Working with one ' s own distribution is particularly an option if the sales activities require little shop or office space, the work can easily be scheduled, and extensive travel is unnecessary. In virtually all other cases, working with distribution partners or franchisees will be a cheaper option, even if these partners only spend part of their time on the product portfolio.
From the distributor ' s point of view, the value of an( exclusive) partnership with a supplier is that it enlarges his portfolio( for the quantification, see next paragraph), it offers better marketing and sales support, and it enables him to set up a good purchasing process. The advantages for a franchisee are even greater: he can participate in a comprehensive and proven shop concept, will receive coaching in his operational management, and only needs to concentrate on local marketing and sales. This does come at a price, however, as will be discussed in Chapter 4.
Proposition alignment and collaborative offering
Portfolio management is an important means of increasing your relevance for a target group. By including more special, complementary or even lower priced products or services in your offer, you are substantiating your brand promise. However, this need not necessarily be the offer of one single company; if two or more suppliers decide to align propositions, or to refer to each other, or to collaborate in the offering, they can achieve greater relevance for their market.
Yet to remain relevant, it is important that the portfolio displays some measure of synergy. Thus, it wouldn ' t make sense for McDonald ' s to start selling vegetables, but it would if they started offering veggie burgers. Also for a company like Office Depot, portfolio management constitutes the core of their marketing policy.
By choosing for one or a few alternatives at most, rather than selecting all products, the customer is offered a pre-selection. This saves the customer from making complicated choices, and regardless of the precise purchase, the quality is satisfactory. Combined with the availability of the products and the certainty of not needing to go somewhere else afterwards, this makes Office Depot a relevant party for many entrepreneurs.
Portfolio management also applies at a larger scale, when choosing in what activities the company should invest. Thus, the Boston Consultancy Group portfolio matrix concentrates mainly on market growth and market share in a certain activity. This activities portfolio need not be relevant for the customer, however, so there is little of synergetic value for shareholders here. A company should therefore seek products and services that represent a relevant and mutually reinforcing combination for customers.
Entering into a partnership may be an attractive alternative to developing and producing or purchasing and reselling a product or service inhouse.
If two businesses decide to align their portfolios and to refer to each other, this may represent added assurance for the customer: he may assume that the supplied products or services are compatible, or that he will, at the very least, be informed of any necessary adjustments. This assurance is of value to the customer, and may thus justify a higher price.
An alternative would be to calculate how much it would cost the company to purchase the goods or services directly and to resell them. In case of goods one should also consider the costs for storage and
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