Managing a portfolio of products can seem overwhelming. With so many variables across different products, where do you begin? Successful product managers start with a clear understanding of their entire portfolio and its strategic position in the market.
GSuite is a great example of a product portfolio; it includes Gmail, Google Calendar, Google Docs, and more. To manage this portfolio, a product manager must consider each product’s competitive positioning in the market and how it contributes to the overall business goals. Let’s take a closer look at how a product manager can manage a product portfolio for maximum impact.
What Is Product Portfolio Management?
Product portfolio management is the practice of managing all aspects of the products and services a company sells.
Key components of product portfolio management include:
- analyzing the performance and potential of existing products
- identifying market trends and opportunities for new products
- allocating resources to support the development and marketing of different products
Effective product portfolio management can result in increased revenue, market share, and customer satisfaction. It also enables companies to adapt to changing market conditions and stay competitive.
Apple is an example of a company that has successfully diversified their product portfolio. Their portfolio now includes computers, smartphones, tablets, and wearables (the Apple watch). This diversification has helped Apple capture a broader customer base and increase its market share in different product categories.
Goals of Product Portfolio Management
The main goal of product portfolio management is to optimize the company’s product offerings in alignment with the overall business and product strategy. Typically, a product portfolio manager wants to maximize the profitability from each product while minimizing risks and inefficiencies.
Additionally, product portfolio management seeks to balance long-term and short-term goals, ensuring that investments are made both in innovative products for future growth and in sustaining current revenue streams.
Here are a few more goals of product portfolio management:
- Identify high-demand products and ensure that resources are allocated to these products to maximize revenue and profitability.
- Improve, change, or re-brand products in promising markets to increase market share and profitability.
- Eliminate underperforming products so that resources are focused on more profitable products.
- Ensure that the product portfolio aligns with the company's overall objectives and goals.
- Accelerate product development to decrease time to market.
Overall, effective management of a product portfolio is crucial for sustained growth and profitability.
Understanding Your Product Portfolio
Every company needs a comprehensive vision and understanding of the products and services they offer. Without this understanding, it’s difficult to identify opportunities for growth or improve areas of weakness.
To understand a product portfolio, a product manager will analyze a variety of factors–including market demand, profitability, and customer satisfaction–for each product in the portfolio. This analysis helps a product manager make informed decisions about product development, the product roadmap, marketing strategies, and resource allocation.
Additionally, understanding the product portfolio can help businesses adapt to changing consumer preferences and emerging trends.
Product Development for a Portfolio
A product manager should consider many factors before approving a new product for development. Here are three of the most important things to consider:
- Will the product address a clear need in the market? To answer this question, a product manager will analyze market demand, customer feedback, and the competitive landscape.
- Does the company have the resources to successfully develop and launch the new product?
- Will the new product contribute to the company's business goals?
Prioritizing Products Within the Portfolio
To prioritize existing products within the portfolio, a product manager will consider many of the same factors listed above.
To determine which product ideas are most promising, a product manager will evaluate:
- Market demand
- Resource requirements
- Potential return on investment
- Alignment with the company’s strategic objectives
The product manager will prioritize the most promising ideas that are in line with the company's strategic objectives.
Best Practices For Managing Product Portfolios
Managing a product portfolio involves making strategic decisions about which products to develop, invest in, and prioritize. Implementing these best practices can help businesses make informed decisions about their product offerings and drive sustainable growth.
Product Portfolio Analysis
Product portfolio analysis involves assessing a company's products/services to evaluate their performance and potential. Here are the typical steps for product portfolio analysis:
- Identify the unit of analysis–typically individual products/services, or product lines.
- Measure and record important metrics (market share, growth potential, profitability, etc.) for each product.
- Construct a matrix to visually compare the products based on their relative market share and growth potential. The Growth Share Matrix is a useful tool for product comparison.
- After categorizing the products, evaluate the portfolio to identify current and new opportunities. The analysis should also consider external factors such as industry trends and competition.
- Finally, make decisions on where to invest or divest based on the analysis.
Ongoing product portfolio analysis is key for adapting to changes in the business environment, market conditions, or customer preferences.
Corporate Strategy Alignment
Aligning a product portfolio to company strategy can be challenging. Many companies set goals on different strategic levels. For example, a company may have financial, innovation, and market positioning goals. A product manager wants to ensure the portfolio is balanced and can serve these competing goals.
Ongoing product portfolio analysis, as mentioned above, helps the product manager assess the overall product mix and make strategic decisions. This may involve investing in new product development to fill potential gaps, sunsetting underperforming products, or acquiring complementary products to expand the portfolio.
The ultimate goal is to optimize the portfolio so that it supports the company's long-term success.
Managing the Product Life Cycle
A product’s life cycle is the time period from when the product is introduced to customers until it is removed from the market. There are four stages in the product life cycle: introduction, growth, maturity, and decline. A product manager needs to monitor the life cycle of each product in the portfolio.
Understanding the life cycle stage of each product helps the product manager make strategic decisions. For example, when a product is in the growth stage, a product manager will likely allocate resources to scale production and expand market share. When a product reaches maturity, a product manager might prioritize product improvements. For products that are in decline, a product manager needs to decide if the product should be removed from the market or reinvented.
It’s important that a product manager communicate regularly with stakeholders, including executives, other product managers, and product teams. It’s the product manager’s responsibility to make sure everyone is aligned and understands their roles and responsibilities.
Managing a product portfolio requires careful planning, prioritization, and effective communication. By following best practices for portfolio management, you can optimize your portfolio and achieve success in your role.
Want to learn more about how to succeed as a product manager? Consider taking an ICAgile certification class. Developed by leaders in the field and focused on industry best practices, ICAgile's certifications give you knowledge and skills to help advance your career.