Blog Post #2: Analyzing a Business Portfolio

Have you ever realized how many businesses and products there are within a large company like ESPN? ESPN has a vast business portfolio, which includes their TV channels, ESPN Radio, ESPN.com, ESPN The Magazine, ESPN Zone restaurants, and apparel among many others. With so many separate entities to manage, market, and finance, it can likely be very confusing at times to distinguish between all of the products and businesses. That is why analyzing your business portfolio is key in understanding where each business and product stands within your company. Analyzing your business portfolio even allows you to understand things like how and when to market to your target audience.

So how do you analyze a business portfolio? There are a few ways, but in this post I am going to discuss the Boston Consulting Group (BCG from now on) growth-share matrix (see Figure 1 below). The first step in this type of analysis is to identify a company’s key businesses, or strategic business units (also known as SBUs). The next step is to place each SBU into a category based on its market growth rate and relative market share. There are four categories that the SBUs can be placed into: stars, cash cows, question marks, and dogs. Stars are high-growth, high-share businesses and products while cash cows are low-growth, high-share businesses and products. Question marks are in high-growth markets but have low-share. Lastly, dogs are low-growth, low-share products and businesses.

Fig. 1: The Boston Consulting Group Growth-Share Matrix

To look into the BCG growth-share matrix in order to gain a better understanding of how it works, let us continue to use ESPN as an example. Let us start with identifying some cash cows. The ESPN television channel, namely their flagship program Sportscenter, is certainly a cash cow because the level of market growth is low because the program has been established in the market for a long time. It is also a cash cow because its relative market share is very high. Since Sportscenter has been established since the late 1970s, people are very familiar with the program and it has become the main hub of sporting news in the United States.

As for the star category, ESPN.com is one of ESPN’s biggest stars. Since the Internet is still a relatively new medium in terms of history, there are always rapid developments when it comes to online experiences. ESPN.com is high-growth because the Internet’s capabilities grow every day, allowing ESPN to add more and more interactive content to their website. The website is also high-share because ESPN has established itself as a frontrunner in sporting news and information through its television channel, which causes people to migrate to the online version of ESPN for even more information.

Question marks are an interesting category of the BCG growth-share matrix. They are the new, up-and-coming businesses and products of a company that have high potential to succeed but also high potential to fail. They may become stars and then cash cows someday. For example, ESPN started as a television network first in 1979. In 1979, there were many doubters of the idea of a 24/7 sports channel. Many did not think it would succeed. ESPN was a question mark. It had great potential and eventually took off thanks to Sportscenter. As it grew, ESPN and Sportscenter became stars and then reliable cash cows once their market matured.

A dog of the ESPN portfolio is ESPN The Magazine. Magazines are low-growth in this day and age largely due to the fact that people like to go online for any information they need or want. Many do not want to pay for information that they can get online for free. The Magazine is also low-share because in terms of its market, there are not many that seek out information in magazines anymore. While The Magazine may generate enough money to stay afloat, it is likely not creating a large amount of income for ESPN.

To wrap things up, this idea of business portfolio analysis is important because it is important to understand where a company’s strengths and weaknesses are. The BCG growth-share matrix allows a company to identify where they are performing well and where they are not. Identifying question marks and dogs shows a company where they may need to focus their marketing efforts in order to make as many of their businesses and products into stars and cash cows as possible. Identifying stars and cash cows shows a company what they are doing correctly and maybe sets a marketing model that should be followed again. If a company does not understand its strengths, weaknesses, and potential, it does not understand how it can move forward to efficiently operate in the future.

Blog Post #1: The Prevalence of Marketing Myopia

I recently read fellow blogger Michael Hyatt's book, Platform: Get Noticed in a Noisy World, which discusses how in marketing we all need to create and effectively manage the what and the who. Hyatt describes the what as being “a compelling product” and the who has being “a significant platform” (Hyatt 22). To Hyatt, a significant platform essentially means a stage or pedestal that you have to showcase your product on so that you may get your word out. The platform, for instance could be a blog. The what, on the other hand, is a product (anything that you are trying to sell) that should blow away the customer’s expectations. Hyatt explains that you should focus on creating a “wow” product in order to capture and contain the contemporary customer’s short attention span (Hyatt 26).

