to drive revenue consistently on a sustainable basis, this is one of the best ways firms can maximize their profit. Like how Marks and Spencer diversified their product line into clothes and household items, other companies are expected to move with the market and do the same.
However, it is vital to note that this methodology only works on a product line instead of a singular product.
What Is Product Portfolio Management?
Simply put, product portfolio management (PPM) refers to managing a corporation’s product line by executing effective business strategies to optimize incoming revenue. It is a comprehensive process that requires a deep dive into assessing, analyzing, and ascertaining the sales performance of each product sold.
Based on TCGen’s Product Portfolio Management, you can determine which product is actually generating profit for the company. With actionable insights gathered, a company strategically devises, develops, and delivers more products aligned with consumers or drops poor-performing products.
Here are the two aspects of product portfolio management with disparate stakeholders:
- New Product Portfolio – for products still in the works
- Product Life-Cycle Management – for products that have been or are currently being sold
How Does It Work?
Unlike product management, product life-cycle management concerns important decisions regarding marketing, sales, and budgets. In order to successfully manage a product line, decisions have to be prompt and precise to market conditions.
These are the five phases of a product’s life cycle:
This marks the beginning of a product that is first launched and requires attention. From social media campaigns to press releases, shaping the brand’s image is critical.
2. Market Growth
Once a product starts selling well, it is the best time to start capitalizing within the market.
Similar to most projects, each assignment needs an unbiased eye to monitor and track the market. Every program can only be carried within strict business specifications from advertising and market expenses.
For a company to grow, diagnosing poor-performing areas is a key aspect of seeking opportunities for improvements. By being aware of every expenditure, you can start planning on maximizing revenue.
In this category, reducing costs is key. From customer support to marketing, monitoring product development can signal the end of a product’s continuation.
Product Portfolio Management Framework
Are you just starting out? Fear not; for one that does not have their own toolkit, the Internet is a handy tool in dishing out helpful information to help you get started. Upon research, PPM has four main frameworks that meet wildly different specifications based on what’s adopted.
Here are the four common frameworks in PPM:
- Ansoff Matrix
- GE/McKinsey Portfolio Analysis Matrix
- Innovation Ambition Matrix
- BC Matrix
Each framework serves a different purpose. PPM is a highly-tailored process for firms to execute effective business strategies.
Benefits Of Product Portfolio Management
While companies grow in size and product lines, it becomes more critical than ever to adopt a data-driven approach to carry out PPM. To help your firm thrive, the only way is by moving forward. With data analytics highlighting products and their performance statuses, PPM is the next best move to help your business grow.
Here are some of the key benefits of using PPM:
- Alignment of Strategy & Vision: Optimize all resources once you align your business strategy with the firm’s objectives for long-term planning and profit.
- Increased Creativity: With PPM, by keeping and dropping products, employees would be more motivated to create new, updated products more suitable for the market.
- Mitigate Risks: Since PPM identifies under and over-performing products, you can invest in the best product with the lowest risk yet the highest profit.
For businesses to generate consistent revenue, PPM is a great way to kickstart strategic planning based on data-driven results.
Yet, it is critical to note that keeping updated with the times plays a huge role in this aspect. From enhancing sales to understanding the market on an intimate level, the possibilities are endless. Thus, starting early is key.
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