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11/4/2020 Product Mix - Overview, Dimensions and Practical Example
What is Product Mix?
Product mix, also known as product assortment or product portfolio, refers to the complete
set of products and/or services o ered by a rm. A product mix consists of product lines,
which are associated items that consumers tend to use together or think of as similar
products or services.
Dimensions of a Product Mix
#1 Width
Width, also known as breadth, refers to the number of product lines o ered by a company.
For example, Kellogg’s product lines consist of: (1) Ready-to-eat cereal, (2) Pastries and
breakfast snacks, (3) Crackers and cookies, and (4) Frozen/Organic/Natural goods.
#2 Length
Length refers to the total number of products in a rm’s product mix. For example, consider
a car company with two car product lines (3-series and 5-series). Within each product line
series are three types of cars. In this example, the product length of the company would be
6.
https://corporatefinanceinstitute.com/resources/knowledge/other/product-mix/ 1/6
#3 Depth
Depth refers to the number of variations within a product line. For example, continuing with
the car company example above, a 3-series product line may o er several variations such as
coupe, sedan, truck, and convertible. In such a case, the depth of the 3-series product line
would be 4.
#4 Consistency
Consistency refers to how closely related product lines are to each other. It is in reference to
their use, production, and distribution channels. The consistency of a product mix is
advantageous for rms attempting to position themselves as a niche producer or
distributor. In addition, consistency aids with ensuring a rm’s brand image is synonymous
with the product or service itself.
Illustration of a Product Mix
In the illustration above, the product mix shows a:
Width of 3
Length of 5
Product Line 1 Depth of 2
The mix is considered consistent if the products in all the product lines are similar.
Example of a Product Mix
Let us take a look at a simple product mix example of Coca-Cola. For simplicity, assume that
Coca-Cola oversees two product lines: soft drinks and juice (Minute Maid). Products
classi ed as soft drinks are Coca-Cola, Fanta, Sprite, Diet Coke, Coke Zero, and products
classi ed as Minute Maid juice are Guava, Orange, Mango, and Mixed Fruit.
The product (mix) consistency of Coca-Cola would be high, as all products within the product
line fall under beverage. In addition, production and distribution channels remain similar for
each product. The product mix of Coca-Cola in the simpli ed example would be illustrated
as follows:
Importance of a Product Mix
The product mix of a rm is crucial to understand as it exerts a profound impact on a rm’s

brand image. Maintaining high product width and depth diversi es a rm’s product risk and
reduces dependence on one product or product line. With that being said, unnecessary or
non-value adding product width diversi cation can hurt a brand’s image. For example, if
Apple were to expand its product line to include refrigerators, it would likely have a negative
impact on their brand image with consumers.
In regard to a rm expanding its product mix:
Expanding the width can provide a company with the ability to satisfy the needs or
demands of di erent consumers and diversify risk.
Expanding the depth can provide the ability to readdress and better ful ll current
consumers.
Summary
Successfully expanding a product mix can help a business adjust to changing consumer
demand/preferences while reducing product risk and reliance on a single product or
product line. This, in turn, generates substantial pro ts for the rm. On the other hand, poor
product mix expansion can result in a detrimental impact on a company’s brand image and
pro tability.
Related Readings
CFI is the o cial provider of the Financial Modeling and Valuation Analyst (FMVA)™
certi cation program, designed to transform anyone into a world-class nancial analyst. To
keep learning and developing your knowledge of nancial analysis, we highly recommend
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AIDA Model
Market Planning
Substitute Products
Walmart Marketing Mix
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11/4/2020 Product Mix Decisions - Width, length, depth and consistency
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PRODUCT MIX DECISIONS – WIDTH, LENGTH, DEPTH AN

CONSISTENCY
written by Maximilian Claessens 1st June 2015 43961 views
After having taken a look at the product line decisions, product mix decisions need to be discussed. Product mix dec
arise as soon as an organization has several product lines. But what is a product mix, and what product mix decision
be taken?
The Product Mix

Before turning to the product mix decisions, we first have to know what the product mix actually is. The product mix,
called product portfolio, is the set of all product lines and items that a company offers for sale. For instance, the prod
Colgate consists of three product lines: oral care, personal care and pet nutrition. Each of these product lines, in turn
of several sub-lines. A vehicle manufacturer may have two product lines: motorbikes and cars. Product mix decisions
be taken for the wholeWe
product mix andtoaffect
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The Product Mix – Product Mix Decisions
4 Dimensions of the Product Mix – 4 Product Mix Decisions

Four important dimensions of a product mix can be identified. These are: width, length, depth, and consistency. The
product mix decisions refers to the product mix width. The width is all about the number of different product lines th
company carries. As mentioned in the previous example, Colgate has 3 product lines. Thus, it has a rather limited wi
The product mix length refers to the total number of items a company carries within the product lines. For instance
carries several different brands within each line. In Colgate’s oral care product line, several different categories of too
can be identified. A car manufacturer may have several series in its car product line, such as 3-series, 5-series, and
The next one of the product mix decisions is the product mix depth. It refers to the number of versions offered for e
product in the product line. For instance, Colgate toothpastes come in several tastes and variations. The vehicle
manufacturer’s 3-series in the car product line may be offered in several versions: convertible, coupé, sedan, and so
Finally, the consistency of a product mix completes our four product mix decisions. Consistency refers to how close
the product lines are in terms of end use, production requirements, distribution channels or any other way. In Colgate
we can observe a ratherWestrong
use cookies to improve
consistency, whichyour experience.
is based on the fact Accept Read
that all product More
lines constitute consumer pro
and go through the same distribution channels. The vehicle manufacturer also has a relatively consistent product mix
both product lines contain consumer-vehicles, can be sold in the same way etc.
Certainly, these four product mix decisions are interrelated.
4 Ways to increase business with Product Mix Decisions

We can identify four ways in which a company can increase its business on basis of the four product mix decisions
determined above.
1. Add new product lines: widen the product mix. New lines benefit from and build on the company’s reputation in
lines.
2. Lengthen the existing product lines. More items in the product lines may result in a more full-line company.
3. Add more versions of each product: Deepen the product mix.
4. Make product lines more consistent (or less). This depends on whether the company wants to have a strong re
in a single field or in several fields of business.
As you can see, the four product mix decisions are more than a strategic issue that has some impact on the compan
success. To be precise, the product mix is one of the most critical instruments the company has. It is the centre of its
Therefore, the right product mix decisions should be taken, in line with customer needs. Since customer needs may
rapidly, product mix decisions need to be taken more than once at the beginning – product mix decisions are part of
ongoing process. Only if product mix decisions are taken on an ongoing basis, maximum value for customers can be
CONSISTENCY PRODUCT LINE DEPTH PRODUCT LINE LENGTH PRODUCT LINE WIDTH PRODUCT MIX
PRODUCT MIX DECISIONS
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65
8 Product and portfolio analysis
OBJECTIVES
To investigate the competitive position of your business’s products or strategic business

units (sbus) in the context of market development. By displaying products or a portfolio of
products in a matrix fashion, insight is gained into the strategic position of the products,
the likely direction in which they are developing, the cash flow implications and pointers
as to what strategies should be pursued.
The analytical approaches covered in this chapter are:
Experience curve and scale economies

Product life cycle stage analysis
Growth-share matrix
Directional policy matrix
Hofer matrix
Portfolio analysis is mostly relevant for existing, larger businesses with multiple products.
For such businesses, matrix displays are helpful in making strategic decisions about the
allocation of limited cash resources among a portfolio of products. Some products require
further cash investments, some generate cash and others may have to be divested. This is
an input into the generation of strategic options, which is addressed in Chapter 10.
Matrix displays can be generated for your business as well as for competitors. The displays
can be used to make strategic comparisons between your business and competitors. This
allows you to anticipate likely strategic moves by competitors and plan your own moves.
THE EXPERIENCE CURVE AND ECONOMIES OF SCALE
In most businesses, there is a relationship between volume and cost as a result of two
factors: the experience curve and economies of scale effects.
Research by the Boston Consulting Group, a business consulting firm, showed that there is
a relationship between cumulative production volume and unit costs. Unit costs decline in
a predictable manner as the cumulative quantity produced over time increases. The
mathematics of the experience curve and its application in forecasting are discussed in
Chapter 12. The main reason for the experience curve effect is that the organisation and
people within the organisation learn how to do things better. Initially, substantial benefit is
derived from this learning process, but it diminishes over time. It should be noted that this
effect does not depend on production volumes increasing. Even if production remains
static, over time costs will decline.
Economies of scale effects occur when production volumes increase. There are several
reasons for scale effects:
66 8. PRODUCT AND PORTFOLIO ANALYSIS
Fixed and overhead costs can be distributed over a larger number of units.
Plant and machinery may operate more efficiently at larger volumes.
Increased bargaining power vis-à-vis suppliers.
Increased specialisation.
Potentially a higher utilisation of capacity.
In practice, the experience curve effect and the economies of scale effect work together.
When a new product is launched volumes are small, but they increase rapidly. If a
company achieves higher production volumes more quickly than its rivals, it will
experience lower unit costs. As a result, it could offer lower prices, thus increasing market
share even further (see Chart 8.1). Therefore market share is of overriding importance
when assessing the strategic imperatives of product life cycle, portfolio and matrix
analysis.
Chart 8.1 The virtuous circle of volume and cost

Higher volume
Experience effect
Higher market share Lower cost

Scale economies
An important aspect of portfolio analysis, which is discussed in detail below, is market

share. The importance of market share in a mass market derives from the ability to pursue
a cost leadership strategy and thus achieve higher overall returns on investments because
of high-volume sales. Market share is therefore a key determinant of business position.
PRODUCT LIFE CYCLE STAGE ANALYSIS
The growth pattern for many products follows an s-shaped curve, from an introduction
stage, through growth, then reaching maturity and eventually declining when the product
is being replaced with substitutes. A similar life cycle can be observed for whole industries
(see Chapter 7). The product life cycle concept has several uses, notably for market
forecasting, which is covered in Chapter 12. This chapter discusses the product analysis and
business planning implications of the product life cycle concept.
From the introduction to the withdrawal of a product, customer, demand, marketing,

competitive and resource factors generally follow a pattern that is driven by the product
life cycle. Knowing where a product is in the product life cycle allows you to anticipate
and plan for the next stage. Chart 8.2 summarises the product life cycle characteristics and
the impact on strategy.
Product life cycle stage analysis 67
Chart 8.2 Product life cycle characteristics and strategies
Introduction Growth Maturity Decline

