I ran into that problem at Tech Data after the components business had grown substantially. Across categories such as memory and graphics, we were carrying several brands with technically similar products, overlapping customer groups and comparable use cases. On paper, the portfolio looked rich. Commercially, the lack of differentiation meant that we were increasingly asking our own brands to compete against one another for the same transaction.
The consequences showed up first in pricing. When three products are broadly interchangeable and nobody has defined a clear reason why one belongs in a different buying situation from another, price becomes the easiest way to win the order. In a distribution environment where market prices could already move quickly, that added another layer of pressure. Falling market prices were difficult enough to manage without also allowing several brands inside the same portfolio to discount against one another.
The scale of the portfolio made the problem harder to see clearly. We were dealing with large numbers of SKUs, different stock positions, product lifecycles, vendor expectations and shifting market prices. Some suppliers wanted volume, others wanted premium positioning, and some products were moving towards end of life while others were newly constrained. The instinctive response could easily have been to manage each vendor more aggressively, but that would have treated the brands as separate commercial problems rather than recognising the structural issue underneath them.
The real question was not whether we had too many products. It was whether too many products were being asked to compete for the same reason.
That changed the way I looked at the portfolio. Instead of organising the category primarily around vendor names, I started with the way customers approached the market. Some buyers were looking for high-end gaming performance, others were upgrading existing systems, retail had its own pricing and packaging requirements, and another group was fundamentally driven by budget. Those buying situations created a more useful structure than the logos printed on the boxes.
We therefore created four clearer commercial subcategories: high-end gaming, upgrading, retail and budget. Brands and products could then be positioned deliberately within those spaces instead of being left to overlap across the entire market. The same underlying products now had context, and Sales had a clearer reason for recommending one option rather than another. Customers also gained a more understandable buying logic, while suppliers could grow without automatically taking volume from another brand already sitting inside the same portfolio.
The shift was commercially more important than the category labels themselves. Once every offer had a more distinct role, pricing became easier to defend because the conversation no longer started from direct equivalence. A customer comparing products designed for different needs is less likely to reduce the decision to a single price point than a customer comparing three apparently interchangeable options. The portfolio stopped behaving like a collection of competing products and started behaving more like a system of complementary commercial roles.
The broader lesson is easy to miss because portfolio growth tends to happen incrementally. One additional product line rarely creates a crisis, and neither does one acquisition or one new vendor. Over time, however, new offers accumulate, often because each looked attractive in isolation. The complexity becomes visible only later, when Sales struggles to explain the differences, Marketing has to support too many overlapping propositions, or margin starts eroding because customers can move between near-identical options without sacrificing much value.
At that point, organisations often respond by trying to improve the individual propositions. Product teams sharpen features, Marketing creates more messaging and Sales receives additional training. Those actions can help, but they will not solve a portfolio architecture problem if several offers continue to occupy the same commercial space. The issue is not necessarily that the products are weak. It is that the organisation has failed to decide what role each product should play relative to the others.
This becomes especially relevant in businesses that grow through acquisition. New products and brands often arrive with their own positioning, customer base and sales logic, while the acquiring company initially leaves those structures largely intact. That can be sensible during integration, but the portfolio gradually becomes harder to navigate if nobody later revisits how the offers fit together. What began as expansion can eventually create duplication, internal competition and unnecessary pressure on pricing.
The same dynamic appears in software. A company may launch several modules aimed at adjacent use cases, only to discover that account teams are positioning them against the same budget and buyer. In professional services, different practices can end up selling similar transformation work under different names. Industrial companies can accumulate product variants that look distinct internally but appear largely interchangeable to customers. In each case, the complexity sits inside the organisation before it becomes visible in the market.
One of the strongest warning signs is that Sales increasingly needs discounts to create differentiation. Discounting is not always evidence of poor selling. It can be the rational response of a salesperson who has been given several overlapping products and no clear reason why the customer should prefer one over another. If the portfolio itself creates direct comparison, pricing pressure is a predictable outcome rather than a behavioural failure.
Another warning sign is that the sales organisation begins choosing products based on availability, commission or personal familiarity instead of customer fit. Once that happens, the portfolio stops expressing strategic intent. It becomes a catalogue from which individuals make local choices, often with little visibility into the wider consequences for margin, vendor relationships or positioning.
Portfolio architecture therefore requires leadership to make choices that are easy to postpone. Which offers deserve premium positioning, and which are intentionally designed for volume? Which customer groups should each brand serve, and where should overlap be accepted because it reflects genuine buying behaviour? Which products should be allowed to compete directly, and where does that simply create internal cannibalisation?
Those decisions are uncomfortable because they constrain choice. A supplier may prefer broader access to the market, a product team may want its offer available to every segment, and Sales may value maximum flexibility. Leaving every option open can feel customer-friendly, but excessive flexibility often transfers complexity from management to the frontline and ultimately to the buyer.
The Tech Data approach worked because the portfolio was organised around customer buying logic rather than around vendor entitlement. The subcategories created enough separation to reduce direct price competition, stabilise pricing and allow multiple brands to grow alongside one another. The source material also records improved margin predictability and clearer buying logic for resellers and customers as outcomes of the model.
What made the model scalable was not the specific four-category structure. Those categories reflected that market at that time. The more transferable principle is that a growing portfolio needs an explicit reason for the coexistence of its offers. Without that, every additional product increases complexity faster than it increases customer value.
This is also why portfolio discussions should not be left entirely to Product. Positioning, pricing, sales behaviour and customer understanding are all affected by the way the portfolio is structured. A technically rational product map can still produce poor commercial outcomes if customers cannot understand the differences or if Sales repeatedly has to explain why several internal options appear to solve the same problem.
The strongest portfolios create choice without creating confusion. They allow different brands or products to occupy distinct commercial positions, while still making sense as part of the same overall system. That gives Sales clearer guidance, gives Marketing more focused propositions and gives customers a reason to choose beyond whichever option happens to be cheapest that week.
Growth through portfolio expansion can be powerful, but only if the organisation keeps making choices about how the pieces fit together. Otherwise, the business may continue adding products while quietly weakening the value of everything already there.
