Business Portfolio Planning and BCG Matrix

Portfolio Planning

• Portfolio planning helps management assess a company's prospects for success within each of its products, offers suggestions about what to do within each line, and provides ideas for how to allocate resources.
• It involves managing groups of brands and product lines of a company.

Business Portfolio - BCG Matrix

• Stars: market leaders in high-growth markets with high prospects for further growth; need to be protected and considered as cash cows of the future.
• Problem Child or Question Mark: cash drains due to low profitability; options include increasing investment to turn it into a star, withdrawing support, or finding a niche market segment.
• Cash Cow: high profitability, low investment associated with high market share in low-growth markets; need to be defended, and excess cash should be used to support stars, selected problem children, and new product development.
• Dogs: weak products that compete in low-growth markets; options include harvesting, divesting, or focusing on a defendable niche.

Product Life Cycle (PLC)

• Refers to the length of time a product is introduced to consumers until it's removed from the market.
• PLC is typically broken down into four stages: Introduction, Growth, Maturity, and Decline.

Factors Influencing Pricing

• Product Line Strategy: companies need to consider where the price of a new product fits into its existing product line, and may modify versions of the product for different target markets.
• New Product Launch Strategy: options include Rapid Skimming, Slow Skimming, Rapid Penetration, and Slow Penetration.

Place in Marketing Mix

• Refers to the geographical location in which a company sells its products and provides its services.
• Important considerations include making products and services available to customers in adequate quantities, in convenient locations, and at times when customers want to buy them.
• Distribution channels include wholesalers, retailers, distributors, and the Internet.

Communication Process

• Fundamental process for the success of promotion element of the marketing mix.
• Offline communications techniques available to marketers include Advertising, Sales Promotion, Publicity, Sponsorship, Direct Marketing, and others.

Integrated Marketing Communication (IMC)

• System by which companies coordinate their marketing communications tools to deliver a clear, consistent, credible, and competitive message about the organization and its products.

Important Considerations to Choose Promotional Mix

• Resource availability and cost of promotional tools.
• Market size and concentration.
• Customer information needs.
• Product characteristics.
• Push versus pull strategies (distribution push vs. consumer pull strategy).

Promotional Mix

• Advertising: paid format of delivering information using multiple types of media.
• Sales Promotion: marketing strategy to promote products using short-term attractive initiatives to stimulate demand and increase sales.
• Public Relations and Publicity: building and maintaining a company's image and reputation through various activities.
• Sponsorship: business relationship between a provider of funds, resources, or services and an individual, event, or organization.
• Direct Marketing: distribution of products, information, and promotional benefits to target consumers through interactive communication.
• Other techniques: Exhibitions, Product Placement, and Guerrilla Marketing.

Learn about portfolio planning, a process that helps companies assess their prospects for success, allocate resources, and manage brands and product lines. Includes the BCG Matrix framework.