Rules for You Put All of Your Company’s Products Into Their Respective Categories

Topics: The Coca-Cola Company, Coca-Cola, Strategic management Pages: 4 (650 words) Published: October 9, 2011
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 “Iron Man” earned in two months). Nike then marketed Converse through retailers (such as Target) where it would not allow its own brand to be sold. In 2007, Converse earned $550 million. With Nike’s resources and marketing ingenuity, this old dog learned a few tricks.

2nd example:

Question Marks

High Growth, Low Market Share

• Most...
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