Rules for You Put All of Your Company’s Products Essay Example for Free

Rules for You Put All of Your Company’s Products Essay Once you put all of your company’s products into their respective categories, you then consider these rules: 1. Stars:  invest your marketing dollars in these since they could become dominant market leaders 2. Cash Cows:  milk these to provide the cash to invest in your stars and a few question marks 3. Question Marks:  invest in the most promising of these as well — but only a few 4. Dogs:  cut the leash and let these go to the highest bidder for some much needed cash To illustrate, imagine that you’re Coca-Cola. Your portfolio might look something like this: Question Mark:  your energy drink brand (Full Throttle) ? Star:  your bottled water (Dasani) ? Cash Cow:  your namesake soft drink (Coca-Cola) ? Dog:  your sweetened juice drink (Hi-C) As Coca-Cola’s CMO, you would use income from Coke to invest primarily in Dasani and Full Throttle, while looking to sell off Hi-C to some private equity fund with too much cash on its hands. But before you rush off and start reallocating your dinero, consider these caveats†¦ Caveat #1: Markets change with the economy and other conditions — sometimes very quickly. What if consumers make a massive shift from bottled water to tap water, as many municipal governments are doing? Dasani is doomed. Or what if  Tiki Bar TV  uses Hi-C as a drink mixer, making it a hip and trendy drink amongst geeks overnight? Your dog is now a star†¦ Caveat #2: One company’s dog is another company’s cash cow (or better). Some investors have struck gold by buying another company’s dogs. In 2003, Nike bought troubled Converse for only $305 million (less than what the movie â€Å"Iron Man† earned in two months). Tips: Invest for sales growth and market share. Use cash from Cash Cows to support required investments. Star examples: Apple = iPhone Coca-Cola = Vitamin Water Cash Cows Low Growth, High Market Share [pic] †¢ Foundation of the company and Stars of yesterday †¢ Generate more cash than required †¢ Extract profits by investing as little cash as possible †¢ located in an industry that is mature and not growing or declining Tips: Maintain the strong market position and defend your market share. Take advantage of sales volume and leverage the size of operations. Support other businesses. Cash Cow examples: Apple = iPods Coca-Cola = Coca-Cola Classic Dogs Low Growth, Low Market Share [pic] †¢ Cash traps †¢ Do not have potential to bring in much cash †¢ Number of dogs in country should be minimalized †¢ Business is situated at a declining stage Tips: Optimize your current operations. Get rid of all non value added activities and features. Reposition your offering to generate positive cash flow or sell this business. Dog examples: Apple = Since good company should not have any dogs Coca-Cola = New Coke