The Growth Share Matrix
The Growth Share Matrix was built on the premise that market leadership will result in sustainable, superior results.
Ultimately, the market leader can obtain a self-reinforcing cost advantage that your competitors find difficult to copy. These high growth rates suggest which markets have the most potential.
Dogs: The usual marketing advice here is to aim to remove dogs from your product portfolio as they are a drain on resources. However, this can be an over-simplification since it's often possible to generate ongoing revenue with little cost.
Question marks: It’s not known if they will become a star or drop into the dog quadrant. The challenge is that a lot of investment may be required to get a return It’s not always easy to spot the future star and this can result in potentially wasted funds.
Stars: Can be the market leader though require ongoing investment to sustain. They generate more ROI than other product categories.
Cash cows: The simple rule here is to ‘Milk these products as much as possible without killing the cow! Often mature, well-established products.
While this matrix is super simple can easily help to understand the strategic positions of a business portfolio, it is best used as a starting point for more thorough analysis. Market share and industry growth are not the only factors of profitability.
And, high market share does not necessarily mean high profits.
This matrix does not account for synergies between different products or services.
Dogs can be as important as cash cows to businesses if it helps to achieve competitive advantage for the rest of the company.