Hello, I’m Jim Glover, That Branding Guy, for Once a Day Marketing™ and today is Strategic Tuesday. Have you ever heard the term Cash Cow? We are going to discuss the Boston Consulting Group model where that term originated and how you can use it as a strategic tool.
The Boston Consulting Group created this model quite a while ago but it’s still an effective tool. The vertical axis depicts market growth. That will range from 0% to however fast your business unit (or brand) is growing. The horizontal axis represents your market share relative to your competition. You may be 10 times greater than your competition in the market or you might be one tenth the size of your competition. This tool will enable you to map where a business unit stands with respect to growth and relative market share.
There are four quadrants on the matrix and one of these is where the term Cash Cow comes from. Cash Cow is a business unit that isn’t growing rapidly at the moment but it does have good market share compared to the competition. Another category is called Stars. That is a business unit where there is quite a bit of growth and also a good position in market share compared to the competition.
The third section is labeled Question Mark (?). A business unit falls into this quadrant when there is growth but relative market share is not very large compared to the competition. The last category is Dogs. A business unit will fall into this section when there is little growth and little relative market share.
Determine whether you have a Cash Cow or a Star or a Question Mark or possible a Dog. Then evaluate the strategic options to move forward. You can build it up, maintain it as it is, harvest resources or divest.
Building up a business unit requires input of additional resources to grow and increase market share. On the other end of the continuum is divestiture where you would move resources out of one unit to put into your Stars and Question Marks. Leverage the growth share matrix to make a strategic decision as to how you are going to respond to your businesses placement.
That concludes Strategic Tuesday. Join us tomorrow for Action Wednesday. If you need any branding or marketing support, please contact me to discuss an online or onsite service engagement. You can always find that information at the end of this video. I'm Jim Glover, That Branding Guy, for Once a Day Marketing™ and we will see you next time.
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