Users/sales Few Increasing rapidly Settling in Declining
Costs High R&D, unit and Falling rapidly, Declining production Stabilising
launch costs utilisation, scale and costs but higher
experience effects marketing costs
Competitors Few New entrants, Consolidation Some exit
innovator may sell out
Marketing objective Successful introduction, Build market share by Retain customers, get Further reduce costs
gain opinion leader focusing on new customers to switch, and exploit product or
endorsement customers and creating renewals and upgrades, brand
distinct brand image extend life cycle,
increase frequency of
use, new product uses,
cost reduction
Product Basic, little variety, Increasing variety and Stable, Declining variety, no
quality not high, features, good quality standardisation, some further development
frequent design and reliability tinkering, eg, “new
changes improved xyz”
Prices High, price-skimming Falling slowly, supply Falling rapidly, Stabilising, increasing
strategy, introductory constraints may keep discounts, price in late decline stage
offers prices high competition
Promotion Promote product, build Mass-market Focus on brand and its Scaled down brand
awareness, user advertising, increased advantages, loyalty, promotion
education, press focus of brand bundling, affinity
relations, high
advertising to sales
ratio
Place Specialist retailers, Mass-market channels, Mass-market channels, Phase out marginal
dealers who can give large multiples large multiples, outlets, some multiples
advice, exclusivity deals power of channels may de-list,
increases specialisation
Cash flow Negative Break even Positive Positive, but declining
Profitability Losses Profitable Margins decline, but Declining margins
offset by volume offset by low
depreciation charges,
possible write-downs
Risk High business risk Low demand side risk, Low business risk, Low business risk,
but cash flow risks cyclical factor impact labour conflict in
unionised industries
Introduction
The introduction stage is the period before sales start to increase exponentially. It is the
riskiest stage and requires most management effort. The business will have already
committed substantial resources. Despite convincing market research, the product may fail
the test of the real market. There is still the opportunity to fine-tune the marketing mix or
even relaunch the product. If there are early signs of success and sufficient resources are
available, managers may opt for penetration pricing, thereby driving up volume and
capturing market share before competitors enter the market. However, this increases risk
and failure will be catastrophic.
Growth
A rapid acceleration of sales signals the start of the growth stage, which can be divided
into the accelerating growth stage and the decelerating growth stage. In the accelerating
growth stage, the incremental year-on-year sales increase. In the decelerating growth stage,
sales are still growing but year-on-year incremental sales decline. The dividing point
between the two is the point of inflection in the s-shaped product life cycle curve.
As the business changes to become more volume driven, the risks profile changes.
Demand for the product is now proven and competitors enter the market. The expansion
requires investment in capacity and working capital. The early growth stage may coincide
with the highest funding requirement. Many businesses fail during the expansion stage,
not because they are unprofitable but because they become insolvent. A strategy for a
smaller entrepreneur may be to sell out to a larger, later entrant. The rationale for seeking a
buy-out is not just access to resources. The introduction stage and the growth stage require
different kinds of organisation and skills. Indeed, many business plans have an explicit exit
strategy, seeking to sell out once the business is in the early growth stage.
In the early growth stage the focus is usually on winning new customers. This stage is
crucial to positioning the product as a market leader. In the late growth stage more
attention is given to customer retention.
Maturity
At this stage the focus shifts to a fight for market share and cost reduction. Some
consolidation may take place. Because growth objectives remain, businesses may seek to
increase sales through a higher repeat sales rate, increased frequency of use or finding new
uses for an existing product. For example, faced with declining sales in an ageing market,
Cognac producers started to promote drinking Cognac on ice (much to the horror of
traditionalists) as an aperitif rather than a digestif. This rejuvenated Cognac by making it
attractive to younger drinkers and gave Cognac a new use.
Decline
When decline sets in, the time for consolidation is probably past. The least efficient
competitors will gradually exit the market. Management is likely to focus on cost reduction
in order to maintain profitability despite declining sales. Some assets may be reallocated.
Businesses can become highly cash generating, because capital investment is low and
some working capital is freed up. A re-reorganisation and change of management style are
likely. In moribund, large, unionised businesses it may be extremely difficult to exit
profitably because exit costs are high. Demand for some products does not die away
completely but settles down at a low level. This can constitute an extremely profitable
niche business.
Product life cycle stage analysis 69
Product life cycle and competitive position

Arthur D. Little, a management consulting firm, suggested using the product life cycle
analysis in combination with the competitive position. This yields pointers as to what
strategies should be pursued for the business or the sbu (Chart 8.3). In this analysis, the
product life cycle stages are replaced by industry maturity stages – embryonic, growth,
mature and ageing – which correspond to the product life cycle stages identified above.
The competitive position is measured as dominant, strong, favourable, tenable and weak.
A dominant position implies a near monopoly whereas a weak position means that a
business’s long-term survival is threatened as a result of low market share.
Conceptually, the matrix is similar to the growth-share matrix and directional policy
matrix (see below), inasmuch as the market growth rate is an indication of industry
maturity and market share is one factor in determining the business position. The
strategies suggested by the industry maturity/competitive position matrix are also similar
to the implication of the directional policy matrix and are discussed in more detail below.
The fact that strategic choice is more complex than the strategies suggested by the matrix
analysis is captured by the fact that each box contains multiple options in descending
order of suitability. There may well be overriding reasons, not captured by the two-factor
matrix, for a business to pursue one strategy rather than another.
Chart 8.3 Industry maturity: competitive position matrix
STAGES OF INDUSTRY MATURITY

Embryonic Growth Mature Ageing
Fast growth Defend position Defend position
Dominant
Fast growth Attain cost leadership Attain cost leadership Focus

Start-up Renew Renew Renew
Defend position Fast growth Grow with industry
COMPETITIVE POSITION
Find niche
Fast grow Attain cost Differentiate
Start-up Hold niche
Strong
Catch-up leadership Grow with

Differentiate Hang in
Attain cost leadership Renew industry
Fast growth Grow with industry
Differentiate Focus
Harvest
Favourable
Start-up Differentiate Harvest, hang in Renew,

Differentiate Focus Find niche, hold turnaround Retrench
Focus Catch-up niche Differentiate, focus Turnaround
Fast growth Grow with industry Grow with industry
Harvest, catch up Turnaround Harvest

Tenable
Start-up
Hold niche, Focus Turnaround Divest
Grow with industry
hang in Grow with Find niche Retrench
Focus
Find niche industry Retrench
Find niche
Weak
Turnaround Withdraw Withdraw

Catch up
Retrench Divest
Grow with industry
Source: Johnson, G. and Scholes, K., Exploring Corporate Strategy, Prentice-Hall, 1989, from Arthur D. Little
GROWTH-SHARE MATRIX
The original growth-share matrix was developed by the Boston Consulting Group and is
also referred to as the bcg box. The purpose of the matrix is to analyse a firm’s product
portfolio or portfolio of sbus. The matrix relates market growth (the key variable in the
product life cycle stage analysis) to relative market share. The objective of the analysis is to
gain strategic insight into which products require investment, which should be divested
and which are sources of cash.
The growth-share matrix (Chart 8.5) is constructed by plotting the market growth rate as a
percentage on the vertical axis and the relative market share on the horizontal axis.
Relative market share rather than absolute market share is used because it gives a better
representation of the relative market strength of competitors. For example, if company A
has 50% of the market for a particular product and there are two competitors, B with 40%
and C with 10%, relatively speaking B’s position is close to A. The relative market share for
a business is calculated by dividing the sales of the business by that of its largest
competitor. In the example, A’s relative market share is 1.25 and B’s is 0.80. A firm’s
portfolio of products is represented as circles, where the area of the circle represents
annual sales of a product. Most spreadsheet programmes have the facility to create a
growth-share matrix. Chart 8.5 was generated with the data shown in Chart 8.4 using the
bubble chart option in Excel.
Chart 8.4 Chart data for the growth-share matrix
Product Relative share (%) Market growth (%) Annual sales ($m)
Sky blue 4.0 4 100
Dark blue 0.2 1 50
Red 2.0 10 110
Purple 0.4 8 170
Green 0.6 18 40
Yellow 6.0 18 180
Orange 0.2 13 15
Chart 8.5 Growth-share matrix

Growth-share matrix 71
Using the growth-share matrix for strategic planning

The growth-share matrix allows you to visualise which products are cash generating and
which are cash-absorbing. This is helpful to understanding where resources should be
allocated to change the strategic position of products or which products should be
divested. Depending on the position of the products, they are classified as stars, problem
children, dogs or cash cows (see Chart 8.6).
Chart 8.6 Cash characteristics and classification of product portfolio
CASH NEUTRAL CASH ABSORBING

RATE OF MARKET GROWTH %
Star Problem child

High
Cash cow Dog

Low
CASH GENERATING CASH NEUTRAL

High Low
RELATIVE MARKET SHARE (LOG)
Star
Stars have a high relative market share in a rapidly growing market; they are in the
introduction or growth stage of the product life. Although gross margins are likely to be
excellent and generate cash, the rapid growth means more cash is required to fund
marketing and capacity additions. This means cash outflows and inflows are roughly
balanced. If the business fails to spend to keep pace with market growth, the product will
lose market share and become a problem child and eventually a dog. However, if the
position is maintained through continued investment, the product will turn into a cash
cow when market growth slows down.
Problem child
A problem child product creates a dilemma. The rapid market growth means investment is
required. However, if investment is made only to keep up with market growth, the
competitive position of the product will not be improved. In order to gain relative market
share, additional cash is required, making problem children highly cash absorbing. The
alternatives are to divest or to do nothing. Divestment will generate cash, which can be
used, for example, to transform other problem children into stars. Although the market is
still growing rapidly, it may be possible to sell the problem child for a good price to a rival
who is in the same position. The combined market share may turn two problem children
into one star. Doing nothing is probably the worst choice, because eventually the product
becomes a dog.
Dog
Dogs are products with a low market share in a market that has reached maturity. Profits
will be relatively low. At this stage it will be difficult to find a buyer for a reasonable price.
As long as the product is slightly cash generating or cash neutral, the temptation may be to
keep it going, but of course it ties up capital. Another strategy might be to reposition the
product into a particular niche, where volumes may be even lower but a premium price
can be obtained.
Cash cow
Cash cows are products with a high market share in a relatively mature market. No further
investment in growth or product development is required, and the dominant market
position means margins are likely to be high. This makes the product cash generating.
Some funds are likely to be returned to investors in the form of dividends or by paying
back debt, but a substantial part of the cash should be used to fund new product
development, stars or problem children. However, as decline sets in, cash cows will
become less cash generating and may eventually die.
Portfolio strategy
Fundamentally, there is little businesses can do about the market growth rate. This is
implicit in the product life cycle curve. In other words, movement along the growth axis is
an externality. However, position and movement along the relative market share axis is the
result of management action relative to the action of rivals. Ideally, a product enters the
matrix on the upper left-hand corner and gradually moves to the lower left-hand corner.
The growth rate is highest in the early stages of the product life cycle (see Chart 8.7), so all
products start at the top of the matrix. Ideally, products are first stars and then become
cash cows. During the introduction stage of the product life cycle, growth rates are high
and continue to be relatively high during the early growth stage. The early growth stage is
defined as the period between the introduction and the point where volume growth is no
longer increasing but starts to decrease. It is important to distinguish between the
percentage growth rate and growth in absolute terms. The growth rate declines throughout
the product life cycle, but growth in volume terms increases to a peak before declining (see
Chart 8.8). This is the point of inflection in the product life cycle curve.
Growth-share matrix 73
Chart 8.7 Sales volume and growth rate

100 250
90
80 200
70
Sales growth rate, %

Sales volume
60 150
50
40 100
30
Sales volume
20 50
Sales growth rate
10
0 0
Chart 8.8 Point of inflection in market growth

100 14
Sales volume
90 Increase in sales volume
12
80
Increase in sales volume

70 10
Period sales volume
60
8
50
6
40
30 4
20
2
10
0 0
While markets are growing rapidly and overall volumes are still small, differences in
market share are not very important. However, as the market moves into the late growth
stage, it becomes increasingly more difficult to win market share. You should therefore
have manoeuvred the product into a star position before reaching the point of inflection,
or it will be in danger of becoming a problem child and eventually a dog.
Irrespective of your efforts, some products may become problem children. If a business
also has cash cows, funds can be used to transform a problem child into a star (see Chart
8.9 on the next page). Alternatively, the problem child can be divested and the funds used
to grow a new star. Most products will eventually reach the decline stage of the product
life cycle. This means standing still is not an option for most businesses. A balanced
product portfolio should include cash cows and stars, and possibly problem children that
can be turned into stars. The cash generated from cash cows funds stars and problem
children as well as returning money to shareholders and bondholders.
Because cash cows will eventually enter the decline stage of the product life cycle where
they no longer generate much cash, there must be a flow of new products. The
development of new products is financed by cash cows. Given that funding is a significant
constraint, maintaining a balanced portfolio must include a product development pipeline
or the business will cease to exist.
Generally, cash cow products will have a large sales volume (represented by a larger than
average circle in the matrix), because the market is mature and because the product has a
high relative market share. This means the volume of cash generated will be
correspondingly large. This needs to be the case because one cash cow has to fund several
new products, of which some may not make it to launch and others may become dogs.
Chart 8.9 Strategic movement of portfolio products and cash
Product development pipeline

