Examine each individual product or service group in your range and place it onto the matrix. Where are the products/services of your rivals in this matrix?
Dogs
These are products with a low share of a low growth market. These are the canine version of 'real turkeys!'. They do not generate cash for the company…. they tend to absorb it. Get rid of these products/services!!
Cash Cows
These are products/services with a high share of a slow growth market. Cash Cows generate more than is invested in them. So keep them in your portfolio of products for the time being.
Problem Children
These are products/services with a low share of a high growth market. They consume resources and generate little in return. They absorb most money as you attempt to increase market share.
Stars
These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income. Keep and build your stars.
Look for some kind of balance within your portfolio. Try not to have any Dogs. Cash Cows, Problem Children and Stars need to be kept in a kind of equilibrium. The funds generated by your ‘Cash Cows’ are used to turn ‘Problem Children’ into ‘Stars’, which may eventually become Cash Cows. Some of the Problem Children will become Dogs, and this means that you will need a larger contribution from the successful products to compensate for the failures.
Here are some definitions of the four terms above. Which is which?
(i) Low market share and low market growth
Star? Dog? Problem children? Cash cow?
(ii) Low market share in high growth markets
Star? Dog? Problem children? Cash cow?
(iii) High growth markets with relatively high share of the market
Star? Dog? Problem children? Cash cow?
(iv) High market share, but slow market growth
Star? Dog? Problem children? Cash cow?
Can you employ this matrix in your business?
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