Product Portfolio Analysis and Small Businesses

What is product portfolio analysis?

• This is a technique developed by the Boston Consulting Group to manage different products within a company's portfolio
• It was designed for large corporates but can be useful for smaller businesses too
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  It evaluates products or services by their market share against their market growth using the below matrix known as the "Boston Box"

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  Why are these two factors important?
  • A growing market means individual suppliers can grow with it without fighting for share and so putting pressure on margins
  • A high market share means that prospects think of you first and so your sales cost less and growth is faster

How do you use this in a small business?

• As a small business if you know your market size, growth and share already then you are probably in a niche and the BCG Box can be applied as shown
• Most small local businesses do not know the size of the markets for their products. It makes little sense (and is not practical) for, say, a small plumbing and heating business to try to measure their national market or even the regional one
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  The approach should be to refine and filter the markets actually or potentially addressed until you have arrived at market and product definitions which allow you to use the Boston grid. At this point you will have define a market niche that is useful and allows you to
  • Be a significant player in that market – or know that you need to be
  • Have a clear marketing strategy, target and message
  • Identify the products or services on which you should be concentrating your efforts
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  Refining and filtering the markets does not have to be complicated:
  • What geography can you serve well and profitably?
  • What customer categories can you serve well and profitably?
  • What specific products or services do you supply or do you want to supply?
  • Would prospects in that market recognise the market as you define it?
• As an example, our plumber could refine one of his markets as "Manufacturers within 10 miles of x town" and one of his services as "Energy efficient boilers".

And in future....?

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