RATE OF MARKET GROWTH %
High
Low
High Low
RELATIVE MARKET SHARE (LOG)
Product movement
Cash movement
Plotting product movements over time

Ideally, you will carry out an annual strategic planning exercise so you should have a time
series of matrix displays. This means you will be able to track the movement of your
portfolio over time and thus obtain feedback on how well strategies have been working.
This can lead to a reappraisal of strategic choices.
DIRECTIONAL POLICY MATRIX
A limitation of the growth-share matrix is that it relies only on two factors: the market
growth rate and relative market share. Market growth is only one factor that affects
business prospects. Similarly, relative market share is only one aspect of the business
position. The directional policy matrix seeks to overcome this limitation by including
many more factors (see Chart 8.10 on page 76). In doing so, the exercise becomes less
numerical and involves judgment.
Directional policy matrix 75
Joseph Guiltinan and Gordon Paul developed the directional policy matrix while working
at Shell Corporate Planning during the late 1970s. It is based on the growth-share matrix
(see above), originally developed by the Boston Consulting Group, but the work done at
Shell enhanced the perspective specifically with a view to managing a portfolio of
products competing for limited funds within Shell. The method of developing a directional
policy matrix shown here is based on Patrick McNamee’s Tools and Techniques for Strategic
Management.1
In the directional policy matrix, the vertical axis is used to map business-sector prospects
and the business position is plotted against the horizontal axis. Completion of a directional
policy matrix involves considerable environmental and resource analysis. The evaluation
factors used to generate the data for the directional policy matrix could be limited to the
critical success factors or could be a broader collection of factors. The list provided in Chart
8.10 is only indicative and should be adapted to meet the industry’s and your firm’s
particular circumstances.
Quantification of business-sector prospects and business position

The factors identified in Chart 8.10 on the next page must be converted into values so that
the products or sbus can be positioned in the directional policy matrix. This requires
judgment, so this method is more subjective than the growth-share matrix. Subjectivity is
not necessarily a bad thing, because it involves thinking through the issues affecting the
business in a structured manner. Clearly, businesses are not managed by just two numbers
but by an understanding of the wider environment and the business position in that
environment.
The same method is used to quantify the business-sector prospects and the business
position.
1 An importance score is assigned to each factor. The importance scale ranges from 0 to
5. A factor with a zero importance score could be omitted for the purposes of the
calculation, but it is still valuable to record the fact that a particular factor is of no
importance and has not just been missed.
2 A score is assigned to indicate the strength of the influence of the factor on your
firm’s product or sbu. The scale ranges from –5 to +5. A negative number indicates a
negative influence.
3 The two scores for each factor are multiplied to produce a total score for business-
sector prospects and the business position for your firm’s product.
4 The score achieved by your firm’s product is expressed as a percentage of the
maximum score (all scores set to +5 and totalled). This produces the co-ordinates to
position the product on the matrix. The area of the circles should be proportional to
the annual sales value of the product.
The scale on the axis of the matrix ranges from –100% to +100%: –100% is the worst
possible business-sector prospect and –100% is the worst possible business position; +100%
indicates the best business-sector prospect and strongest business position. Charts 8.11
(page 77), 8.12 (page 78) and 8.13 (page 79) provide an example of how to calculate and
display a particular product for a company.
Chart 8.10 Factors for evaluation in a directional policy matrix
Business sector prospects Business position

Market factors Marketing factors
Market size Market share
Market growth Relative market share
Price elasticity Sales growth
Product life cycle stage Relative product quality
Cyclicality Image
Bargaining power of suppliers Brand
Bargaining power of buyers Product diversity
Relative maturity
Competitive environment
Positioning
Degree of concentration
Distribution strength
Threat from new entrants
Exits Technology factors
Consolidation R&D strength
Vertical integration Product development pipeline
Threat from substitutes Patents and rights
Manufacturing technology
Technology factors
Degree of flexible manufacturing
Scope for innovation
Scalability
Speed of change
Product diversity Production
Complexity Cost relative to competitors
Differentiation Scope for cost reduction
Flexible manufacturing Capacity utilisation
Capacity utilisation Inventory
Patents and copyrights Degree of vertical integration
Financial and economic factors Organisational factors

Margins Relative skill level
Fixed versus marginal costs Stakeholder interest and backing
Trend in input costs Attitude to risk
Capital intensity Strategic interests
Contribution Union reaction
Share prices
Financial factors
Cost of capital
Margin
Synergies
Contribution to profit
Political factors Cash flow
Social trends Cost of capital
Barriers to exit Access to funding
Subsidies Capital structure
Regulation and legislation Capital intensity
Environmental impact Fixed versus marginal costs
Threat of litigation Potential impairment charges
Pressure groups Taxation
Chart 8.11 Quantification of business-sector prospects
Factor Importance Strength Score

Market factors
Market size 5 2 10
Market growth 4 3 12
Price elasticity 2 –3 –6
Product life cycle stage 4 2 8
Cyclicality 0 0 0
Bargaining power of suppliers 2 3 6
Bargaining power of buyers 3 –1 –3
Competitive environment
Degree of concentration 3 –2 –6
Threat from new entrants 1 –1 –1
Exits 1 2 2
Consolidation 2 –4 –8
Vertical integration 2 1 2
Threat from substitutes 5 –4 –20
Technology factors
Scope for innovation 1 1 1
Speed of change 2 –2 –4
Product diversity 3 2 6
Complexity 4 5 20
Differentiation 3 –2 –6
Flexible manufacturing 3 –5 –15
Capacity utilisation 4 4 16
Patents and copyrights 0 0 0
Financial and economic factors
Margins 4 3 12
Fixed versus marginal costs 5 5 25
Trend in input costs 4 –1 –4
Capital intensity 5 5 25
Contribution 5 3 15
Share prices 3 2 6
Cost of capital 3 2 6
Synergies 0 0 0
Political factors
Social trends 3 5 15
Barriers to exit 4 –3 –12
Subsidies 0 0 0
Regulation and legislation 2 –1 –2
Environmental impact 2 –1 –2
Threat of litigation 1 –1 –1
Pressure groups 1 –1 –1
Total score 96
Maximum possible score 480
Percentage score 20
Chart 8.12 Quantification of business position
Factor Importance Strength Score

Marketing factors
Market share 5 5 25
Relative market share 4 –1 –4
Sales growth 1 1 1
Relative product quality 4 2 8
Image 3 1 3
Brand 3 3 9
Product diversity 0 0 0
Relative maturity 5 2 10
Positioning 4 3 12
Distribution strength 2 1 2
Technology factors
R&D strength 2 1 2
Product development pipeline 1 0 0
Patents and rights 0 0 0
Manufacturing technology 4 3 12
Degree of flexible manufacturing 5 5 25
Scalability 3 –2 –6
Production
Cost relative to competitors 5 2 10
Scope for cost reduction 5 4 20
Capacity utilisation 5 2 10
Inventory 2 –2 –4
Degree of vertical integration 0 0 0
Organisational factors
Relative skill level 2 0 0
Stakeholder interest and backing 3 –2 –6
Attitude to risk 2 –4 –8
Strategic interests 3 –2 –6
Union reaction 2 –4 –8
Financial factors
Margin 3 –2 –6
Contribution to profit 4 1 4
Cash flow 3 –1 –3
Cost of capital 3 –2 –6
Access to funding 1 –2 –2
Capital structure 0 0 0
Capital intensity 4 –2 –8
Fixed versus marginal costs 4 2 8
Potential impairment charges 0 0 0
Taxation 0 0 0
Total score 94
Maximum possible score 485
Percentage score 19
Chart 8.13 Directional policy matrix

100%
Attractive
BUSINESS SECTOR PROSPECTS
33%
Average
-33%
Unattractive
-100%
100% 33% -33% -100%
Strong Average Weak
BUSINESS POSITION
Using the directional policy matrix to develop strategic direction

The nine squares in the directional policy matrix and the labels assigned to it (see Chart
8.14) are similar to those in the growth-share matrix, but they provide a finer degree of
analysis. The labels provide an indication as to what strategic directions may be most
appropriate for a particular product or sbu.
Chart 8.14 Strategic directions

Attractive
BUSINESS SECTOR PROSPECTS
Leader Try harder Double or quit

Average
Growth/ Phased
Leader/growth
custodial withdrawal
Unattractive
Phased
Cash generator Divest
withdrawal
Strong Average Weak
BUSINESS POSITION
Leader
This is the position that is most likely to generate the highest return on investment in the
longer term. It is similar to the star in the growth-share matrix. A product in this category is
well positioned with regard to the most important industry attractiveness factors. Rapid
market growth is probably one of the reasons for its attractiveness, so the product will
require investment in capacity and marketing, for example brand building and distribution
channel development. If the position as leader is maintained, the product will become a
cash generator.
Try harder
A product in this category is not the market leader but it has a good chance of catching up.
The market is still growing fast and positions can change. To move the product to the
leader box, additional cash above that required to keep up with market growth is required.
Double or quit
Here the chances of catching up with the market leader are slimmer. The product is in an
attractive market but its position is weak. Substantial investment is required to improve the
business position and success is not guaranteed. The easier option may be to divest, by
selling out to a competitor whose product is in the try harder box, for example. It is highly
likely that the net present value of a product to a competitor is higher than it is to your
business. In other words, you would maximise your return on investment by selling out.
Leader/growth
These products are leaders in a market of medium attractiveness. To ensure that they do
not lose their business attractiveness, some investment is required. If the position is
maintained, they are likely to become cash generators.
Growth/custodial
A product in this category has good business-sector prospects and there are no particular
business advantages. Sales are likely to be too large to reposition the product as a niche
player. Given that sector prospects are only average, a holding strategy may be appropriate.
This is likely to release some cash, but returns will be below average.
Phased withdrawal
Products that are either in an unattractive market and have only an average business
position or in an average market but with a weak business position fall into this category.
In both cases returns are below average. Although these products are probably cash
generating, they can easily turn into the growth-share matrix dog and become a drain on
resources. The best strategy may be to withdraw the product and reallocate resources.
Cash generator
Products in this category are similar to the cash cow products. They are in a relatively
unattractive market but with an excellent competitive position. Because business prospects
are not good, making further investments is not recommended. The strong competitive
position means that cash flow will be highly positive. However, in the directional policy
matrix the business prospect does not depend on growth rates alone. Other factors may be
responsible for the unattractive business prospect, such as a reduction in import tariffs
which may allow the market to be flooded with cheap imports.
Divest
This is the least enviable position. The product’s business-sector prospects are bleak, its
business position is weak, and it is likely to lose money. This is a true dog identified in the
growth-share matrix. The best strategy is to divest the product. It is unlikely that a high
price could be obtained in these circumstances, but at least the cash haemorrhage could be
stopped. Shutdown and write-off may be the only alternative.
THE BUSINESS/INDUSTRY ATTRACTIVENESS SCREEN
Following the development of the directional policy matrix, McKinsey & Co, a
management consultancy, developed a similar approach working with General Electric
(ge). The matrix is commonly known as the ge business/industry attractiveness screen
(see Chart 8.15) and the approach is similar to the directional policy matrix. It comes in
several versions, but they all have the same basic structure and strategy implications.
The version shown in Chart 8.15 is based on the work of Charles Hofer, Dan Schendel and
Michael Porter. The competitive position of the sbus to be analysed is plotted on the
horizontal axis and the industry attractiveness on the vertical axis. The criteria used to
quantify the position are similar to those in the directional policy matrix and can be
selected according to what is relevant for your industry.
sbus in boxes 1, 2 and 4 are those that should be protected or developed (they require
funding), those in boxes 6, 8 and 9 should be carefully managed, harvested or even
divested (they provide cash), and those in boxes 3, 5 and 7 should be managed in a cash
flow neutral manner.
Chart 8.15 Industry maturity: competitive position matrix
Strong Average Weak
1 Protect position 2 Invest to build 3 Built selectively

