A product portfolio is comprised of all the products which an organization has. A product portfolio may comprise of different categories of products, different product lines and finally the individual product itself. Management is needed on all the three levels of a product portfolio. There are managers for managing individual products, managing product lines and finally the top level management which manages the complete portfolio.
An organization is comprised of a number of different departments, all focused towards one goal – the betterment of the organization. In the same manner, the product portfolio should be such that each and every product in the portfolio is focused towards one goal – Bringing the organization on top by optimally using the resources available.
Product classification is done on the basis of the BCG matrix. The BCG matrix classifies products on the basis of the market share of the product as well as the growth rate which a product may have. On the basis of this classification, a product manager can decide what level of investments a particular product might need and what would be the returns from such a product. As the other goal of product portfolio management is cash flow management, the BCG matrix propagates balancing the cash flow between all products equally.
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