a) Product portfolio refers to the diversity of the different product lines produced by a business. In this case, Mattel's product portfolio includes: board games, toy cars, cuddly toys, dolls and educational toys.
‘Product portfolio' should be described in the context of Mattel for maximum marks.
b) Having a vary product portfolio is significant to Mattel for several reasons, including:
• Improved sales since a wider customer base are catered for. This can also persuade repeat custom (consumer loyalty) since customers may be fascinated to buying a range of different toys.
• Risk-bearing economies of scale. A vary product portfolio can help to recompense losses made by unpopular product lines by profits being made in other more successful strategic or products business units, a diversified portfolio decreases risks.
• It can increase Mattel's market power and market share, i.e. the firm's competitiveness develops.
• Economies of scope - Mattel can promote the family brand across the whole portfolio of products, thereby related costs and other cutting marketing.
• Broadening the product portfolio can help to make known the Mattel brand and this makes future product launches more likely to succeed.
Note: ‘Diversification' (a growth strategy) is not the same as a varied (diversified) product portfolio.
For example, HotWheels for boys, Barbie for girls, Scrabble for families and Elmo for toddlers.