Stars are units with a high market share in a fast-growing industry. Strategies for Stars: All types of marketing, sales promotion and advertising strategies are used for Stars. New Customer acquisition strategies are the best strategies for converting Question marks to Stars or Cash cows. Strategies for Question marks: As they are new entry products with high growth rate, the growth rate needs to be capitalized in such a manner that question marks turn into high market share products. Strategies for Dogs: 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. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom. They are regarded as staid and boring, in a “mature” market, and every corporation would be thrilled to own as many as possible. The BCG Matrix - or Boston Matrix - was developed by The Boston Consulting Group in the late 60s as a way for companies to develop strategies for their different product lines. What’s it: Question mark is a product or business unit with a low market share but in a high growth market. The result is a large net cash consumption. They are to be “milked” continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. Thus in cases of Dog products, divestment strategy is used. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. The hope is that starsbecome the next cash cows. The company has two stars, two cash cows, three question marks, and three dogs. By continuing to use the website, you agree to the use of cookies. Question Marks – Since it’s a mystery whether the diet food and soda industry will boom in the future and will Pepsico’s products will find their place or not, Diet Pepsi, Pepsi Max, Quaker, etc. These units typically “break even”, generating barely enough cash to maintain the business’s market share. Cash cowsare units with high market share in a slow-growing industry. Dogs, it is thought, should be sold off. The question mark is one of the four categories of the BCG matrix. Strategies for cash cows: The cash cows are the most stable for any business and hence the strategy generally includes retention of the market share. The product has an opportunity to increase market share and dominate the market. They are to be “milked” continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. They depress a profitable company’s return on assets ratio, used by many investors to judge how well a company is being managed. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. It can be moved only to the question mark region where again the future of the product is unknown. Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. Every business needs strategic planning to rule in the industry. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. Furthermore, time to time market research also helps in determining consumer psychology for the product as well as the possible future of the product and a hard decision might have to be taken if the product goes into negative profitability. The other three are Cash Cow, Star, Dog. Thus customer satisfaction programs, loyalty programs and other such promotional methods form the core of the marketing plan for a cash cow product or business unit. Strategies for cash cows:The cash cows are the most stable for any busi… This is because in cash cow, already these strategies have been used and they have resulted in the formation of a cash cow. BCG Questions Marks - Guide to the BCG growth-share matrix and analysis Similarly in Stars, because of the high competition and rising market share, the concentration and investment needs to be high in marketing activities so as to increase and retain market share. Although the concepts of Cash Cows, Dogs, Question Marks and Stars may described are used more widely in large business they may be applied to business of all sizes. These units typically generate cash in excess of the amount of cash needed to maintain the business. Understanding BCG Matrix The chart below shows the ten circles in the growth-share matrix represent a company’s ten current SBUs. Sustaining the business unit’s market leadership may require extra cash, but this is worthwhile if that’s what it takes for the unit to remain a leader. For more information about cookies, please visit our. They are regarded as staid and boring, in a “mature” market, and every corporation would be thrilled to own as many as possible. In order to optimize our website for you and to be able to continuously improve it, we use cookies. As the market is not growing, acquisition is less and retention is high. The areas of the circles are proportional to the SBU’s dollar sales. Therefore, The Boston Consulting Group designed product portfolio matrix (BCG matrix) or growth-share matrix to help business with long-term strategic planning. However, moving a dog towards a star or a cash cow is very difficult. Cash cows are units with high market share in a slow-growing industry. fall in the question marks section of the Pepsico’s BCG matrix. These units typically generate cash in excess of the amount of cash needed to maintain the business.