Product-Market Combination Analysis

The product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure a long-term value creation, acompany should have a portfolio of products that contain both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: Market share and market growth. The basic idea behind it is the bigger the market share is or the faster the products market growth the better it is for the company.
Placing products matrix results in 4 categories:

1. Stars (=high growth, high market share): use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.
2. Cash Cows (=low growth, high market share): Profit and cash generation should be high and because the hrowth is low, the invetsments and need for cash are low.
3. Dogs (=Low growth, Low market share): Avoid and minimize the number of dogs in a company, beware of expensive turn around plans, deliver cash, otherwise liquidate.
4. Question marks (=high growth, low market share) Have the worst cash characteristics of all because thigh demands and low returns due to low market share. If nothing is done to change the market share, question makrs will absorb great amount of cash and later as the growth stop will become a dog. Either invest heavily or sell off the off.