The term portfolio analysis denotes the analysis of an efficient pool of different strategies and approaches of marketing that can be proved quite helpful in reaching to a specific result. In regard to management of marketing activities of a business organization, the role of portfolio analysis can be considered quite vital. The analysis of the portfolio of organisational strategies and product and service offerings will allow the management to have a holistic view of the market (Cant, et al, 2009).
The effective analysis of the portfolio also allows the organization to diversify risks related to external business environment. No organization can sustain in the market by relying heavily over just one strategic move or product offerings. Dynamics of external market place put some intensive amount of pressure over companies and their Marketing managers to have a pool of strategies for managing their activities. In this regard, effective and regular analysis of the portfolio allows the business organization to obtain knowledge regarding the current performance of different tools and strategic directions (Meek and Meek, 2012). On the basis of this knowledge the marketing manager can easily allocate the available resources in the most efficient manner.
In addition to this, while taking any new decision related to the marketing functions, it is essential for the organization to analysis different crucial aspects of the available portfolio so that a balanced approach towards decision making can be taken into account. Along with this, another crucial role of portfolio analysis can be revealed in the identification of the stage of product life cycle for the product (Wilson and Gilligan, 2012). Heavy and complex product portfolio of the company reflects that the company is in maturity stage. In this way, it can be considered that portfolio analysis method helps the marketing managers to take effective actions for the company.
In the strategic planning process of a company, portfolio analysis works as a systematic process which mainly conducts the analysis of the products and services of the companies which establish an association of them with the business. Portfolio analysis is a systematic process that has major contribution for the marketing management in having the understanding of the current market position of a product or service in the entire product life cycle phase of the product (Motiwala, 2008).
The portfolio analysis is conducted with the help of portfolio matrix creation through the examination of the product positioning and consideration of the relevant category of products. These categories of the product might be the attractiveness of the product in the marketplace, its growth or maturity in the related industry, and technological skills of the business behind developing that product.
The concept of portfolio analysis has been derived from the concept of investment portfolio which is used in the marketing management field. The marketing managers mainly uses portfolio analysis for the purpose of evaluation of the product offering of a particular company or brand in order to determine the way to have best allocation of the use of company’s resources.
The portfolio analysis in the marketing management practices is done with the help of several different methods. The main methods that are used for portfolio analysis are General Electric Business Screen, Boston Consulting Group’s growth/share matrix, and Shell International’s Directional Policy Matrix (Wilson and Gilligan, 2012). These all methods of the portfolio analysis are used to examine the profitability of the business in the market and its future prospects of success in order to determine the investment requirements for the company.
For instance; The Boston Consulting Group (BCG) portfolio matrix is the model that provides a way to rate the product or services in order to have assessment of the cash contribution of that product in future and determination of the demand of that product/service in the market in the coming years (Zic, Hadzic, and, Ikonic, 2009). Overall, the portfolio analysis is used in marketing management to determine marketing mix, as well as, determination of the future prospects of the product or service.
Cant, M. C., et al, 2009. Marketing Management. Juta and Company Ltd.
Meek, H. and Meek, R. 2012. CIM Coursebook 03/04 Strategic Marketing Management. Routledge.
Motiwala, A. 2008. The Dictionary of Marketing. Lulu.com.
Wilson, R.M.S. and Gilligan, C. 2012. Strategic Marketing Management. 3rd ed. Routledge.
Zic, S., Hadzic, H. and, Ikonic, M. 2009. Portfolio Analysis – A Useful Management Tool. Technical Gazette 16(4), pp. 101-105.