Product Portfolio Management (PPM), advocated by the Boston Consulting Group, is a framework for analyzing business maturity and market growth potential, classifying businesses into four categories: cash cows, stars, losers, and problem children.
These categories are straightforward and may seem uncomfortable to say out loud within your own company, but a deeper understanding of the strategic implications of each can deliver great value.
Of particular note is the "Money Tree." As you can imagine from the name, the department that corresponds to the "Money Tree" is the company's main earner, backbone, and cash cow, and plays an important role in supporting the company's financial foundation.
However, a business that stands out is list of aruba consumer email not necessarily a "money tree." A business that looks flashy may be in the red, and the department that is the "money tree" may be unspectacular. So, what are the characteristics of a business that is the "money tree"?
In this article, we will explore the basic concepts of product portfolio management, the meaning of the "money tree" and its role within a company, how to apply the concept to marketing, and how the "money tree" contributes to corporate growth based on case studies from seven companies in different industries, including Amazon and Sansan.
What is a "money tree"?
The "money tree" is the quadrant located in the "most profitable business" in Product Portfolio Management (PPM).
The English term is "cash cow." In other words, like a dairy cow that produces milk every day, it generates a stable cash flow and can be used as an investment source for other businesses with growth potential.
What is Product Portfolio Management?
" Product portfolio management " is a business analysis framework developed by the Boston Consulting Group (BCG) in the United States in the 1970s. It is also called the " BCG Matrix ."
Product portfolio management is a useful framework for deciding where to invest a company's resources, as well as product management and brand marketing policies.
The framework classifies businesses into four categories based on their relative market share and market growth rate. The categories are as follows:
Money Tree: A business that consistently generates high profits in a mature market and realizes maximum returns with minimal investment.
Problem child: A business located in a growing market but with a low market share, which has potential for growth but is uncertain about the return on investment.
Star: A business with high market growth rate and expanding market share that has the potential to become a "money tree" in the future.
Losers: Businesses with stagnant market growth and low market share that need to be withdrawn or restructured.