Invest to grow at maximum rate Challenge for leadership Specialise around limited strengths
High
INDUSTRY ATTRACTIVENESS
Focus effort on maintaining strength Built selectively on strengths Seek ways to overcome weaknesses
Reinforce vulnerable areas Withdraw if indications of sustainable
growth are lacking
4 Built selectively 5 Selectivity/manage for earnings 6 Limited expansion or harvest

Medium
Invest heavily in most attractive segments Protect existing programme Look for ways to expand without high risk;
Built up ability to counter competition Concentrate investment in segments where otherwise minimise investment and
Emphasise profitability by raising profitability is good and risks are relatively rationalise operations
productivity low
7 Protect and refocus 8 Manage for earnings 9 Divest

Manage current earnings Protect position in most profitable segments Sell at time that will maximise cash value
Low
Concentrate on attractive segments Upgrade product line Cut fixed costs and avoid investment
Defend strengths Minimise investment
THE HOFER MATRIX
Hofer’s product market evolution matrix adds an additional dimension to the display of
market evolution and business position and uses a finer grid. The competitive position is
plotted on the horizontal axis and the stage of product or market evolution on the vertical
axis. The competitive position, which is similar to the business position in the directional
policy matrix, can be calculated in the same way as for that matrix. The market evolution
axis is similar to the product life cycle, where development equates to the introduction
stage, growth to the accelerating growth stage and shake-out to the decelerating growth
stage. The products or sbus are shown as circles and, unlike in other matrixes, the area of
the circle represents total product turnover. Within the circle the share of a firm’s product is
shown as a slice of the circle.
The Hofer matrix includes more information, but is also more difficult to construct and
exceeds the capabilities of Excel. However, there are specialist software tools (see below) to
facilitate the creation of matrixes such as this.
Chart 8.16 Hofer matrix
Strong Average Weak

Development
STAGE IN PRODUCT/MARKET EVOLUTION
Growth
Shake-out
saturation
Maturity/
Decline
Source: Hofer, C. and Schendel, D., Strategy Formulation: Analytical Concepts, West Publishing Co, 1978, p. 34
Using software for product life cycle and matrix analysis 83
USING SOFTWARE FOR PRODUCT LIFE CYCLE AND MATRIX

ANALYSIS
Many of the diagrams in this chapter can be created using Excel, but it has charting
limitations. There are specialist pc-based software tools that facilitate the task of analysis
and create the associated charts as an output. Some of the programmes can be interfaced
with Excel, so that your projections can be made in Excel and then read into the specialist
software. For example, Market Modelling Ltd (www.market-modelling.co.uk) has developed
an easy-to-use set of software tools for strategic marketing analysis.
LIMITATIONS OF MATRIX PORTFOLIO ANALYSIS
Product life cycle stage and portfolio and matrix analysis provide a structured approach to
the analysis of products, particularly for larger, multiple product businesses. They should
be part of a strategic and business planning process. If a business plan includes some of
the above diagrams, it will gain credibility. This is not because fancy charts impress people,
but because it demonstrates that you have gone through the strategic planning process and
thoroughly researched and thought through the strategic implications before presenting the
business plan.
Any such tool or model is only an abstraction of the real world, which is extremely
complex with diverse influences. It may not always be possible to capture these in a
matrix. For example, the cash flow issues, which are central to the growth-share matrix,
depend on much more than the market growth rates and relative market share. Matrices
should not be used blindly for strategy formulation but as a key input into strategic
thinking and business planning.
Lastly, the models need not be used in exactly the way they have been devised by the
authors; often it will be better to take the basic ideas and adapt them to the circumstances
of the business that is planned.
USES OF OUTCOMES IN THE BUSINESS PLAN
One of the main outputs of product life cycle and portfolio analysis is the insight into cash
flow implications. Funding is central to any business plan. It may not be possible to
develop all products in the manner planned, because access to funds is limited. If a
business embarks on an ambitious strategy to turn “problem children” into “stars”, it must
ensure adequate funding. The portfolio analysis should be checked against funding plans.
The analysis helps to ascertain the need for future product development to maintain the
business as a going concern. If there are no stars or problem children to be developed,
turnover will decline in the medium to long term. A business that consists mainly of cash
cows but does not see an opportunity to develop products internally may embark on an
acquisition strategy or, although this is rare, return funds to shareholders, for example
through a share buy-back plan.
The matrix analysis produces recommendations on the strategic direction in which

products should be developed. The prescriptive aspects of matrix analysis, such as “build”
or “harvest”, are an input into the generation of strategic options. This is discussed fully in
Chapter 10.
If the portfolio analysis is carried out not only for your business but also for competitors,
this provides useful insight into the strategic direction your rivals may take and is therefore
an input into the competitor analysis.
Reference
1 McNamee, P.B., Tools and Techniques for Strategic Management, Pergamon Press, 1985.
11/4/2020 What is Product portfolio? Definition and Importance of management

Home » Marketing management articles » What is Product portfolio management ?
What is Product portfolio management ?

July 27, 2020 By Hitesh Bhasin Tagged With: Marketing management articles
Table of Contents 
Definition of Product Portfolio Management

Product Portfolio can be de ined as the compilation of products and services offered by
the company to the target market. It comprises of all the set of products offered right
from the ones that were launched and offered during the inception of the brand to the
ones that are launched currently along with ones that are in the pipeline.
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
inally the individual product itself. Management is needed on all the three levels of a
product portfolio. You need managers for managing individual products, managing
product lines and inally the top level management which manages the complete
portfolio.
https://www.marketing91.com/product-portfolio/ 1/13
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Lets look at an organization from a macro angle. An organization is comprised of a

number of different departments, all focused towards one goal – the betterment of the
organization. In the same manner, your 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.
As an organization is comprised of different products, it becomes di icult to manage all

of them. Thus there needs to be a hierarchy. This is where products portfolio management
steps in.
Breaking-down Product Portfolio and its management :
. Product Portfolio management is one of the most crucial elements of the entire
business strategy as it helps the company to attain its overall business objectives and
plan the future line of products accordingly.
. It works as a signi icant tool for the corporate inancial planning of the irm and also
for the investors conducting the equity research analyzing the return on investments.
. The thorough analysis of the Products Portfolio can provide the management of the
company with crucial information such as stock type, growth prospects of the brand,
products that are high on pro it margins, income contribution by each and every
product offered to the market, market share of every product, operational risks, and
market leadership.
. Many a time, there are too many projects underway and there are seldom that is right
for the company to attain the pro its. And here is the main role of Product Portfolio
management to analyze which projects are well aligned with the overall strategy and
objectives of the business and will be the cash cows and the ones that don’t feel
relevant is taken off from the portfolio.
Also Read How to Deliver Great Customer Service?
Importance of Products Portfolio to businesses :
1) Product Innovation
It is very important to follow the strategy of having a Product Portfolio and analyzing it in
the regular intervals in order to plan and come up with the new and innovative line of
products to be offered to the target market. It helps in de ining the types and nature of
products that are liked and preferred by the customers and with the experience and
knowledge, launch the new line of products that are not only innovative and novel in
ideation but matches the taste and preferences of the target market.
2) Tax benefits
Managing and analyzing the Product Portfolio on the regular basis helps to structure the
investments and all the other inancial elements of the company resulting in the various
tax bene its.
3) Aligns projects with the businesses strategy

It is very important that the product offerings and their revenue generations match and
align with the long-term vision of the company and the business strategy. As then only the
company will be able to accomplish its aims and objectives of higher sales, elevated
pro its, competitive advantage, and increased market share. Having the proper
management of the Product Portfolio helps the management to align the existing and
projects in the pipeline with the overall business strategy and vision of the company.
4) Visualize the entire products-line

Studying and analyzing the operations, revenue generation, and other facets of each and
every product on an individual level offered by the company can be very cumbersome
and will not help to draw comparative study effectively. But with the Product Portfolio in
place, all the key members of the management are able to visualize the entire portfolio of
the all the old, existing, and future products having a broader spectrum.
5) Effective allocation of resources


Having and managing the Products Portfolio helps in allocating the various resources of
the irm such as inances, human resources, and manufacturing plants amongst others in
an effective manner. It helps in iguring out the products that are working as the cash
cows for the companies, the products that are capable for higher market share but
require the boost from the management, and the products that are redundant in nature
and needs to be taken off from the market.
Also Read Consumer Behavior: De inition, Importance and Types
6) Data for the key members of the management

It helps providing the crucial and important data to the key members of the management
that enlightens them about the performance of the products in the market, revenue
generation by the each product, market share, customer preferences, and requirement of
any sort of tweaking or innovation in any products amongst others that helps with the
planning and execution of the next plans and strategies of the business.
7) Cash flow
The company requires the regular low of cash for the day to day business operations
such as paying overheads, staff salaries, and more along with the money required for the
investments in the existing and future line of the products. And with the proper planning
and administration of the Products Portfolio, the cash low issues of the company are
sorted out as it helps to determine the products that bring the maximum revenues and
the company will allocate the maximum resources on the same.
8) Synergy within the internal team

All the products offered by the company and their operations are not managed by the
single person, but they are managed by various departments and individual teams
formulated by the management of the irm. This case is mainly applicable to the large
corporate irms that have a huge and varied line of products in the market. And with the
proper Products Portfolio in place, there are various team meetings and discussions
resulting in all the members on the same page and well aware about the overall business
strategy and operations of the irm having a required synergy to attain the long-term
business aims and objectives.
9) Proper selection of the target industry
Products Portfolio helps the management to igure out on why the certain lines of

products are performing extremely well working as the cash cows for the irm whilst some
of them not matching the required and envisioned plans and objectives. And if the later is
having the issue of the products not targeted and promoted to the required target market
and audience, the elements, and strategies of the Products Portfolio helps to iron out this
problem.
Also Read What is Product Labelling & what is the Importance of labelling?
How do we classify the products in a products portfolio?

Product classi ication is done on the basis of the BCG matrix. The BCG matrix classi ies
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 classi ication, 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 products portfolio management is cash low
management, the BCG matrix propagates balancing the cash low between all products
equally. In harsh words – no extra revenue should be given to products which cant give
the revenue back to the organization.
The number of products you have today determines the strength of your organization
tomorrow. This is why the ield of products portfolio management is gaining importance.
Although products portfolio management is not an important task for small businessmen,
portfolio management is a must for enterprises and it leads to a strong organization with
planned goals and optimum resource allocation.
Conclusion
If the companies are offering a wide array of products to the various target markets, it is
quite imperative to have a Products Portfolio to achieve the objectives of higher market
share, increased sales and pro its, and enhanced brand value.

