Product portfolio: assigning an economic role to every offer.
Key distinctions
Three conditions before calculating.
Role rather than presence
Each offer must explain the function no other fills as well: recruit, convert, increase value, retain, defend or organise a migration. A reference without a distinct role consumes inventory, support and attention without proving its portfolio value.
Measured overlap
Two offers can share a segment if they answer distinct uses, prices or channels. Overlap becomes a problem when the same demand, the same promise and the same costs are duplicated without demonstrable incremental contribution.
A life-cycle rule
Maintain, invest, migrate and withdraw each require a dated threshold. A legacy offer is not kept out of inertia: its defensive or transitional role must be explicit, capped and reviewed.
Method
Arbitrating the portfolio before analysing an isolated extension
- 01Map the roles
For each offer, name segment, use, journey stage, price, channel, contribution and expected role; flag the roles without an offer and the offers without a role.
- 02Measure the portfolio value
Compare direct contribution with acquisition, upgrade, retention, complexity cost and transferred margin, keeping observed, estimated and unavailable effects separate.
- 03Test the overlaps
Measure substitutions, service duplication, price confusion and competition between channels; the page dedicated to cannibalisation provides the detailed calculation when transfers become the main question.
- 04Decide the life cycle
Give each offer an action, an owner, a threshold and a date — invest, maintain, migrate, merge or withdraw — and simulate the portfolio after the action, not only the offer's own profit and loss.
The map of roles and life-cycle rules
Four offers are each linked to a role, an economic indicator and a rule to keep, migrate or withdraw.
The gradual withdrawal of an offer without a distinct role creates €7,000
A Legacy offer serves 2,000 customers and produces €90,000 of contribution. Its use and its segment now overlap the Core offer. A simulated migration transfers 70% of the customers to Core at €65 of contribution, temporarily keeps 20% on Legacy at €45 and expects 10% attrition. The migration costs €12,000.
Contribution after the decision: 1,400 × €65 + 400 × €45 = €109,000. Net incremental contribution: 109,000 − 90,000 − 12,000 = €7,000. The calculation keeps attrition visible instead of assuming a complete migration.
Legacy moves to migration status rather than maintenance. Full withdrawal remains conditional on service stability and on the attrition rate observed after the first wave.
Acceptance conditions
What must be true to act.
- 01
Each offer has a distinct role and an indicator of contribution to the portfolio.
- 02
Overlaps of segment, use, price and channel are measured.
- 03
Complexity, service and migration costs are included.
- 04
Maintain, invest, migrate or withdraw each have a threshold and a review date.
Limits
What this analysis does not prove.
- Declared origins often understate real substitutions.
- Competitive reaction can change the sources after launch.
- Loyalty and reputation effects require a longer window.
References
Works cited.
- Cooper, R. G., Edgett, S. J. & Kleinschmidt, E. J. (2001), Portfolio Management for New Products.
- Kester, L., Griffin, A., Hultink, E. J. & Lauche, K. (2011), “Exploring Portfolio Decision-Making Processes”, Journal of Product Innovation Management, 28(5), 641–661.
- Van Heerde, H. J., Srinivasan, S. & Dekimpe, M. G. (2010), “Estimating Cannibalization Rates for Pioneering Innovations”, Marketing Science, 29(6), 1024–1039.