It is also named as problem child and wild cat. It is in a growing market, but does not have a high market share. It may be necessary to spend heavily to increase market share. In such low market share but high market growth forces, the company to invest heavily in promotion without earning enough profit from sales to cover expenditure.
The products are often in the growth stage of the life cycle, but the low market share makes them highly unprofitable. The company needs high cash but cash generation is low, so company should to take decision to strengthen or divest.
Following situations take place in this cell of matrix
⦁ Products having a low market share in a high growth market.
⦁ Need money spent to develop them.
⦁ May produce negative cash flow.
⦁ Low relative market share position yet compete in high-growth industry.
⦁ Cash needs are high
⦁ Cash generation is low
⦁ Decision to strengthen (intensive strategies) or dive
Dog: It has a low share in static or declining markets and is thus the worst of all combinations. Dogs may be a cash drain and use up a disproportionate amount of company time and resources.
Following situation take place in this cell of matrix
⦁ Products in a low growth market
⦁ Have low or declining market share (decline stage of PLC)
⦁ Associated with negative cash flow
⦁ May require large sums of money to support.
⦁ Low relative market share position and compete in slow or no market growth
⦁ Weak internal and external position
⦁ Decision to liquidate, divest, retrenchment
Cash Cow: In this category of matrix, we see high market share and low market growth minimizes promotional expenditure. It is often product in the maturity, saturation or decline stage of the life cycle. High market share guarantees good profitability (except during the saturation stage).
It has a high market share in a mature market. Because growth is low and market conditions are more stable, the need for heavy marketing investment is less. But high relative market share means that the SBU should be able to maintain unit cost levels below those of competitors. The cash cow should then be a cash provider, perhaps to finance ‘question marks’.
Following situation take place in this cell of matrix;
⦁ High market share
⦁ Low growth markets – maturity stage of PLC
⦁ High cash revenue – positive cash flows
⦁ High relative market share position, but compete in low-growth industry
⦁ Generate cash in excess of their needs
⦁ Milked for other purposes
⦁ Maintain strong position as long as possible
⦁ Product development, concentric diversification
⦁ If becomes weak—retrenchment or divestiture
The Boston Consulting Group suggested that investment should principally be channeled into stars and those which could be promoted to star status. Investment in cash cows should be at the level necessary to maintain market share. The profitability of dogs should be carefully monitored and the organization should withdraw from unprofitable dogs. It should also withdraw from question marks which are without star potential.