BCG Matrix

What are Useful Product Management Tools?

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There are a plethora of product management tools available to help teams in every phase of the product lifecycle. Starting with this post and continuing over a number of upcoming weeks we will explore a few of the most useful product management tools. This discussion is not meant to be a complete and exhaustive explanation of every conceivable tool available in the marketplace. Instead, I’ll describe the general nature of the tool, underlying components, and what distinguishes it as a stronger product management tool than others one might consider using. We’ll begin in the conceptualization stage of product development.

Managing the Product Portfolio

Your product portfolio links your specific product strategy to the overall company strategy. Within the product portfolio you should find the complete suite of products, including those that currently exist and those that are planned for the future. By actively managing the product portfolio, you help ensure that your company meets its goals.

The product portfolio management process links your company’s high-level resource/budget allocation to the strategic initiatives or the product roadmap(s). The process of managing the product portfolio is also linked to what is a more tactical project portfolio management regimen. This discipline manages the approval and tracking of specific projects tagged as being supportive of the overall product portfolio initiatives.

Analyzing the Product Suite

Successful product leaders know not only where to invest, but just as important, where not to put their resources.

Boston Consulting Group (BCG) devised a simple way to communicate how to handle market analysis. It revolves around a dog, a cow, a star, and a question mark.

BCG’s Growth-Share Matrix

Using this approach, market growth rate is shown on the vertical axis and relative market share on the horizontal. Products that fall in the lower right box are those with low growth potential and low market share in your company. In other words, these are the dogs. Anything that falls in this quadrant is definitely on its way out. By pulling investment from the dogs, you free up resources to use in more productive quadrants.

The upper right quadrant displays a question mark. This represents products that usually will require your company to invest in order to improve your share of the market. However, since the prospect for market growth is high, the products represented here have high potential for the future.

Now let’s move to the upper left quadrant where you find the star products. These are the products where your company has a high share of the market and there is high potential for growth.

Finally, in the lower left quadrant are the cows – the CASH Cows. These are successful mature products. Your company has a high share of the market, but growth potential is pretty low. These are the products that produce profit you can invest in your stars and question marks hopefully to turn them into stars.

Looking at the Matrix Over Time

As time passes, things change. You will see your cash cows gradually morph into dogs as new and better products come into the market. You’ll also see today’s question marks evolve into tomorrow’s stars as the current stars replace the cash cows or rotate out of the 2-by-2 matrix entirely.

This visual clearly shows the importance of keeping a pipeline full of emerging products you can grow into robust winners for your company.

Next Week

Through my next post we’ll take a look at other product management tools starting with the GE-McKinsey Matrix, another tool that can be very helpful in your product portfolio management.


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