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Transcript of Product portfolio
the market share is good and the growth rate too is good.
cash cows are products which are having a high market share in a low growing market.
How do we classify products?
The BCG matrix classifies products on the basis of the market share of the product as well as the growth rate which a product may have.
A product portfolio is formed by
all the products which an organization has.
A product portfolio may contain different categories of products, different product lines and finally the individual product itself.
You need managers for managing individual products, managing product lines
this way, a product manager can decide what level of investments a particular product might need and what would be the returns from such a product.
Management is needed on all the three levels of a product portfolio.
and finally the top level management which manages the complete portfolio.
The BCG matrix
no extra revenue should be given to products which cant give the revenue back to the organization
the cash cows are the ones which require
but at the same time
give higher returns.
Thus customer satisfaction programs, loyalty programs and other such promotional methods form the core of the marketing plan for a cash cow product
All types of marketing, s
ales promotion and advertising strategies
are used, the concentration and investment needs to be high in marketing activities so as to increase and retain market share.
a company might come up with an innovative product which immediately gains good growth rate. However the market share of such a product is unknown.
The major problem associated with having Question marks is the amount of investment which it might need and whether the investment will give returns in the end or whether it will be completely wasted.
Products are classified as dogs when they have low market share and low growth rate.
they are considered as negative profitability products mainly because the money already invested in the product can be used somewhere else.
Depending on the amount of cash which is already invested in this quadrant, the company can either divest the product altogether or it can revamp the product through rebranding / innovation / adding features etc.
Strategies based on the BCG Matrix.
1) Build – By increasing investment, the product is given an impetus such that the product increases its market share.
2) Hold – The company cannot invest or it has other investment commitments due to which it holds the product in the same quadrant.
3) Harvest – Best observed in the Cash cow scenario, wherein the company reduces the amount of investment and tries to take out maximum cash flow from the said product
4) Divest – Best observed in case of Dog quadrant products which are generally divested to release the amount of money already stuck in the business.
The BCG Matrix is named after the Boston Consulting Group, a global management consulting firm. The company has 81 offices in 45 countries and is one of the Big Three management consulting firms.
The company was founded by Bruce D Henderson, an alumnus of Vanderbilt University and Harvard Business School.
As BCG founder Bruce Henderson wrote in 1968, "all products eventually become either cash cows or pets [dogs]. The value of a product is completely dependent upon obtaining a leading share of its market before the growth slows."