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Also Read Process In Marketing Mix - Concepts & Types Of Processes
Related Posts:
What is Product Quality? 7 Steps of Product Quality Management
Five product levels in Marketing - 5 product levels in Marketing
Understanding the Product hierarchy and Product classi ication
What is a Core product? Core product explained with examples
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Product mix and Product line
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Product Information Management: Meaning, Importance, and Examples
New product adoption
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About Hitesh Bhasin

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Comments
Surinder Singh says
interesting -n- informative
Reply
Dixter Kaluba says
I have found the website mature and very useful. I am an HOUR professional annd
currently doing my Masters Degree in Human Resource Management
Reply

Salum Abdallah says
i need the reasons on why current market situation, on why many organization
prefer customer portifolio rather than product portifolio
Reply
Hitesh Bhasin says
These are two very different things and a corporate needs both. Product
portfolio is needed to have multiple products in the product line and
therefore to capture a higher market share. A Customer portfolio on the other
hand constitutes of your most important customers or customers who can
give you the most business. Product portfolio is from the Marketing and
strategy point of view whereas Customer portfolio comes from the Sales and
Selling point of view. So a corporate needs both – customer portfolio and
product portfolio. The corporate which is strong in both will likely be one of
the leading corporates in its industry.
Reply
baraka jonathan says
product portfolios seems the collectives of the product or services offered by the
company, this can provide nuanced views in stock type like company growth
prospect, pro it margin driver, income contributions, market leadership as well as
operation risks.
Reply
baraka jonathan says


I need reason to why company do shift from product portfolios to customer

portfolios
Reply
Nitin says
Hello sir,
I have a doubt regarding, How product mix is different from Product portfolio?
Reply
Salum Sharif says
This notes about product portfolio is so helpful and understand.thanks
Reply
Sumana says
Hi can you send me questionnaires on signi icance of product portfolio

management
Reply
Ramesh says
? Describe the terms relationship marketing and internal marketing

? Explain how relationship marketing helps in a service organization. 
? Describe how internal marketing helps in a service business.
Reply
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11/4/2020 Reading: The Product Portfolio | Principles of Marketing
Principles of Marketing
Module 10: Product Marketing
Reading: The Product Portfolio
https://courses.lumenlearning.com/clinton-marketing/chapter/reading-the-product-portfolio/ 1/8
Throughout this course we have discussed a number of ways that

organizations market products successfully. How does an organization
decide which products to o er? When should a company add new
products, and when should it discontinue existing ones? Product
portfolio management answers these questions.
Organizing for E ective Product Marketing
Before we dive into the product

portfolio it is important to
understand how products are
organized in most businesses.
Johnson & Johnson has

hundreds of products. They sell
baby shampoo to new parents
and knee systems to surgeons
who perform knee-replacement
surgeries. Imagine trying to
understand all of the di erent products and their target buyers. It would
be impossible to span all of those products well. At the same time, what
if your organization owns a single product—say, Johnson & Johnson’s
Neutrogena face wash? A di erent organization owns Johnson &
Johnson’s Aveeno face wash. It would be easy to optimize for a single
product, rather than trying to achieve company objectives across all the
products.
Typically, organizations group like products into product lines, and then
group lines of business targeting a common set of customers into
something called strategic business units (SBUs).
A product line is a group of products marketed by an organization to one

general market. The products have some characteristics, customers, and
uses in common, and may also share technologies, distribution channels,
prices, services, etc. There are often product lines within product lines.[1]
A product line inside a product line? Johnson & Johnson has a product
line of skin and hair care products. Within that product line, there are a
number of brands that have a set of complementary products. Returning

to our previous example, the Neutrogena product line includes a
complete set of dermatologist-recommended skin and hair care
products. The Aveeno product line includes a complete set of natural
skin care products. Neutrogena products target buyers who place
greater trust doctors, and Aveeno targets buyers who trust natural
products, but both are part of the Johnson & Johnson skin and hair care
product line.
The skin and hair care product line is part of a larger strategic business
unit for Johnson & Johnson: the consumer health care products
business unit. This SBU includes:
baby care
skin and hair care
wound care and topicals
oral health care
over-the-counter medicines
vision care
nutritionals
Think about this list. There are di erences in the target buyer for each
product line, but drugstores like Walgreen’s and CVS carry all of these
products, and they are, of course, all targeting consumers.
Johnson & Johnson’s other SBUs include medical devices and

prescription products.
Let’s pause and review all of these de nitions within product

organizations.
A product is a bundle of attributes (features, functions, bene ts, and

uses) that a person receives in an exchange. In essence, the term
“product” refers to anything o ered by a rm to provide customer
satisfaction—tangible or intangible. Thus, a product may be an idea
(recycling) , a physical good (a pair of jeans), a service (banking), or any

combination of the three.
An example of a product is Tylenol pain reliever.
A product line is a group of products marketed by an organization to

one general market. The products have some characteristics, customers,
and/or uses in common, and may also share technologies, distribution
channels, prices, services, etc. There are often product lines within
product lines.
An example of a product line is the full range of Tylenol products,

or over-the-counter medicines.
A strategic business unit or SBU is a self-contained planning unit for

which discrete business strategies can be developed.
An example of a strategic business unit is consumer health care

products.
Managing the Product Portfolio
The goal of product portfolio management is to ensure that the

company’s investment in products meets objectives. In order to do this,
portfolio management must understand the needs and contributions of
the products and allocate resources across product lines and SBUs to
optimize their market performance.
Analyzing SBU Performance
Should Johnson & Johnson invest equally in all of its SBUs and product
lines? The table below shows Johnson & Johnson’s 2014 nancial
results.[2]
Revenue Research and

2014 %
SBU growth from Development
revenue pro t
2013 spending
Consumer $14.5
1% 13.4% $629 million
health care billion
Medical $27.5
1.6% 28.9% $1.7 billion
devices billion
Prescription $32.3
16.5% 36.2% $6.2 billion
products billion
You can see that Johnson & Johnson is spending ten times more on
research and development (R&D) for prescription products than for
consumer health care products. Given the higher growth rates and pro t
margins for prescription products, this looks like a good decision.
Within the SBUs, managers also make important decisions about where
to invest. For example, in 2013, the lowest-growth product line in medical
devices was diagnostics, which decreased by 8.9 percent from 2012 to
2013. In 2014, Johnson & Johnson sold a major diagnostic product from
that product line to another company for $4 billion. This eliminated a
product that was not contributing to the portfolio objectives, and it
generated new capital that could be invested in higher-growth product
lines.
The examples here demonstrate a simple review of SBU performance,

but companies can also perform a deep analysis of an SBU and product
performance in order to understand past performance and identify future
growth opportunities.
Analyzing Market
Opportunities
Beyond the internal performance

data, portfolio analysis considers
broader market factors. In
the marketing planning module,
we discussed the Boston
Consulting Group’s growth-share
matrix, which is a tool to used

analyze the product portfolio.
You’ll recall that this model
considers the attractiveness of
the market by studying the
growth potential in the market,
and it includes company
performance by showing the
product’s current market share.
These are both important factors
to consider in determining the
future growth opportunities.
In its annual report, Johnson & Johnson shared the following information
with investors about its largest prescription-drug product line:
Immunology products achieved sales of $10.2 billion in

2014, representing an increase of 10.9 percent as
compared to the prior year. The increased sales of
STELARA® (ustekinumab) and SIMPONI® /SIMPONI
ARIA® (golimumab) were primarily due to market growth
and market share gains. REMICADE® (in iximab) growth
was primarily due to market growth.
A very simplistic analysis of this information suggests that Stelara and

Simponi are stars (high market growth and high market share) while
Remicade is a question mark. It is bene ting from market growth but is
not achieving gains in market share.
Knowing about the product life cycle is also important to understanding

market growth. During the introduction phase, the market growth rate is
low, and the longer-term potential is unknown. As the market moves into
the growth phase, it moves up the market growth axis and creates
opportunities for products that are gaining market share and
becoming stars. Those that don’t perform well in gaining market share
will become question marks. As the market moves into maturity and
decline, the market growth moves back down the axis and products will
become either cash cows or dogs.
If we add the data from the iPod product life cycle to the growth-share
matrix, as shown above, we can see how Apple’s products might be
analyzed. In the growth-share matrix, the size of product sphere is
determined by the total sales. Obviously, this diagram is not perfectly
sized, but it gives a picture of the way in which product life cycle can be
used to inform product portfolio management.
. https://www.ama.org/resources/Pages/Dictionary.aspx?
dLetter=P#product+line ↵
. http:// les.shareholder.com/downloads/JNJ/1279939564x0x815
170/816798CD-60D9-4653-BB5A-
50A66FD5B9E7/JNJ_2014_Annual_Report_bookmarked_.pdf ↵
Previous Next
Four brand strategies
When it comes to brand development, there are four main brand approaches, as shown
in the following diagram.
As you can see, this diagram is

a matrix built around the two attributes of existing/new product category and
existing/new brand name. This then determines one of the four boxes, namely:
 Product line extension

 Multi-brand
 Brand extension
 New brand
Please note that the top axis refers to the product category – that is, a set of products –
not an individual product. Therefore, if Toyota was to introduce a new car, then that
would still be considered to be an existing product, because they already offer and
market cars.
Product line extension
A product line extension is introducing a new product – that is similar to what the
company already offers (that is, within an existing product line/category) that is
targeting an existing market by using the current brand name.
This is a very common approach in marketing. This is because the existing brand name
has a customer following, and new products/variations will tend to be relatively well
received by these loyal customers.
We frequently see this approach with product sold through supermarkets channels,
where you variations of tastes/flavors and packaging sizes have some appeal with the
marketplace.
Multi brand
A variation of the product line extension above, is to run a multiple brand strategy
within the same market. As you can see from the matrix, a multi-brand strategy involves
having more than one brand competing in the same product category.
Again this is a relatively common approach for large companies. For example, a
manufacturer of frozen vegetables may have multiple brands – that to the consumer
appeared to compete against each other – but have the same corporate ownership.
The main reasons for this is that these brands can have different positioning in the
market, dominate the overall shelf space, and reduce opportunities for competitors to
enter the market or to win market share.
The disadvantage of this multi brand strategy (as opposed to a product line extension
strategy) is the cost and time of developing a new brand name successfully in the
marketplace.
Brand extension
A brand extension involves broadening the market’s understanding of the brand. This is
achieved by offering more products (of a different nature/category) under the existing
brand name.
An example of this in recent years would be McDonald’s competing in the gourmet

coffee product category – effectively broadening the positioning of McDonald’s from fast
food only to being perceived as also competing against Starbucks to some extent.
Brand extensions they usually approached with care, as the market may not fully accept
the brand’s expertise in another product category. As a hypothetical example, consider if
the Coca-Cola brand was extended to shampoos and detergents – the market would see
little connection and the overall brand would be damaged.
Therefore, brand extensions work best if the new product category has some
relationship to the brand’s existing product category and perceived area of expertise.
New brand
The final brand development strategy is a new brand. A new brand occurs when the firm
is expanding is offering – by developing a new product line that they haven’t not offered
before – and as a result, need to build a new brand.
Branding Strategies
A product that’s well-received by a target audience can transform a business. As
consumers become savvier, businesses need to become more strategic in their
branding efforts to ensure their products and services are met with high demand.
When it comes to branding strategies, there is no one-size-fits-all option. Your
marketing team should brand your products and services with a strategy that aligns
with your business’s values and resonates with your customers. Here are five different
types of branding strategies your company should consider.
Company Name Branding

Well-known brands leverage the popularity of their own company names to improve
brand recognition. Logos, slogans, packaging or colors are generally recognized by
consumers in association with the business as a whole. For instance, companies like
Coca-Cola, Tylenol and Porsche rely on company name branding to engage with their
audiences.
Individual Branding
Large companies with a variety of well-known products may opt for an individual
branding strategy by giving each product its own brand name. For example, Apple is
the parent company but relies on an individual branding strategy to market its
different brands such as Mac, iPhone or iPad.
Attitude Branding
Sometimes a company will rely on an overall feeling or attitude to market its products
and reflect its business. This branding strategy brings the business to life by marketing
a larger feeling to create an emotional connection between the brand and its
customers. Brands such as Nike use attitude branding not only to sell athletic shoes,
but also to promote a healthy lifestyle that aligns with its infamous slogan, “just do
it.”
Brand Extension Branding
An existing strong brand may decide to extend its success into a new venture with
effective use of a brand extension strategy. Many clothing companies use brand
extension strategies to launch a new line of shoes, fragrances or accessories. The
products may be different, but the brand identity stays the same.
Private-Label Branding
Successful store brands may use private-label branding strategies to compete with
larger retailers. For example, supermarket chains such as Kroger produce cost-
effective brand options for specific food items.
More on Branding Strategies….

Are you starting up a new business? Have you looked into the competitors of your
industry? There must be some big players operating in the industry with an established
brand name. Is that so? So, what’s your strategy to compete with those brands? Have
you considered how would you establish your branding strategy? I hope you are not
excluding your new business from the category of brands. Yeah, you have read it right.
Your new company is a brand too. A brand is not dependent upon the time period in the
market. Rather it is dependent on the mindset, and the strategies followed. Additionally,
you don’t have to invest much of your money to get it recognized it as a brand. You just
need to invest the money that you want, not something extra to make it a brand.
If you are not aware of the branding strategies that you can use for establishing your
brand, then you must go through this article. It will help you in finding the branding
strategies that can lead to establishing your business with a strong brand presence in
the market.
WHAT IS BRANDING STRATEGY?

