Mastering Product Portfolio Management
As a B2B manufacturer, effective product portfolio management is crucial for sustaining growth and increasing competitiveness.
A product portfolio strategy is the backbone of any successful B2B manufacturing business. It allows you to:
- Respond swiftly to market changes
- Maintain a competitive edge
- Drive sustainable growth
- Maximize resource allocation
The challenge is that most manufacturers struggle to implement an effective product portfolio strategy because they are often:
- Stuck in Reactive Mode: Many focus on immediate sales and customer requests, leaving little time for proactive portfolio management.
- Dealing with Resource Constraints: Limited resources make it difficult to invest in both current product maintenance and future innovation.
- Lacking Strategic Alignment: Without a clear strategy, efforts become scattered, leading to a portfolio that's more a collection of products than a cohesive, market-driven lineup.
- Struggling with Data Overload: The abundance of data can be overwhelming, making it tough to extract actionable insights for portfolio decisions.
The result is a reactive approach that limits growth, misses market opportunities and fails to maximize resource allocation. The challenge is to shift from a short-term, reactive mindset to a strategic, forward-looking portfolio strategy.
To overcome these challenges and set your business on a path toward growth, the first step is to thoroughly assess your current product portfolio.
The Power of a Well-Managed Portfolio
A portfolio assessment is the process of evaluating your product offerings to understand their current state and fit in the market. By thoroughly assessing your product lineup, you’ll be better equipped to prioritize initiatives and allocate resources effectively in subsequent steps.
To begin assessing your product portfolio, follow these actionable steps:
- Segment Your Portfolio: Start by categorizing your products into distinct groups based on factors like product type, market segment, or customer base.
- Analyze Sales Data: Gather sales data from the last three years for each category. This historical data will help identify trends and patterns.
- Apply the 80/20 Rule: Use the Pareto Principle to identify the top 20% of products that contribute to 80% of your profits. These are your high-impact products that drive the most value for your business.
- Break Down Top Performers: For each top-contributing product, dig deeper into the following areas:
- Revenue Year-Over-Year (YOY): Examine the growth or decline in revenue for each product over the past three years to spot trends and opportunities.
- Sales by Channel: Identify where customers are purchasing these products. Break it down by channels like:
â—¦ Distributors
â—¦ Direct Sales
â—¦ Ecommerce
â—¦ Manufacturer Reps - Gross Product Margin: Calculate the gross margin for each product to understand its profitability.
- Percentage of Revenue to Overall Business: Determine what percentage each product contributes to your overall revenue to gauge its strategic importance.
- Product Lifecycle Stage: Assess where each product is in its lifecycle—introduction, growth, maturity, or decline. This helps in planning future investments or divestments.
- Market Share: Evaluate the market share of each product to understand its position against competitors.
By systematically analyzing your product portfolio in this way, you'll gain valuable insights to make informed decisions on which products to nurture, innovate or phase out.
If you're ready to take control of your product portfolio and drive sustainable growth, let's connect. I can help you assess your current lineup, identify high-impact opportunities and develop a strategic plan tailored to your business.
Reach out to schedule a complimentary consultation, and let's unlock the full potential of your products together.
Posted in Start Product Management | Tagged Business Acumen, Product Portfolio, Leadership
