Marketing Roles for a Portfolio's Products

In a balanced portfolio, each product plays a role. This role may be to promote a particular image intended to represent the brand or company; products with these roles cannot be evaluated solely from a financial point of view. Image products are often designed for a specific customer sector for example the premium sector. Typically, such products set an elevated quality standard. Most often of all, this practice manifests in services: for example, premium banking services.

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Product Analysis by BCG (Boston Consulting Group) Matrix

The Boston Consulting Group's Matrix is a universally classic tool for analyzing the range of products in a business's portfolio. The BCG Matrix is a scatter diagram on which each product is represented as a point. The following indicators are used as axes:

X Axis: Share out of total sales (calculated as the ratio of the product sales compared to the total company sales during the same time period).

Y Axis: the growth rate of product sales relative to the previous period.

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The BCG Matrix results yield four product groups: "stars", "cash cows", "wild cats", and "dogs". Different strategies should be prioritized based on the product's classification. For example, products with a low growth rate but a large share of the market are cash cows - as the name suggests, they require little investment but yield great profits. Therefore, they become a major source of funds for business development. The optimal strategy for these products is to maximize the harvest, i.e. make the minimal investment in exchange for the maximum return.

Stars have a high growth rate and are very profitable. They are the market leaders, but maintaining their market position requires substantial investment. However, the considerable profits generated by these stars can be reinvested into the maintaining their market position. Upon full maturity, these products become "cash cows".

Dogs have a low growth rate and small market share. Typically, their cost of production is fairly high, compared to the competition. If their inclusion is not necessary to maintain a consistent range of products, then the best solution is to discontinue them, or at least to cease all extra investments in them.

Wild cats have a high growth rate but small market share. This is the most uncertain position. These products could increase their market share, since the market has not developed fully, but this requires a substantial investment. If they are evaluated as promising products, it makes sense to invest in their development and help boost them to "star" status. If the company does not intend to finance the support of "wild cats", then their growth will slow down, and they will eventually sink to the "dog" category.

Furthermore, it's useful to analyze product trends using the BCG Matrix. The different trajectories of the matrix's products allow for an evaluation of the current effectiveness of the product range, and if necessary, for the development of an action plan to remedy any adverse trends. Product analyses by the BCG matrix should be conducted regularly.

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