Product Portfolio


DEFINITION of 'Product Portfolio'

The collection of different items a company sells. Within the product portfolio, each item typically makes different contributions to the company’s bottom line. Some products cost more to produce, some are increasing their market share (or losing market share) at a faster rate, some bring in more revenue and some have greater marketing expenses. 

BREAKING DOWN 'Product Portfolio'

Managing a product portfolio entails analyzing consumer behavior to determine how to expand with new products and how to improve profitability by removing underperforming or money-losing products. A broader product portfolio offers consumers more choices and gives a company more opportunities to capture consumers with different needs and tastes.

For example, Coca-Cola’s product portfolio consists of regular, low- and no-calorie beverages including sodas (e.g., Coca-Cola and Coke Zero), energy drinks, still and sparkling waters (e.g., Dasani), juices and juice drinks, sports drinks (e.g., vitaminwater) and bottled teas.

A key decision for any company with a product portfolio, as opposed to a single product, is how to allocate investment to each product based on its market share and its market growth rate. Based on their performance in these two areas, the items in a product portfolio can be divided into four categories:

  • High-growth, high market-share products (“stars”) 
  • Low-growth, high market-share products (“cash cows”)
  • Low-growth, low market-share products (“pets” or “dogs”) 
  • High-growth, low market-share products (“question marks”) 

Each requires a different strategy and level of investment. For example, companies will invest more in high-growth products, even though this might mean minimizing profits in the short term, in the hopes that these products will become cash cows, which generate more cash for a lower level of investment compared to other products in the portfolio. Companies might also decide to sell their dogs/pets, which don’t generate a profit beyond the investment required to maintain them.

  1. Benchmark

    A standard against which the performance of a security, mutual ...
  2. Alpha

    Alpha is used in finance to represent two things: 1. a measure ...
  3. Equity

    Equity is the value of an asset less the value of all liabilities ...
  4. Series 6

    A securities license entitling the holder to register as a limited ...
  5. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  6. Dividend

    A distribution of a portion of a company's earnings, decided ...
Related Articles
  1. Fundamental Analysis

    Analyzing Porter's Five Forces on Apple

    Evaluate Apple's position in the marketplace by looking at it through the perspective of the Porter Five Forces Model for industry analysis.
  2. Stock Analysis

    New Chevron Refinery Makes It the Leader in Lubricant Base Oils

    Learn how Chevron's new Pascagoula refinery plant for the production of base oil lubricants will likely improve its bottom line profitability.
  3. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  4. Stock Analysis

    5 Reasons Thoratec Corp. Keeps Impressing Investors

    Learn about Thoratec Corporation and its position in its industry. Understand five key factors why the company has impressed investors.
  5. Stock Analysis

    3 Stocks Near Their 52-Week Lows

    Discover some stocks that are currently trading near their 52-week lows, which may be undervalued and offer a good buying opportunity for investors.
  6. Stock Analysis

    Comparing Coca-Cola and Pepsi's Business Models

    Understand more about the Coca-Cola company and the PepsiCo company. Learn about the key similarities and differences that make both companies successful.
  7. Stock Analysis

    Will Abercrombie & Fitch Ever Make a Comeback?

    A comeback seems possible for Abercrombie & Fitch, but can it afford the costs required to put it back on top?
  8. Mutual Funds & ETFs

    American Funds' Top Funds for Retirement

    Planning for retirement in this economic and investment environment is far from easy. American Funds might offer an answer.
  9. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  10. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  1. How can a company reduce the unsystematic risk of its own security issues?

    Companies can reduce the unsystematic risk of their own security issues simply by doing the most effective job possible of ... Read Full Answer >>
  2. How liquid are Vanguard mutual funds?

    The Vanguard mutual fund family is one of the largest and most well-recognized fund family in the financial industry. Its ... Read Full Answer >>
  3. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  4. Does OptionsHouse have mutual funds?

    OptionsHouse has access to some mutual funds, but it depends on the fund in which the investor is looking to buy shares. ... Read Full Answer >>
  5. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  6. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center