According to Marketing MO, the branding strategy helps you in conveying the
personality of your brand to your potential customers. You can define the persona of
your brand and sell it to the customers. It is not about selling only. You need to define
the personality offer establishing a positioning and ultimately the long-term relationship
with the customers.
It is actually a series of processes or plans that you must use for ranking your product or
service in the market. Digital marketing is important in defining the brand strategy too.
The trend in social media can be seen in this article.
With such an explanation of branding strategy, there are a few things that you must
consider while going for a particular branding strategy. These include:
 A focused and defined target market
 Description of the product or service that you are selling
 The value proposition of the product or brand
 An attractive and unique name of the brand or company
Without having these aspects of your brand, you cannot expect to develop a brand
strategy in any way.
TYPES OF BRANDING STRATEGY:

Now, let’s have a look at some of the types of branding strategy. A number of brands
utilize these strategies, so they can be known as some of the proven strategies. You
can use them for your business as well. However, you must be careful about the size of
your business, your overall aims, and objectives from the brand and even the
competition in the industry. This is because each strategy might be applicable in a
different situation. Without realizing the contextual scenario of the brand, you cannot
expect to get the best out of these strategies.
1. HOUSE OF BRANDS:
In this type of branding, you must have a number of products or services to offer to your
customers. This strategy has to be used at the initial stages of the brands, but the real
impact is often seen when your business becomes large cooperation. The reason for
such a statement is that when you are working on a small scale, you’ll want to cross-sell
the product and will tell your existing customers about the launch of new products.
When you’ll promote the upcoming product with this motive in mind, you won’t be able
to use the house of brands strategy to its fullest. Or you won’t be able to name it as
“house of brands” initially.
House of brands is a strategy where your parent brand is different from the sub-brands
produced by the company. The intention behind this strategy is that the legacy of the
parent brand is not transferred to the sub-brands. Each of the products produced by the
company would have a different name and a different identity. You might divert from the
original idea of starting up the company. Even, the name of the strategy itself implies
the standing of the brands. House of brands shows the presence of a number of brands
under one main head or house. So, the advantages and disadvantages of House of
brands include:
ADVANTAGES:
 You don’t have to keep on the legacy of the parent brand or the other brands in the company
 You can easily deviate from the original idea and go for diversification
 Brand positioning is independent
DISADVANTAGES
 It might take extra time to establish the presence of the brand in the market
BRANDING STRATEGY EXAMPLE:

The example of this brand strategy includes Proctor & Gamble. Proctor & Gamble
produces a number of different products, but it does not use its name with any of those
products. Some of the most prominent brands of Proctor & Gamble include Tide,
Pampers, Ariel, Gillette, Pantene, etc. Each of these brands has its own existence in the
market. Proctor & Gamble does not extend them the support to survive in the market.
A number of successful brands are following this strategy. So, you can adapt it as well,
if your aim is to create individual brands.
2. BRANDED HOUSE:
In this branding strategy in marketing, the new products and brands are seen as the
branches of the main company. The individual existence of the brand is there. But it is
usually taken as the name of the product, not the brand itself.
The number of products and services have to be large in number for this strategy too.
However, you’ll have to make the decision about adopting this strategy when launching
your second product or service in the market.
One thing that you must note here is that you’ll have to specify a separate name for
each of the product that you offer, but you’ll definitely have to use the name of the
original product. So, the advantages and disadvantages are the part of this branding
strategy too. These include:
ADVANTAGES:
 You can establish a relatively quick reputation in the market
DISADVANTAGES:
 In case the reputation of the parent brand is negative, the new brand will have to face it as well.

For this strategy, the example includes Google. We know various products of Google for
different functions. But we recognize most of them as Google Products rather than the
maintenance of a separate identity. The search engine “Google” email services in the
form of Google Mail, Google Hangouts, Google Calendar are some of the sub-brands or
categories of the main brand. So, I hope you would have understood it.
3. PRODUCT LINE EXTENSION:

This type of branding strategy in marketing actually refers to the inclusion of new
products in the existing portfolio of your business. If you are using the same brand
name that you have already used and enter the same product category, then this
strategy is product line extension.
ADVANTAGES:
 You can cater more customers through the introduction of such products
 Feeling of customization can be inculcated in your audience with the introduction of specific
versions
DISADVANTAGES:
 Cannibalization is the problem when it comes to the product line strategy, so it can be a problem

The prominent example of this strategy is the Dove Shampoo. The presence of different
variants in the form of total repair, damaged hair, etc. are the extensions in the product
line. Similarly, the other shampoos providing different variants for different hair types
exhibit this strategy. So, you can use this strategy quite easily if it seems for your
business type.
4. BRAND EXTENSION:
This strategy also fits when you need to add in more products to the portfolio. Moreover,
the basic difference between product line extension and brand extension is in the
category of product. If you are introducing a new category with the same old brand
name, then you are actually using the brand extension.
ADVANTAGES:
 You can capture the brand value associated with the existing brand
 You can increase the revenue stream because targeting more customers will result in more
sales and thus more revenue.
 Cross-selling is often a possibility
DISADVANTAGES
 You don’t get recognized exclusively for a particular product niche
BRANDING STRATEGY EXAMPLE

This example below will help you in understanding this concept as well as differentiating
between the two. I’ll take the example of Dove brand again. Let’s assume that Dove
created shampoos before than the soap. The introduction of new variants of shampoo
was the product line extension (discussed above). But the introduction of Dove Soap
when Dove shampoos were already in the market is a brand extension.
5. MULTI-BRAND STRATEGY:
The last strategy that I am going to highlight today is a multi-brand strategy. In this
strategy, you need to enter the existing product category with a different brand name.
This strategy actually has its role when you are analyzing conglomerates. But for simple
companies, this strategy is not much practical or at least it has not been used widely
yet.
ADVANTAGES:
 You can get more sales and revenues by targeting a different segment
DISADVANTAGES
 Chances of spoiling the reputation of parent brand exist, so you’ll have to be careful about it
 Cannibalization can be a problem

If you have ever wondered why a large conglomerate does introduce two similar nature
products, then you’ll find an answer here, in this strategy. Let’s take Lipton and
Supreme as examples. Both are the products from Unilever. Any idea, why are they
both introduced? No? Let me explain. Both of these brands target a different market.
You can consider the market of each of these brands as their specific niches to which
they are catering. At the time of introduction of both these brands, the market would
have been researched by Unilever and a market gap indicating the two different niches
would have been found.
In normal cases when you have just started the business or even when it is at the
medium scale, you try to include more products for the same market, or you might go
for targeting different market by introducing new product category. This multi-brand
strategy is usually used when all the other options of expansion are exhausted.
11/4/2020 What's in a name?
What's in a name?
Shovon Nandi • Sep 27
Every brand has a story and most are very interesting. Here are how these 30 famous brands were
christened !
1. Nike : Name for the Greek Goddess of Victory. The swoosh signifies her flight.
2. Coca-Cola : The two main ingredients were Coca leaves and Cola berries.
3. Pepsi : From the digestive enzyme 'pepsin'. Although pepsin is not an ingredient in the drink.
4. Google : Derived from 'googul' which means 1 followed by 100 zeros. Signifies owners Larry Page and
Sergey Brin's mission to provide innumerable info to all users.
5. Adidas : Named after owner Adolf Dassler whose nickname was Adi. Adi Dassler became Adidas.
6. Intel : Short for integrated electronics
7. Canon : Adapted from Kwanon (Japanese name of Buddhist Bodhisattva of Mercy). It was changed to
Canon for easier acceptance worldwide.
8. Lego : Derived from Danish words 'Leg Godt', which means to 'play well'. Lego also means 'put
together' in Latin, which they claim is actually a coincidence.
9. Nintendo : Transliterated from Nintendou. Nin in Japanese means 'entrusted' and Ten-dou means
'heaven'.
10. Amazon : CEO Jeff Bazos wanted a name starting with 'A'. He chose Amazon because it is the
biggest river in the world, just what he wanted his company to be.
11. Skype : Originally the idea was 'Sky peer to peer', which later became Skyper and finally Skype.
12. Adobe : Named after a creek that ran behind the co-founder, John Warnock's house, called Adobe
Creek.
13. Nokia : Started as wood-pulp mill, it expanded its business to producing rubber products in a city in
Finland called Nokia.
14. Sony : Derived from the Latin word, 'Sonus' (meaning sound) and an American slang word, 'Sonny'
(meaning bright youngster).
15. Vodafone : Voice, Data and Telefone. Source: blogzamana
PBM: TRIM
16. Volkswagen V 2019-2021
: Means 'People's car' in German. There was a time when only very expensive cars used
to ply on German roads. Volkswagen was a revolution.
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17. ebay : Originally called Echo Bay. The domain was already taken. So it was shortened to ebay.
18. IBM : Founder TJ Watson Sr wanted to be a step ahead of his former employers 'National Cash
Register', so he decided to call his company 'International Business Machines'.
19. Nikon : Short for Nippon Kogaku, which means 'Japanese Optical'.
20. Reebok : Derived from the Afrikaans spelling of an African Antelope, 'Rhebok'.
21. Starbucks : Named after a character in Moby Dick, Starbuck. Originally the name 'Peqoud' was
suggested, the name of the ship from the novel. When it got rejected, they settled for 'Starbuck', the chief
mate of that very ship.
22. Virgin : Because the business was new and the team members were virgins at business. This was
suggested by a girl in Richard Branson's team.
23. Durex : Durable, Reliable and Excellence.
24. Fanta : The head of the German Coca-Cola team asked them to use their 'Fantasie' to come up with
the name. That did not take long though.
25. Nivea : Derived from the Latin word 'Niveus', which means snow white.
26. HP { Hewlett Packard } : William Hewlett and David Packard flipped a coin to decide whose name
would come first.
27. Toyota : Named after founder Kiichiro Toyoda. The name was changed to Toyota because Toyoda
literally means, 'fertile rice paddies'.
28. Microsoft : A combination of the words Microcomputer and Software.
29. Cisco : Not actually an acronym. They just removed San Fran from San Francisco.
30. Budweiser : Beer has been brewed in Budweis, Bohemia, since 1245. Budweiser means 'of Budweis'
and was developed as a 'Bohemian-style' beer. Founder Adolphus Busch was inspired to create the
beverage after a trip to the region.
1 class comment
AASHI GUPTA Sep 27

Thank You Sir
Add class comment…
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PBM: TRIM V 2019-2021
What's in a name?
Shovon Nandi • Oct 4
𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴 𝗳𝗮𝗰𝘁𝘀 𝗯𝗲𝗵𝗶𝗻𝗱 𝘁𝗵𝗲 "𝗡𝗮𝗺𝗲" 𝗼𝗳 𝗜𝗻𝗱𝗶𝗮'𝘀 𝗿𝗲𝗽𝘂𝘁𝗲𝗱 𝗕𝗿𝗮𝗻𝗱𝘀/ 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 :
1. "𝗗𝗮𝗹𝗱𝗮"
The famous ghee was imported by a Dutch company Dada & company. To reflect it's ownership
Hindustan Lever added "𝗟 " in middle of Dada.
2. " 𝗗𝗮𝗯𝘂𝗿 "

