Product Portfolio

Question 1

Product portfolio

Answer 1

The complete range of products produced by a business, including product lines and individual products.

Also called a product mix

Question 2

Product line

Answer 2

A group of products that are closely related to each other, and are viewed as a unit because of marketing, technical, or end-use considerations.

Question 3

Product portfolio management strategy

Answer 3

Design, deployment, and management of multiple brands as a coordinated portfolio…

…that address the needs of diverse customers in a marketplace…

…and maximize return while minimizing risk.

Specifies the optimal portfolio of brands a company should maintain…

…for comprehensive market coverage with minimal overlap.

Question 4

Product mix breadth

Answer 4

The variety and number of product lines offered by firm (product categories)

Question 5

Product line depth

Answer 5

The number of items in a given product line. Satisfying customer sub-segments with different tastes and price sensitivities.

Question 6

Product portfolio management: Inefficient portfolios

Answer 6

• A lot of FMCG and fashion companies haven been found to maintain large, inefficient portfolios
  
  • Unilever
  • Diageo
• Several companies have undergone a process of cutting down their portfolio for higher efficiencies
  
  • Burberry
  • Armani
  • Coke

Question 7

Managing the product portfolio

Answer 7

Understand:

• Visualization
• Financial contribution
• Strategic roles

Change:

• Line pruning
• Line extensions

Question 8

Understanding the portfolio

Visualization

Answer 8

Understanding how the offering in entirety covers the market & relative to the competition.

Question 9

Understanding the portfolio

Financial contribution of brands

Answer 9

Contribution to revenue, profit, margins, market share:

Top & bottom line:

• Revenue
• Volume
• Profit & profit margins

Market share:

• market share
• future growth

Question 10

BCG growth matrix

Answer 10

Portfolio management framework for prioritizing business/brands by degree of profitability.

• ideally, the excess cash from cash cows is invested in question marks, so that they become stars
• stars ideally become cash cows once category growth slows down

Question 11

Understanding the portfolio

Strategic brand roles

Answer 11

Focus brand:

• strong financial results
• future momentum
• strong consumer following

Fighter brand:

• low-value offering

Niche:

• very narrowly defined segment

Past champion:

• cash cows

Silver bullet:

• Establish/maintain the overall brand image

Entry point:

• Entry point to the brand

Question 12

Upside of high-priced products in a portfolio

Answer 12

• Increase the sales of other products in the portfolio
• To communicate expertise and brand prestige
• Publicity –> Supreme Brick & Supreme Oreo

Question 13

Asymmetric dominance (decoy effect)

Answer 13

The decoy effect is defined as the phenomenon whereby consumers change their preference between two options when presented with a third option – the “decoy” – that is “asymmetrically dominated”.

Question 14

Anchoring (compromise effect)

Answer 14

Consumers are more likely to choose the middle option of a selection set rather than the extreme options.

Question 15

Portfolio change:

Line pruning

Answer 15

Discontinue or revitalize underperforming products, to increase efficiency & avoid cannibalization.

• Pruning the portfolio & restructuring takes time to succeed (if at all)

Question 16

Portfolio change: Line filling

Extensions

Answer 16

Add new products to cover market gaps, and achieve full coverage.

• A brand extension is when a firm uses an established brand name to introduce a new product
• A brand that creates an extension is called a parent brand
• or family brand if already associated with several products

Question 17

Extensions types

Line extension

Answer 17

Line extension:

• transfers the existing brand name to a new product within the same product line
• Horizontal:
  
  • same quality level
  • accommodate different tastes
• Vertical:
  
  • downmarket
  • upmarket

Question 18

Extension types

Category extension

Answer 18

Transferring of a brand name to a new product or service outside of the original product category

Question 19

Extension types

Customer extension

Answer 19

Using existing brand on new products or services sold to a different customer segment.

Question 20

Extension types

Channel extension

Answer 20

Expand to a different distribution channel, e.g. luxury channel to mainstream

Question 21

Where to extend?

Determine where the brand can add value

Answer 21

1. Associations - which are leverageable?
   
   • ​Existing brand associations and brand identity
   • What do people associate with your brand?
2. Identify product categories for which there would be a fit
3. Evaluate the category in terms of business attractiveness
   
   • Are there unmet needs?
   • What is the competitive landscape?
   • Entry barriers?
4. The extension concept: positioning
   
   • Differentiated offering
   • Testing the new concept

Question 22

Determining optimal value proposition

Answer 22

Question 23

Brand architecture system

Answer 23

Branded house:

• One brand creates a single powerful image, sometimes with a descriptor

Sub-brands:

• Combining the corporate brand with strong sub-brands
• Sub-brands help differentiate and boost corporate brand

Endorsed brand:

• Leading with a strong sub-brand but leveraging corporate brands as endorser

House of brands:

• Decentralized companies targeting diverse markets

Question 24

Establishing the need for a new brand

Answer 24

Conditions that would justify the need for a new brand:

• All existing brands have associations that are incompatible with the new offering
• Offering would damage the brand name
• New brand name is needed to create and own an association
• Only a new name would signal the newness of the offering
• A channel conflict requires a separate name
• The business is of sufficient size and longevity to justify investing in a new brand