Okonkwo Prelims

this group do not generate cash for the company but tend to absorb it and
therefore might need to be removed from the product portfolio. In the luxury
goods sector, these would include haute couture, which several brands have
gradually removed from their portfolio.
Cash cowsare products with a high share of a slow-growth market. The
products in this group generate high sales and profitability for their owners;
more than the investment made in them. It is therefore important to keep them
in the product portfolio. An example is jewellery.
Starsare the products that have a high share in high-growth markets. They
also generate huge income and contribute substantially to the profitability of
the brands. The stars are the key products of brands and should be kept and
rejuvenated at all costs.
Problem child products are those with a low share of a high-growth
market. They consume high capital resources and generate few sales and prof-
its in return. They also need huge investments of time, money and effort in
order to increase their market share. These include products like timepieces.
In balancing the role of products within the portfolio, there should be equi-
librium in investments and management time. This means the removal of the
Dogs, the maintenance of Cash Cows, and the boosting of the Stars. Usually,
the funds from Cash Cows are invested in Problem Child products to turn
them into Cash Cows or Stars. If, however, the Problem Child product poten-
tially becomes a Dog, then it ought to be removed from the product portfolio.
The BCG Matrix is also useful as a platform for performance measurement
for luxury companies with multiple brands in their portfolio, as shown in
Figure 5.7.
The next major task after defining and charting out the product range of a
brand is to actually manage the products. The decisions that are made regard-
ing product management consist of product naming, product classification,
product extension, product alignment to the brand image, marketing research,
trend tracking and analysis of the consumer response to the product offerings

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the art of creating and managing luxury fashion brands

Star Problem child

(leather goods) (wristwatches)

Cash cow Dog

(jewellery) (haute couture)

Market share

High

Market growth rate

High

Low

Figure 5.7 The Luxury Fashion Product Classification using the BCG Matrix