Marketing Strategy and Competitive Positioning pdf ebook

The product portfolio
A key aspect of understanding an organisation’s resources is to undertake a portfolio analy-
sis of the various offerings it has available on the market.
For some time, being ‘one or two in all we do’ has been the driving philosophy of General 
Electric (GE), the American conglomerate whose activities range from power stations to 
LEDs. GE’s businesses are amazingly diverse, and until quite recently one of its most suc-
cessful subsidiaries was the manufacture of electric light bulbs – a very mature, high-volume 
and low-priced commodity. In 2016, however, GE announced that it was no longer going to 
produce traditional electric light bulbs and instead was going to focus on LEDs – a market 
where it had had a lot of early success. Other divisions in GE make domestic electrical appli-
ances of all types, medical equipment including body scanners, renewable energy, and one 
of the most successful parts of the company is market leader in the military and commercial 
aero engine markets. It is clear that different businesses within the company are operating 
in different markets, with different opportunities and threats, and utilising different cor-
porate skills and resources. It is therefore important to ensure that appropriate objectives 
and strategies are formulated for each business unit, and that these support each other to 
ensure sustainability of the corporate entity. The process of balancing activities across this 
variety of business units involves portfolio planning, which is the subject of this chapter.
Consider, for example, the challenges that managing a group of businesses such as those 
owned by Virgin presents. Virgin’s operations include travel, communications, entertain-
ment, financial services, hospitality, retail, aerospace and a host of other areas. It is an 
example of growth through collaboration and of portfolio management, with both suc-
cesses and failures.
Portfolio analysis is the foundation for making important choices for investment and 
for strategic direction. These examples underline the importance of portfolio issues and 
the central role of marketing variables, as opposed to purely financial criteria, in making 
portfolio choices.
More than four decades ago, one of the founding fathers of management theory Peter 
Drucker, identified seven types of businesses that still have resonance today (see Figure 2.4):
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