There are many ways that you can argue or discuss a company, brand, or industries success. Some people may tend to lean towards the opinions and decipher which ones they agree with and which ones they don't. Others may opt to use a more structured and factual basis to conclude how the business is really doing. According to the Boston Consulting Group you can find out what the companies SBU's, or Strategic Business Units, that will help you understand where they stand in their industry. "SBUs are classified as stars, cash cows, question marks, or dogs." (Armstrong & Kotler 2011 Marketing Page 44) If you are wondering what these terms mean you can be sure that they all correlate in importance to the business and which concept is going to be better for the company in the short and long term sense.
"Cash Cows. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share." (Armstrong & Kotler 2011 Marketing Page 44) This is a quick way for the company to make enough money to pay their bills and take care of any other financial investments that may be important to the business. The opposing term to a Cash Cow would be the Dogs. " Dogs. Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash." (Armstrong & Kotler 2011 Marketing Page 44) It is easy to understand which one is more important. Cash Cows are the quick and reliable source that keeps the goods coming while the dogs are not really worth paying attention to. They do not hold as much promise as a cash cow and can often times be a source that needs more care and maintenance to grow, than it can produce profit.
"Question Marks. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out." (Armstrong & Kotler 2011 Marketing Page 44) The Question Mark draws the most attention from the company because it requires the most consideration. The Question Mark that is chosen can make or break whether the investment was good for the company or a complete flop.
When using this approach you must ask yourself, "Is this approach cost effective, and can the companies "SBU's" be measured?" If you can answer yes to both questions you should not have any limitations that make this approach irrelevant or inconsistent. In the case of the video game market, the BCG Analysis approach suggests that the market is growing and expanding in a healthy business aspect but may need to strengthen areas such as their Cash Cow opportunities and Stars. "Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows." (Armstrong & Kotler 2011 Marketing Page 44)
"As recently as six months ago, the videogame industry was racking up strong growth even as other businesses reported sharp declines in sales and profits. U.S. videogame sales jumped 10% in January as consumers snapped up $60 to $70 games, which can bring dozens of hours of at-home family entertainment." (http://online.wsj.com/article/SB124865158612682399.html#printMode) This source was written in 2009 and boy has it changed since then.
We now have a clear insight of what brands and components of the video game industry play which role in the BCG Matrix. The Cash Cows in the industry would be the companies that have officially made a name for themselves like PlayStation, Nintendo, and Xbox. These are the big league players and they do not have to focus on being relevant because they have been for over 10 years now. The Stars are the new game release or consoles within these brands that create attention and also interact with the customer and their needs. The Question Marks are the concepts that may take time to develop like real-life simulation games and new gaming programming. The Dogs in this industry can be identified as the games or products that are not as successful and may not have a broad demographic that the industry currently produces for.
There are so any variables that drive the customers to stay loyal to a company and strictly buy their products. Quality, consistency, and creative ability all are important but there are even more sub-categories that the marketing team of the company must take into consideration. For example, "On the side of system implementations, Microsoft has somewhat locked in customers. Once a customer has purchased a console at, say for example $300, they are essentially making an investment and will most likely purchase games for that specific console in order to get their money’s worth. The games are where Microsoft makes most of its money, so the strategy works. Access to the Xbox platform is said to be ‘rigorously controlled by Xbox’, creating a barrier to entry in an already difficult to enter market. [11] Xbox developers also established a major alliance when one of the most popular game developers, EA Games. This "alliance factor" also holds true with Xbox being the only one to carry Halo and Gears of War." (http://teamxbox.wikidot.com/marketing-strategies) This is only a small fraction of what goes into decision making and investing. You can only imagine what other SBU's there are to look at in the video game industry.
Armstrong & Kotler (2011). Marketing: An Introduction, 10th Ed. Prentice Hall Publishing Page 44-47
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