The BCG (Boston Consulting Group) Matrix is my “go-to” tool when analyzing products to sell on Amazon.
Do you have stars, dogs, cows, or problem children in your business?
Rank your products on the basis of their relative market shares and growth rates.
Cash cows is where a company has high market share in a slow-growing industry. Boring products in a mature market. These are the cash generating products. Continue to “milk” them with as little investment as possible.
Dogs are products with low market share in a mature, slow-growing industry. Usually “break even” generating barely enough cash to maintain the business’s market share. Dogs should be sold off.
Question marks (also known as problem children) are products operating with a low market share in a high-growth market. They are a starting point for most products.
Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows.
Stars are units with a high market share in a fast-growing industry. They shine bright and require a lot of monetary investment.
The balanced portfolio has:
stars whose high share and high growth assure the future;
cash cows that supply funds for that future growth; and
question marks to be converted into stars with the added funds.