Why there is need of portfolio analysis for marketer of XYZ company?

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Portfolio (and Portfolio Analysis)

The set of products or services which a company decides to develop and market. Portfolio analysis is the process of comparing the contents of the portfolio to see which products or services are the most promising and deserving of further investment, and which should be discontinued.

Portfolio Analysis

More diversified companies are more usefully considered as being composed of a portfolio of strategic business units (SBUs). Portfolio analysis is used to assess needs and to allocate resources in recognition of differences in the contributions of different SBUs to the achievement of corporate objectives for growth and profitability. Portfolio analyses are often performed using models that classify SBUs and product-markets within a two dimensional matrix in which one dimension represents the attractiveness of the market and the other dimension the strength of competitive position. The position of the SBU within the matrix has direct implications for the generic investment strategy of the business-that is, whether it is appropriate to have an investment strategy/build strategy, hold strategy, harvesting strategy, or divest strategy. Some of the best known models for portfolio analysis include the Boston Consulting Group's growth-share matrix and General Electric's market attractiveness-competitive position matrix.


(1) Analysing elements of the marketing mix.

(2) Analysing product performance within the product range.

Two variables frequently used in the evaluation are market growth rate and relative market share. Portfolio analysis. Borrowed from investment portfolio analysis and used by marketing management to evaluate a company's product offerings for the purpose of determining how best to allocate company resources. There are several different methods of product portfolio analysis in current use, such as the Boston Consulting Group's growth/share matrix, General Electric Business Screen, and Shell International's Directional Policy Matrix, but they all involve an analysis of the profitability, prospects and investment requirements of the company's products. A company's ideal product mix consists of a balance between products which are very profitable and those which are expected to become very profitable, the cash flowing in from the former being available for investment in support of the latter. Product portfolio analysis enables marketing managers to decide which of their products to channel resources into or away from, which products to consider for deletion, and where opportunities to add new products exist, in order that the desired balance of products might be attained.

Product Portfolio Analysis

• A tool of strategic planning that can be used at more than one level of management. In a large multi-Product company, it is applied at top management level to the company's Strategic Business Units (SBU's), separate divisions each handling one of the company's product lines. It may also be used by SBU and other managers to analyse the products under their responsibility. see Harvesting strategy, product elimination, marketing plan and planning. see Boston Consulting Group Portfolio Analysis Matrix.
• A strategic planning tool that takes a product's market growth rate and its relative market share into consideration in determining a marketing strategy.

Analyzing the Business Portfolio

In order to analyze the current business portfolio, the company must conduct portfolio analysis (a tool by which management identifies and evaluates the various businesses that make up the company). Two steps are important in this analysis:
1). The first step is to identify the key businesses (SBU). The strategic business unit (SBU) is a unit of the company that has a separate mission and objectives and which can be planned independently from other company businesses.
2). The SBU can be a company division, a product line within a division, or even a single product or brand.
3). The second step is to assess the attractiveness of its various SBUs and decide how much support each deserves.