The eccentric etymology of Dabur comes from founding father Dr. S.K.Burman famous for his Ayurvedic
medicines often be called in Bengali "𝗗𝗮"ctar "𝗕𝘂𝗿"man.
3. "𝗥𝗮𝗻𝗯𝗮𝘅𝘆"
Two colleagues "𝗥𝗮𝗻"jit Singh and Gur"𝗯𝗮𝘅" Singh of a Japanese pharmaceutical company founded new
venture" 𝙍𝙖𝙣𝙗𝙖𝙭𝙮" in Amritsar.
4. "𝗧𝗮𝗻𝗶𝘀𝗵𝗾"
The name "Tanishq" was a masterstroke coined by Xerxex Desai then Vice Chairman & MD of Titan
Industries. The name took "𝗧𝗮" from Tata and "𝗡𝗶𝘀𝗵𝗸" means piece of jewelry.
5. "𝗔𝗺𝘂𝗹 "
𝗔nand 𝗠ilk 𝗨nion 𝗟imited of Anand district Gujarat started the Amul by picking first letter of the union in
1946 & became India’s first commercially made butter.
6. "𝗧𝗩𝗦"
A transportation company was founded in 1911 by 𝗧hirukkurungudi 𝗩engaram 𝗦undram Iyengar -
Chennai. by picking first letters of the initials. Now it is well diversified company in many fields.
7. "𝗖𝗶𝗽𝗹𝗮"
The founder Dr K.A. Hamied gave the company title initially as 𝗖hemical, 𝗜ndustrial and 𝗣harmaceutical
𝗟𝗮boratories in 1935 in Mumbai. Now it is a leading drug manufacturer.
8. "𝗗𝗲𝗻𝗮 Bank"
It was founded on 26 May 1938 by the family of 𝗗𝗲vkaran 𝗡𝗮njee, an Indian financier more popularly
known as C.D. Desai.
9. "𝗠𝗮𝗵𝗶𝗻𝗱𝗿𝗮 𝗮𝗻𝗱 𝗠𝗮𝗵𝗶𝗻𝗱𝗿𝗮 "

Two brothers J.C. and K.C. Mahindra, along with Malik Ghulam Mohammed, set up initially "𝗠𝗮𝗵𝗶𝗻𝗱𝗿𝗮
𝗮𝗻𝗱 𝗠𝗼𝗵𝗮𝗺𝗺𝗲𝗱" in 1945 as a steel trading firm. When Mohammed emigrated to Pakistan to serve as
the country’s first finance minister, it was renamed Mahindra and Mahindra Ltd.
10. "𝗪𝗶𝗽𝗿𝗼"
The company was incorporated on 29 December 1945 in Amalner, Maharashtra by Mohamed Premji as
"𝗪estern 𝗜ndia 𝗣alm 𝗥efined 𝗢il Limited" Later In 1966 after Mohamed Premji's death his son Azim
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𝗪estern 𝗜ndia 𝗣alm 𝗥efined 𝗢il Limited . Later In 1966, after Mohamed Premji s death, his son Azim
PremjiPBM:
took over
TRIMWipro as its chairman at the age of 21 and entered in software development.
V 2019-2021
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11/4/2020 PBL Trigger 3: Brand architecture and brand strategy
Study Blog
Study Blog
PBL Trigger 3: Brand architecture and

brand strategy
syyskuuta 14, 2017
For the trigger 3 about brand architecture and strategy, we were given the following
Learning objectives:
1. Compare the brand strategies and architectures of different companies. How and why are
they different?
2. What brand architecture models do companies you know use?
3. Which brand architectures are good for different products and services?
4. Analyse the brand strategy and architecture of a chosen company.
To begin with, lets de ne what does brand architecture and strategy mean and how are
these two related to each other.
Brand architecture: logical, strategic and relational structure for every brand in the portfolio. A
key concept of brand architecture strategy is that customers relate to brands at different
levels. This allows an organization to create a brand portfolio that appeals to distinct
segments or needs states. The brand architecture works as a foundation for the brand
strategy.
Brand strategy: a long-term plan for the development of a successful brand in order to achieve
speci c goals. A well-de ned and executed brand strategy affects all aspects of a business
and is directly connected to consumer needs, emotions, and competitive environments.
1. Compare the brand strategies and architectures of different companies. How and why
are they different?
Coca-Cola: It has a hybrid brand architecture. It has individual sub brands, which are
connected to the main name. It aims to offer consumers options according to their
preference. Nowadays, it has moved to one brand strategy in order for the less
successful products to bene t from the most popular one.
Apple: It has a master (endorsed) brand architecture. All products are strongly
associated with the apple name and logo and designed to work together in the best
way. Apple has several products; however, the iPhone, MacBook, and iPad never
differentiate from their master-brand.
P&G: Is a house of brands where all products are differentiated, but under the umbrella
of the main brand.
P b d h ld dd dibili h
noorastudyblog.blogspot.com/2017/09/pbl-trigger-3-brand-architecture-and.html d db di h f 1/7
Parent brand should add credibility to the endorsed brand in the eyes of consumers.
Study Blog
When the sub-brands are individuals the other stakeholders, like shareholders or
partners, know the company by its parent brand.
1. 2 Are there examples of a company using different brand strategies or architectures locally
vs. on a global level?
Many of the companies that operate in the restaurant industry such as McDonalds,
Dunkin Donuts and Dominos offer different foods in different regions. The service
and brand is the same in all of the regions but the products do vary according to
customer segment’s preferences.
2. What brand architecture models do companies you know use?
Branded House: FEDex, Google House of Brands: Unilever, P&G

Endorsed Brands: Apple, IKEA Hybrid: Coca-Cola, Microsoft; Toyota
2.1 Have there been any con icts between two brands under the same company?
DOVE (women’s self-esteem) and AXE (scantily clad and a bit sexist) both owned by
Unilever
noorastudyblog.blogspot.com/2017/09/pbl-trigger-3-brand-architecture-and.html 2/7
Study Blog
3. Which brand architectures are good for different products and services?
A house of brands/freestanding brands: are designed to stand entirely on their own in

the marketplace. This allows an organization to develop a portfolio of brands, each
with a unique brand positioning tailored to a particular product or market segment.
When your products or services each have a unique brand positioning tailored to a
particular product or market segment. This branding type is most often used for Fast-
Moving Consumer Goods. The basis is that all products under that brand name have
equal quality standards.
A branded house/monolithic/umbrella brand: Emphasizes a single master brand, that

sits over of the other brands within an organization. When your products have similar
bene ts or are in the same category
bene ts, or are in the same category.
Study Blog
Endorsed brands/sub-brands: These brands are basically in the middle. The brands are
often designed to work together and therefore are connected to each other.
Messaging; Color palette, Typography, Photography, Structure and Style are common
for all of these brands.
Hybrid brand: When there is an original product, but brand offerings are expanded. The
successful product needs to be able to keep its brand and in case the new product
differentiates too much it can be smarter to create a own sub-category for it.
4. Analyse the brand strategy and architecture of a chosen company.
Mainly a lot of different consumer goods with different brand identities, images etc. All
brands have their own names, logos etc. In addition, if one brand fails in the market or is
perceived to be of low quality, it does not have a ripple effect on the other product categories.

Organizations that follow this path are marketing-driven organizations in which each
separate brand is supported by an expert marketing staff and a substantial marketing
budget. The advantage of this is the creation of numerous strong independent brands. The
downside of this is the signi cant resources required to support such an approach. Few
organizations have the marketing talent and nancial resources required to make this type of
approach successful.
U il h t d i i f f th i b
noorastudyblog.blogspot.com/2017/09/pbl-trigger-3-brand-architecture-and.html
d h t d t t th 4/7
Unilever has created speci c versions of some of their brands such as tea and soap to t the
Study Blog
needs of a certain region.
“Our R&D Deploy teams draw on local knowledge - such as consumer preference, the
regulatory framework, legal considerations and competitor products - as they ready a product
for launch into a new market. They work closely with colleagues in marketing and supply
chain to make sure the new product can be manufactured e ciently and meets the needs of
our consumers.” Unilever website
Sources:
http://equibrandconsulting.com/services/brand-consultant/brand-architecture/strategy
http://network9.biz/wp-content/uploads/2015/02/Brand-Architecture-ecosystem-chart.jpg
http://www.marketingritson.com/wp-content/uploads/2014/11/week4brandarchitecturebycim.pdf
https://www.usnews.com/news/articles/2013/04/18/unilever-faces-criticism-for-real-beauty-ad-campaign
https://www.unilever.com
Cybexo Writes 16. toukokuuta 2020 klo 0.23

Brand Strategy can Make a Business Successful?
Your brand strategy is the backbone of your business. It is around it that you
will build all your strategies
In this article, I will explain why companies need a brand strategy, go
through 8 steps to create it and which channels to use. In addition, I will talk
about the reason why many companies fail.Read my interesting and unique
article...
How Brand Strategy can Make a Business Successful
VASTAA
Lisää kommenttisi...
Tämän blogin suosituimmat tekstit
PBL Trigger 6: Marketing communication plan

lokakuuta 06, 2017

Study Blog
For our last PBL session we were given the following Learning Objectives
1.Compare different marketing communication planning models: what are
the stages? …
LUE LISÄÄ
PBL Trigger 4: How to communicate the brand through

storytelling and social media?
syyskuuta 19, 2017
Kuva We were given the following learning objectives for trigger 4.

1.What is a brand story and what makes a good brand story?
2.What is storytelling and how does it affect people? …
LUE LISÄÄ
Sisällön tarjoaa Blogger
Teeman kuvien tekijä: Veronica Olson
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Choosing 中 the right Brand ID

oosing- Architecture
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Strategyid/ blog/choosing-
(https:// www.taksudigital.com/
y) the-right-brand-architecture-strategy)
By Bettinabrand-architecture-strategy)
Therese Rognås Ellefsen (https:// www.taksudigital.com/our-writers/ bettina-therese-rognas-ellefsen) on
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CATEGORIES: Branding (https://www.taksudigital.com/blog/category/branding) Marketing

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All companies with a portfolio of brands have a Brand Architecture, but
the question is do they have a Brand Architecture Strategy? (https://www.twitter.com
Most marketeers only think about their Brand Architecture Strategy
during times of change such as mergers, acquisitions, launches and
(https://www.linkedin.co
when rebranding, as they get forced to look at the bigger picture. This
often unveals issues that until now have been luring in the dark, such as
bad brand reputations, negative spill-over e ects between brands or lost (https://www.instagram
growth opportunities to name a few.
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A Brand Portfolio is a term for all the brands that you are managing, and taksu) on August
26, 2020.
a Brand Portfolio Strategy is an internal business strategy of how you
manage this portfolio when expanding into new target groups, markets Does Your
Bounce Rate
or categories. As an example, Lego launched Lego Friends (https://www.taksudigita
Match The
(https://www.lego.com/en-us/themes/friends/products) to have an your- Purpose Of Your
o er more suitable for girls, and Coca Cola launched Coca Cola Zero as Landing Page?
bounce-
Coca Cola Light did not have a strong enough appeal to men. This (https:// www.taksudi
rate- your-bounce-
enabled both companies to maximize sales rather than having brands match-rate-match-the-
competing against one another for customers’ attention. the- purpose-of-your-
landing-page)
purpose-
A Brand Architecture, on the other hand, is an outward-component of By Javier Sanchez
of- (https:// www.taksudigi
your Brand Portfolio Strategy with the purpose of making it easy for your- writers/ javier-
customers to see the links between your brands, nd what they are sanchez) on July 17,
landing-
looking for and to understand what your company has to o er. For Lego 2020.
page)
and Coca Cola, you recognize the brand architecture in the way the
parent brand name is linked to the new brand name. We will soon learn China Marketing
Tips & Western
that this is not a coincidence, but a strategic choice due to the bene ts of (https://www.taksudigita
Misconceptions
the Brand Architect type called “Sub-brands”. marketing-
eBook
tips- (https:// www.taksudi
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The Five Brand Architecture western-
western-
misconceptions-
misconceptions-
Types ebook)ebook)
By Lloyd Cooke
The most popular Brand Architecture types are Branded House, Sub- (https:// www.taksudigi
writers/ lloyd-
brands, Endorsed Brands and House of Brands as established by Aaker cooke) on July 10,
and Joachimsthaler’s (http://vivaldigroup.com/en/wp- 2020.
content/uploads/sites/2/2017/04/2000-The-Brand-Relationship-
Spectrum.pdf) framework called the Brand Relationship Spectrum. CATEGORIES
“Spectrum” is a key word here, as it is normal for companies to navigate ASO

