Rate your products and services: Cash Cow? Dog? Question Mark? or Star?

One product portfolio matrix that enables you as an industry leader or competitor to rate your products consists of categories such as: Star, Cash Cow, Question mark and Dog. The idea of a rating of your products is to know how to improve on the various products you produce and also understand how to categorize them.

Star- This is a product with a high market share and high growth rate result in break-even or perhaps small profits products and services in this category are typically supported by heavy expenditure on advertising, sales incentives, perhaps insufficient production run in order to achieve a dominant market position while there is still overall growth. T5he rationale is that costs should eventually come down over time, and turn the star to a cash cow via strategies such as reductions, product improvements, market coverage etc.

Cash cow- Cash cow is business jargon for a business venture that generates a steady return of profits that far exceed the outlay of cash required to acquire or start it.High market share in a mature market. Once market dominance is achieved and market growth subsides, there is less need of high investment and cost may fall as experience increases. This provides a high level cash income for the producer (who is milking the earlier investment) Such cash might then be fed back into the business to generate and support the next star. The organization would seek to maintain its position by investing in process improvements, technological leadership and differentiation.

Question mark (a.k.a Problem child) A product with a growing market share but a low share. Products and services in this category might be tomorrow’s star if they are given sufficient resource and attention or they might never blossom into viable options. It is usually a difficult management decision  to know which to back and which to let drop. This early stage in a products lifecycle can be extremely costly. The organization will invest in market share growth through marketing efforts (product, price, production, rapid increase in distribution) acquisition of competitors to obtain their share  a conversion might be made from a question mark to a star.

Dog- Low market share product or service.  The situation of the product is not sustainable in the long run as these products may become a cash drain to the organization. The company has to decide when to divest itself of these parts of its business producers someone use the scope of the product range as a unique selling proposition, so that “the dog” may be retained in the short term in order to make a product range comprehensive or because it represents the foundation of a reputation built on that brand. The organization will attempt to maximize the return from these activities by withdrawing support, attempting to sell the business to a more appropriate organization or seek a niche market where the business is still relevant.

Three main issues could be major considerations for changing or maintaining the category to which a product or service belongs:

Funds-(Cash cow is the future of business since it helps sustain the organization).

Resources-How much have really been given to those who are managing the product?

Does the balance of the products and services match the resources available? If the organization has high research and development skills it could enhance the transformation of a product or service.