100 Managers' Toolbox: Competitive Product Placement

When to use

When analysing a product range as part of a strategy review.

What you get

A pictorial representation of products or groups of products positioning in terms of relative competitive position, market growth rate and an assessment of position in the product life cycle.

Time

1-2 hours will provide a useful discussion.

Number of people

3-8 people, preferably from different parts of the business. It is important that there is a representation from sale and/or marketing.

Equipment

Flipchart or wipe board to create the matrix and somewhere to capture useful discussion points.

Method

1. Draw up the matrix shown opposite and agree the scale for each of the axes. It is important that the scales are appropriate for your business.

2. Place your products or groups of products on the matrix fixing their position in terms of relative market share and market growth rate.

3. Discuss the implications of the product positioning.

Dogs: low market share, low market growth

- Do we want to continue producing this? Why? What would happen if we stopped this product line? How can we maximise its usefulness?

Cash cows: high market share, low market growth-How long it will maintain cash cow status? Are there any options to increase the market growth?

Question marks: low market share, high market growth-Is there anything we can do to increase market share? What movement in market share are happening in the marketplace?

Stars: high market share, high market growth-Have we got any stars? Where are we going to get a constant source of stars from? How long will they stay stars?

4. Consider the balance of the portfolio. The absence of stars may lead to no cash cows in the future, no cash cows now may lead to cash flow problems. Too many question marks may drain the business of cash if ambitious levels of market share are aimed at.

5. Use this perspective of the business to aid strategy development.

                                                                                         Relative Market Share

Exercise

Complete the matrix for a theme park.

Key points

This is a useful tool for understanding an organisation’s situation or market position and as a basis for internal managerial debate.

     The questions in step 3 of the method are a sample of the types of discussion points that can be raised.

     It isn’t always possible or necessary to get accurate information on positioning on the grid; simply using the high, low relative measure still provides a useful discussion.

     This tool can be used for service offerings as well as products.

Additional comments

Due to the tool’s simplistic nature it often fails to represent the complexities of

markets. Therefore, do not use in isolation. Growth and market share are not the only factors that make markets attractive.

Other Information

Diagram adapted and reprinted from Long Range Planning 10, B. Hadley, ‘Strategy and the Business Portfolio’, p. 12, Copyright (February 1977), with permission from Excerpta Medica Inc.