Effective Product Portfolio Optimization

The product portfolio optimization strategy is important because it can reduce cost and increase profit. The strategy varies—businesses with a long product development cycle tend to have fewer product launches. New products of some companies are often tied to customers’ technical requirements rather than consumers’ needs. These companies also have difficulty deactivating products, particularly where products are tied to customers’ technology. The major hurdle to optimization is that different functions have different goals. Sales looks to achieve revenue targets; Marketing, to increase market share and profit; Finance’s major concern is profit, cost reduction, and cash flow; and Supply Chain is mostly concerned about cost.