A product portfolio is a group of two or more products that share a basic platform and are produced by a company. Companies can create an entire product line for an individual item, and investors review a company’s product portfolio to determine market demand.
A product portfolio is a group of two or more products that represent a family of items produced by a company. Each family group uses a basic platform for multiple products; in some cases, multiple parties may comprise a few different types of products within the same portfolio. An example of basic platforms in use by a product portfolio is automobile manufacturing. A manufacturer may use the same chassis for several different types of cars, resulting in a family of products. Computer manufacturing often requires the same materials to produce products that have specific variations, creating a family group.
When building a product portfolio, companies often use multiple business segments to get products from the production facility to the end user. These segments may include distribution channels, promotional strategies, pricing methods, and other elements common to all stages of business production. Using the same items repeatedly can save a company money. Instead of reinventing the wheel for each new product, companies will divide the segment between each item in the product portfolio to use the same core competencies to make the product a success.
Companies can also create an entire product line for an individual item in their product portfolio. Product lines often represent the strongest items in the portfolio. These can become the backbone of the business and can lead to a competitive advantage in the economic marketplace. For example, a cell phone manufacturer may create a smartphone that uses leading technology to create an advanced personal digital product. While the smartphone is part of the company’s portfolio of cellular phone products, the popularity of the phone may lead to the creation of an entire line of smartphones. The phone will essentially be its own line of products, including phones with different colors, memory capacities, functions, or other features.
Companies can also create what is known as a product line. This represents new products that the company hopes to introduce into its current portfolio. Tech and pharmaceutical companies often have these pipelines because their products take longer to develop and bring to market. Investors often review a company’s product portfolio to determine how well it is measuring current market demand for goods. New products that do not appear to have the desired features requested by consumers can result in a company losing market share. Ultimately, this weakens the company’s product portfolio and can create a disadvantage in the competitive marketplace in terms of product offerings.
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