International Markets: Stars, Cash Cows, Question Marks and Dogs

In the 70s, the Boston Consulting Group developed the product life cycle matrix to help companies analyze their product portfolios for the purpose of strategic planning and effective resource allocation.

They divided products into 4 groups:

1. Low relative market share and low market growth rate: They called it a “dog” and recommended phasing out these products.

2. Low relative market share and high growth rate: They called these products a “question mark” and recommended investing in some.

3. High relative market share and high growth rate: They called this category a “star” and recommended heavily investing in them.

4. High relative market share and low growth rate: They called it a “cash cow” and recommended maintenance only, milking the product till it turns to a “dog” then phasing it out.

BCG emphasized the need for companies to have a product portfolio that contains products in all of the question mark, star and cash cow quadrants.

Fast-forward to the globalization era. Your geographical market portfolio should match your product life cycle matrix portfolio!

The same techniques and principles can be applied when appraising your international markets and how they rank within these four quadrants. Based on that, you can decide on the amount of resources to apply to product localization.

But if you are new to international markets, how do you avoid investing in dogs?
The first step is Market Identification. You can do so by considering your strategic marketing goals, your strategic international relationships with clients or partners, and/or GDP numbers.

The Market Evaluation stage (question mark) is the research stage where you can analyze and measure the importance of each strategic market, individually. Localized search-engine marketing campaigns for each of the strategic markets are ideal to inexpensively perform your analysis.

Once you’ve identified the key geographies that appear to have the most potential, you can transition the top 1 to 3 geographies to the Market Validation stage (star), while keeping the others in evaluation. Your goal in the market validation stage is to establish sales channels and marketing strategies to actively pursue selling your product in these promising geographies.

When justified, these target markets can move into the Market Penetration stage (cash cow). This is where you want to be long term for the top 10 world markets.

It is no secret that successful international companies earn over 50% of their revenues from international markets. So build and balance your international market portfolio by moving them from one stage to the other, just like you build and balance your product portfolio in the BCG matrix. Using this approach to geographies, you can penetrate the world by dividing it and then conquering it!

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