Comprehensive Definition Of Product Portfolio Management

What is product portfolio management? This is one of the most common questions among organizations and corporations that wish to increase their profits by introducing new products into the market. According to a recent research carried out in United States, an estimated 50% of sales achieved by various firms and businesses come from new products. Based on this fact, it is of utmost importance to plan a product launch effectively in order to achieve the expected results.

Let us look at some reasons why firms need to embrace this new form of management

1# Aligns business strategies: This portfolio helps to take an in-depth look at their product innovation strategies. In the process, portfolio executives are able to uncover any loopholes that may be hindering from achieving maximum results. Two common strategies that are used include top-down bottom up.

2# Sufficiency: Every product innovation strategy has its own goals and objectives. Product portfolio management ensures that revenue goals that are indicated in the strategy are achieved by assessing the current market trends. Financial analysis is used to achieve this objective.

3# Maintain balance: Any successful business entrepreneur can attest to the fact that balancing various projects is a sure way of achieving long term and short term goals. This form of management helps to maintain a desired balance across all projects using various parameters such as risk versus return, business arenas, market trends, technology and the list continues.

4# Value maximization: Firms need to allocate enough resources to each project to maximize the value of each portfolio. Financial methods and scoring models are used to achieve this maximization goal. This helps to foster effective and efficient allocation of resources to all selected projects.

5# Ensure pipeline balance: It helps to avoid companies from taking up too many projects with too few resources. A rank ordering priority list, demand assessment and resource supply analysis is used to gauge the number of resources available versus the current projects. Again, a number of financial analysis have to be carried out during the decision making process.

6# Boost firm’s competitiveness: Competition is one of the major market forces that have a direct impact on supply and demand of project. To achieve maximum results, firms have to be able to compete effectively with other players in the same niche. Portfolio management facilitates formulation of effective marketing strategies as well as safeguard reputation.

7# Establish a Link between business strategy and project selection: Business strategy and project selection are interlinked. Hence, it is of paramount importance for managers to maintain a direct link between the two so as to avert huddles down the road. For example, it helps to avoid resource breakdown and prevent a poor balance in projects as well as lock out projects that are non in line with the current business strategy.

As you can see, there is need to carefully analyze all aspects that govern market trends so as to successfully launch products and hit the set profit margins. Product portfolio management is indeed a sure way of growing your business and attaining your set goals and objectives.


Mark is the Lead Author & Editor of Spectechular Blog. Mark established the Spectechular blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Management.