between structures from time to time. In recent years especially, with (https:// www.taksud
globalization and digitalization, we have seen more “Hybrid” structures Branding
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A Branded House have one parent brand as the umbrella for a wide Lifestyle
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them are linked to the parent brand through use of logo, colour and Optimizaton
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Is this structure the right one for you? This structure gives credibility in
new markets or categories and freedom to create a separate brand
image for the sub-brand. It is thus a great way for you to test out new
territories whilst limiting the risk compared to launching everything
under one name.
There may be some instances however where some categories will

naturally be out of reach due to a mismatch with your parent brand. If
Nivea, for example, wanted to launch a razor product, the name Nivea
Razor might seem as a mismatch from the consumer’s point of view due
to the roughness of a razor and the softness of Nivea. An Endorsed
Brands structure might be smarter.
3. Endorsed Brands
Endorsed Brands are less linked to the parent than sub-brands as they
have unique names but uses elements from the parent as a discrete
quality guarantee.
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A shadow endorser is not connected visibly to the parent brand, but
many consumers still know about the link, such as the car brand Lexus
produced by Toyota.
A token endorser is more visibly connected to the parent brand, for

example through including a piece of the logo or another brand element
such as the Unilever “U” on the back of Dove products.
Last but not least, linked name is when you create a family of brands
linked by a common name with either an implicit or explicit link to the
parent brand. An example of this is Nestlé with Nespresso and Nescafé,
or McDonalds with Big Mac, McNuggets, Egg McMu n and so on.
Is this structure the right one for you? With this structure, you increase
the exibility further but also limits the synergy e ects even more than
what was the case for sub-brands. It, therefore, depends on the nature of
the categories and target groups you want to reach to decide if Sub-
brands or Endorsed brands is the best structure. A rule of thumb is that
the more farfetched the category is from the parent, the closer to
Endorsed Brands you should go.
4. House of Brands
The fourth structure is House of Brands, where all brands are
independent stand-alone brands. An example of this is P&G with Gillette,
Oral-B, Head & Shoulders and Pampers to name a few, or Yum! who is
the parent brand of Taco Bell, Pizza Hut and KFC.
Is this structure the right one for you? Thisoursuits your
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without having to worry about negative spill-over e ects or being limited
by parent brand associations. On the other hand, this is the only structure
where you totally lose out on all economies of scale and synergies.
5. Hybrid
In reality, almost all companies use mixed brand portfolio strategies in at
least one case, thus demanding a Hybrid Brand Architecture. One
example is Amazon that have brands such as IMDB (House of Brands),
Amazon Prime (Sub-brands) and A9 (Endorsed Brands).
Is this structure the right one for you? If you want the best of both
worlds, this might be the structure for you. You might want to stick to a
Branded House structure in your home market, but exploring a mix of
structures in new markets. It is a great way to keep your customers
happy, to avoid confusion while paving the way for future o ers
(https://distility.com/building-brand/hybrid-brand-architecture/). At the
same time, however, remember that you lose out on the potential
synergy e ects and might need to ask yourself if you are
doing yourself a grave disservice.
Choosing your Brand

Architecture Strategy
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By evaluating your Brand Architecture on a more continuous level you

are more likely to:
Identify brand positioning opportunities before your competitors

Avoid high costs of rebranding or shutting brands down
Launch new brands that will survive longer
Uncover new markets and target groups more quickly
Maintain long-term brand consistency and build stronger brands
Feel more con dent of your strategic brand choices
We recommend that you review your structure at least annually, in a

bottom-up process where you look at each brand and ask yourself:
How is this brand performing?

How is this brand perceived in the market?
Is this aligned with how we initially mapped out our architecture?
What can we change in the architectural structure to better reach our
goals?
Hopefully, you can now get started on your own Brand Architecture
Strategy.
Best of luck!
If you are looking for further advice on how to build better, stronger
brands then our branding team can help you. Feel free to explore our
services (https://www.taksudigital.com/services) or get in touch here.
(https://www.taksudigital.com/contact-us)If you want to become a
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11/4/2020 Corporate Branding - Explain Corporate Branding with examples

Home » Branding articles » What is Corporate Branding?
What is Corporate Branding?

December 17, 2019 By Hitesh Bhasin Tagged With: Branding articles
Corporate Branding is an act of using the brand name of the company in the overall
advertising efforts and all the communication to the stakeholders. It is the intangible
attitude and spirit behind the company that gives it a distinguishing identity in the
industry and in the minds of consumers. It is the much broader concept as compared to
promoting the products and services of the company.
Table of Contents 
Advantages of Corporate Branding:
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It provides a competitive advantage to the company whilst selling its products and
services in the market as the consumers are well aware of the company due to its
strong corporate identity and brand name.
It facilitates new product launches and is well accepted in the market due to the
strong corporate legacy created with the previous or existing line of the products
and services offered by the company.
It helps the company to tap and enter new markets and locations on the domestic
and international level as the corporate entity has already created repute for itself
with the corporate branding efforts.
There is an emotional connection with the existing and prospective consumers as it
arises a feeling of brand loyalty in their minds.
It makes the marketing and promotional efforts easier as with the Corporate Branding
well in place, the consumers have the factor of trust towards the product and service
offerings by the company.
There is an increased awareness about the company and its offerings with the
consumers identifying the logo, mascots, color shades, tagline, and other brand
elements having the top-of-the-mind recall about all the expressions of the brand.
The framework of Corporate Branding:

As mentioned earlier, the facets of Corporate Branding are quite different from the
product branding as the latter strives hard on the selling points and generating pro its for
the company whereas the former enlightens the market and the target audience about

the existence of the brand, values, fundamentals, unique selling proposition, aim and
purpose to be in the industry, and very importantly how is it different from the other brand
existing in the market.
It starts with the management and the key staff members together understanding the
nature of the brand, business philosophies, long-term and short-term objectives, and
the target audience along with the market to promote the brand and the products
and services.
The next step is deciding on the way to position the brand in the market and in the
psychology of the consumers and that can be arrived by understanding and inalizing
that in which category does the operations and product range falls, is it luxury, mid-
segment or affordable and then the brand positioning is decided.
Next comes in line are the vision and mission statements of the brand that holds
quite an important place in the framework of Corporate Branding.
Then comes working on the creative elements such as logo, tagline, mascot, color
palette, and design templates.
Many companies also hire a brand ambassador such as a famous sportsperson,
movie star, or a celebrity from any walk of life complementing the nature of the brand
and its offerings.
Once the aforementioned points are in place, it is the time to execute the Corporate
Branding strategies by sponsoring and participating in various events on the
corporate level that give the due visibility of the brand to the target audience and
carving a niche in the market.
Also Read Brand Development - Meaning, Steps and Tips
Below we discuss some Examples of Corporate Branding

:
1) Apple

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The technology giant famous for offering gadgets ranging from mobile phones, tablets,
laptops, computer systems, televisions, and more is not only renowned in the USA but has
made an impact all over the globe with the products that are high on quality, class, and
technology. Its brand logo is quite creative and catchy and as its target audience is niche
and the luxury segment, the design elements are minimalistic in nature with solid color
tones having a classy inesse. Even its print, digital, and television advertisements follow
the same design route with the clear visibility of the logo.
The products of the company can be identi ied even from the far sight owing to the
strong measures taken by the company to build the Corporate Branding.
2) Nike
The popular sports brand is quite a hit number with not only the sports personalities and
celebrities around the world but also with the common man as well. Its mission statement
reads, “To bring inspiration and innovation to every athlete in the world. “ The co-founder
once said in its speech, “If you have a body, you are an athlete.” Making it very clear to the
entire world that the brand is just not con ined to the sportsmen’s but also to everyone
having a zeal for sports and itness.
Its logo encompasses of a single right tick with the slogan ‘Just Do It’ is quite sporty and
direct in nature ensuring quick registration and a strong recall factor. The company has
made a strong corporate base by sponsoring various sports and related events.
3) Coca-Cola
We all know that sodas are not very good for our health and vitality but the beverage
major Coca-Cola is one of the most loved and pro itable brands across the world since
more than hundred years now. Right from mineral water, fruit drinks, aerated drinks,
energy drinks to zero-calorie drinks; it has something or the other in store for everyone
with the cola drink being the most famous amongst the target audience. Its slogan is
‘Taste the Feeling’ as it harps on the fact that drinking coco cola gives the feeling of
freshness with the renewed vigor and vitality. It keeps on hiring celebrities from the
various walks of life as its brand ambassadors to have an emotional connection with the
target audience that is majorly young generation under the age bracket of 15 to 35 years.
Also Read What is a Brand Portfolio? Meaning and Examples
The term and concept of Corporate Branding are much more than the catchy logo and
aesthetic design templates and harps on every expression of the brand such as customer
service levels and unique selling propositions that can be quality, affordability, delivery
timelines, and other depending on the fundamentals and objectives of the organization.
NEXT >> What is Corporate Identity?
<< PREV What is meant by being Brand Conscious? How to target such customers?
KNOWLEDGE BASE All Tutorials on Branding

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Also Read The process of Brand Design- How to design an awesome brand?
Related Posts:
5 Types of Branding and the Bene its of Branding Explained
9 Bene its of Branding - Importance of Branding
Co branding - De inition, Uses and Examples of co-branding
Branding - How it all started
6 branding lessons from Narendra Modi's visit to US
What is Umbrella branding and its advantage in building a brand
5 Branding lessons from Super heroes
Brand awareness and its importance to Branding
What are Brand Attributes and its Importance in Branding
What is Manufacturer Branding?
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11/4/2020 Product Mix - Overview, Dimensions and Practical Example

What is Product Mix?

Dimensions of a Product Mix

Illustration of a Product Mix

In the illustration above, the product mix shows a:

Product Line 1 Depth of 2

Product Line 2 Depth of 1

Product Line 3 Depth of 2

Example of a Product Mix

Importance of a Product Mix

The product mix of a rm is crucial to understand as it exerts a profound impact on a rm’s

In regard to a rm expanding its product mix:

Walmart Marketing Mix

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PRODUCT MIX DECISIONS – WIDTH, LENGTH, DEPTH AN

The Product Mix

The Product Mix – Product Mix Decisions

4 Dimensions of the Product Mix – 4 Product Mix Decisions

Certainly, these four product mix decisions are interrelated.

4 Ways to increase business with Product Mix Decisions

3. Add more versions of each product: Deepen the product mix.

PRODUCT MIX DECISIONS

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8 Product and portfolio analysis

To investigate the competitive position of your business’s products or strategic business

The analytical approaches covered in this chapter are:

Experience curve and scale economies

THE EXPERIENCE CURVE AND ECONOMIES OF SCALE

Chart 8.1 The virtuous circle of volume and cost

Higher market share Lower cost

An important aspect of portfolio analysis, which is discussed in detail below, is market

PRODUCT LIFE CYCLE STAGE ANALYSIS

From the introduction to the withdrawal of a product, customer, demand, marketing,

Chart 8.2 Product life cycle characteristics and strategies

Introduction Growth Maturity Decline

Product life cycle and competitive position

Chart 8.3 Industry maturity: competitive position matrix

STAGES OF INDUSTRY MATURITY

Fast growth Attain cost leadership Attain cost leadership Focus

Catch-up leadership Grow with

Start-up Differentiate Harvest, hang in Renew,

Harvest, catch up Turnaround Harvest

Turnaround Withdraw Withdraw

Chart 8.4 Chart data for the growth-share matrix

Chart 8.5 Growth-share matrix

Using the growth-share matrix for strategic planning

Chart 8.6 Cash characteristics and classification of product portfolio

CASH NEUTRAL CASH ABSORBING

Star Problem child

Cash cow Dog

CASH GENERATING CASH NEUTRAL

Chart 8.7 Sales volume and growth rate