Mix
Development of a successful product mix strategy depends on analyzing existing products for market growth and market share. Results of product analysis allow management to make marketing and resource allocation decisions that maximize profit among existing products and help make long-term product mix decisions. The best product mix for a company is one that directs resource dollars towards products with the highest potential to increase profits and revenue for the company.
Stars
Place a high priority on your product stars. Star products have high growth combined with high-market share. This combination of attributes can lead to high profit levels and increased cash flow. Place marketing, resources and attention onto these products to push them towards market domination. For example, if your company sells metal-studded dog collars that are increasing in popularity and already enjoy high-market share, advertise your collars heavily and look for additional distribution channels to increase product availability.
Cash Cows
Stable products with high-market share but low growth are considered cash cows. A cash cow position is the ultimate goal of all products. In this successful position, profit is maintained with little marketing or resource allocation beyond basic product support functions. Resources are best placed on other types of products that have growth opportunities. For example, your company sells the most popular rhinestone dog collars on the market with 80 percent market share. Marketing efforts fail to increase sales because the market is stable, and you have already established your dominance. Your company should minimize marketing spending on rhinestone dog collars and put your emphasis on your star product, the metal-studded dog collar.
Problem Children
High-growth products with low-market share are deemed problem children. These products have potential to become stars or cash cows, but it can be hard to reach that position. Put time and attention into these products to see if additional advertising, changes in marketing strategy such as targeting a more receptive demographic or rebranding efforts increase sales. For example, your company sells animal print dog collars. Recent fashion trends have increased the overall market for these collars, but your overall markets share is low. Consider advertising your collars in fashion magazines to tie in with the current human fashion trend or in dog owner magazines. If sales increase based on this effort, continue expanding your marketing efforts. If sales stay the same, reconsider the product's classification.
Dogs
Products that have low growth and low market share are called dogs. These products should be removed from your product mix once it is no longer profitable to produce the product. No marketing, advertising or undue resource dollars should be used for these products. Maintain the products as long as there are loyalty buyers. For example, if your polka-dot dog collars have a few loyal dog clubs that use your product for dog shows, but the overall market share and growth for these collars is low, continue to sell until the dog clubs change collars in favor of a new style.
Tags: example your, market share, company sells, example your company, high-market share, products with, your company