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SUCCESSFUL SELLING 255

products with limited potential. Nescafé coffee is Nestlé’s largest
The coffee brand Nescafé has brand, a cash cow valued at $17.4 billion.
continued to perform well since its Growing since World War II, the product
generated sales of $10 billion in 2012.
1938 launch, thanks in part to the
company’s strategy of investing in
and expanding the range. At growth market, elevating food
different times in the company’s products for real dogs and cats into
history it has been a cow and a star star products.
product. Instant coffee is now a
reliable cow, funding expansion in Portfolio management
other areas. However, the company’s Other models have evolved from the
organic food range has suffered low BCG. In the 1970s, General Electric
market share in a growing market, consulted with business advisors
making it a question mark. Nestlé’s McKinsey & Company to develop
large share of the food seasonings an alternative known as the GE–
sector, a low-growth area, could be McKinsey matrix. This nine-cell competitive strength. In 1982,
seen as a cow. model enables a more complex H. C. Barksdale and C. E. Harris
Through a series of acquisitions, analysis of the product portfolio, proposed two new product
Nestlé has become the leading and allows companies to plot classifications to add to the original
pet-food maker in a globally high- market attractiveness and BCG matrix: “warhorses” and
“dodos.” Warhorses lead the market
but are threatened by a negative
Barksdale and Harris market growth, so a business must
created a matrix that added
two new classifications gauge whether to ride out the storm
Although they lead the known as warhorses and in the belief that it will pick up, or
market, warhorses are dodos, both of which were work the horse as long as possible
threatened by the prospect expected to decline. with minimal outlay. Dodos are
of negative growth. about to become extinct, with low
share in a negative growth market.

Using the matrices
A 1981 study by management
professors Richard Bettis and W. K.
On their way to
extinction, dodos have Hall, and supported by P. Haspeslagh
a low share of a market in 1982, found the BCG matrix was
that has an outlook of used by 45 percent of companies
negative growth. ranked in the Fortune 500.
However, the BCG matrix has
attracted criticism for being overly
simplistic and basing judgements on
cash flow rather than return on
investment. A study by Colorado
State University in 1992 discovered
that companies using the BCG
matrix and similar models had lower
shareholder returns than companies
not using such models. Despite its
detractors, the BCG provides an easy
way to make sense of the product
portfolio and the strategies involved
in managing it successfully. ■