Product Portfolio

Question 1

What is a product portfolio?

Answer 1

This means having a range of products on sale. A business should strive to having a product portfolio. There are two types of product portfolios:
- Product line portfolios
- Diversified product portfolios.

Question 2

What is a product line portfolio?

Answer 2

A product like portfolio involves having a variety of similar products on sale. Greater profits can be gained from having so many products on sale as different products ‘in the line’ will appeal to different market segments.

Question 3

What is a diversified product portfolio?

Answer 3

A diversified product portfolio involves having products for sale across completely different market segments. This variety spreads the risk across different markets in case one fails.

Question 4

What is Boston Matrix?

Answer 4

Businesses can analyse their product portfolio using a Boston matrix.

Question 5

What is market share?

Answer 5

The percentage of sales in the market a product makes.

Question 6

What is market growth?

Answer 6

The overall potential for sales that the market has a whole.

Question 7

What is a star?

Answer 7

Products that have a high market share in a high-growth market, e.g Apple’s iPad.

Question 8

What is a impact of a star?

Answer 8

• Stars need constant investment in marketing to keep ahead in a competitive market.
• Stars allows a business to be a market leader.
• Over time, stars will decline into either question marks or cash cows.

Question 9

What is a cash cow?

Answer 9

Products that have a high market share of a low-growth market, e.g Microsoft’s Office software.

Question 10

What is a impact of a cash cow?

Answer 10

• Cash cows should require little marketing expenses due to lack of competition.
• Funds generated can be used to further strengthens stars and improve riskier ventures, such as question marks.

Question 11

What is a question mark/problem children?

Answer 11

Products that have a low market share in a market with high growth potential, e.g. Manufactures of less popular brands of tablet computers.

Question 12

What is a impact of question marks/problem children?

Answer 12

• Question marks can be invested in due to their position in a promising market.
• They need development of a strong marketing mix if they are to be turned into stars.

Question 13

What is dogs?

Answer 13

Products have a low markets share of a market with low growth, e.g. less popular brands in declining technology industries.

Question 14

What is an impact of dogs?

Answer 14

• Dogs can adversely affect profits.
• Dogs should be divested due to the lack of market share and the declining market for the product. They cannot be turned into stars.

Question 15

What are advantages of product portfolio?

Answer 15

• Businesses can spread risk over different markets.
• A business can meet the needs of different market segments and appeal to more customers.
• Newer products can replace those at the end of their life cycle.
• A range of products increases the awareness of the brand as a whole.
• A business will find it easier to launch new products with a large existing portfolio.
• Cash cows can fund other, riskier, ventures such as the marketing of stars.
• Stars allows a business to be market leader in one area which will improve the brand image overall.
• Question marks products give businesses an opportunity to invest and grow.
• Dogs can be divested to reduce losses.

Question 16

What are disadvantages of product portfolio?

Answer 16

• There are high costs involved in researching and developing so many products.
• High marketing costs are incurred to promote so many products.
• Bad publicity surrounding one product may affect the whole portfolio.
• Resources assigned to new products may affect the performance of existing products.
• Dogs can drain a business of profits unless they are divested.