In this article we describe the Portfolio Analysis, an aid that is used by Marketeers to take decisions over product-market combinations (portfolio).
Introduction
Products would always be developed because needs exist. On the long term, changes can take place. Is the current portfolio still up to date? Have products lost their profitability? and/or are they themselves loss-making products? Is the current portfolio complete? or must there be products added? With the Portfolio Analysis, research shall be conducted with which answers can be given on the questions above.
What is the Portfolio Analysis?
The Portfolio Analysis is an aid that is used by Marketeers to take decisions over product-market combinations (portfolio). It is an essential component of the Internal Analysis where the strengths and weaknesses of a company are researched. The Portfolio Analysis provides answer on the question of how the current assortment performs.
Aim of an Portfolio Analysis
- Research and compare performances of product/market combinations.
- Reveal mutual relations of product/market combinations and vitality.
- Compel towards making choices.
- Generate support for changes.
How do you conduct a Portfolio Analysis?
In a Portfolio Analysis, all product/market combinations that a business has, are researched on their function one-by-one.
- Why is this product on the market? Example: Is there a target group?
- Which fixed target does this product actualise? Example: Is a product profitable?
- How long can it keep fulfilling this function? Example: Are there changes to anticipate in the position relative to the competitors? In order to provide answers for these questions, there are various techniques available.
What techniques, implementation?
A portfolio research can be conducted by means of, among others:
The BCG Matrix was developed in the 70’s by the Boston Consulting Group and since then plays an important role in the Portfolio Analysis. The model can be used in finding the balance within the present portfolio to Stars, Cash Cows, Question Marks and Dogs. Furthermore, it is input for an organisation’s strategy.
The portfolio Analysis often makes use of the Product Life Cycle (PLC). The model provides a picture of the phase that a product endures. The speed with which a product goes through the cycle is dependent on.
The MABA Analysis is a Portfolio Analysis and an extension of the BCG Matrix. It stands for Market Attractiveness Business position Assesment. The MABA Analysis is also known as General Electric’s Portfolio Matrix, MABA Model and MABA Matrix.
Conclusion
The Portfolio Analysis is a rather simple tool for researching the effectiveness of a portfolio. The outcome from it serves as input for the SWOT Analysis and therefore plays a considerable role within a strategic marketing plan.