This idea of a “wow” product got me thinking. The other day in my marketing class we discussed the idea of marketing myopia. Marketing myopia is when a company focuses more on a product and its features than the overall experience that they are looking to deliver to the customer with the product. In short, marketing myopia is when a company focuses on products rather than customers. So while Hyatt is correct that a “wow” product is necessary to capture and contain a customer’s attention span, you should not focus solely on the product’s features itself. I am not saying that Hyatt is wrong, because he is not. He just did not explicitly mention how it is vital to not place too much focus on a product’s features. His book was about creating a platform for your product in order to create the overall customer experience, so in a way he indirectly approached the topic.

When thinking about marketing myopia and how to avoid it, the Boston Red Sox come to mind. For those of you who are not sports fans, the Boston Red Sox are a Major League Baseball team that play in Boston, MA at Fenway Park (built in 1904). The Red Sox come to mind because they, along with many other professional sports teams, make their product about the experience. For the Red Sox, their main product is the game itself. The Red Sox have 81 home games a year with nearly a 40,000 tickets sold every game. Now, the Red Sox could focus on just selling the tickets by flaunting how good their team is and then stop at that once the tickets are sold. That would be an example of marketing myopia. They would be focusing on the features of the game, not the experience that they are trying to deliver to customers. The Red Sox focus on the experience that they are seeking to deliver by doing things like creating promotions like Maine Day, where people from the state of Maine are welcomed into Fenway Park with some discounts as well as a chance to win some stuff (like memorabilia). The Red Sox take a personalized approach by allowing people to come onto the field for some special events, playing specific music to create a warm and friendly atmosphere, and getting their players involved with the fans and the Boston community. Focusing on these things allow the Red Sox to build a loyal fan base who will come back to Fenway Park for years to come. If they stopped at ticket sales, maybe customers would not feel so welcome. Maybe they would think, “This was fun, but I do not know if I would do it again.” Creating a positive product experience for customers and avoiding marketing myopia creates a situation where customers will value the experience enough to pay for it again and again.

Think about all the products that you know and love. These products can by physical products, services, experiences, and more. What do they do for you? In all likelihood, they create some sort of positive experience for you or create some sort of benefit for you. They are something that does not have pointless features that are interesting but useless in the end. They may have all the bells and whistles, but they are likely all bells and whistles that you need or want. This is likely because the company that produced the product stayed away from marketing myopia, they sought to create a positive customer experience to go along with a great product. They did not merely create a cool product without a customer experience in mind. So when you are thinking about creating a product, think about the experience you are looking to deliver.

References:

Hyatt, Michael S. Platform: Get Noticed in a Noisy World. Nashville, TN: Thomas Nelson, 2012. Print.

Welcome All!

Hello fellow bloggers, blog-readers, and people!

My name is Kevin Kenneally and I want to welcome you to my shiny new blog page. The topic of this blog is going to revolve around the critical reflection and assessment of contemporary marketing concepts in my own words. The hope is to be both insightful and informative as well as to hopefully provide readers with some clarity. For my first ever personal blog, I will do my best to be thought-provoking and entertaining.

Myself in 1997. You have to market yourself somehow, don't you?

To get started, I will provide a little personal background information. As mentioned before, my name is Kevin and I am currently a student (in my junior year) at Saint Michael's College in Colchester, Vermont (which is near Burlington). I am majoring in Business Administration and minoring in Media Studies, Journalism, and Digital Arts. My minor is all the same minor, by the way, even though it sounds like I have three. I grew up in Biddeford, Maine, a small coastal city in southern Maine. Five minutes from the beach and only an hour and a half from Boston. Not too shabby, huh?

Growing up, I played many sports including baseball, soccer, and indoor track but watched even more. I love the Boston Bruins and Red Sox, skiing, reading, writing, traveling, and trying new things. I recently arrived back in the US from spending a semester abroad in Copenhagen, Denmark. If you have not heard about Copenhagen, check it out and consider going someday. If you have, go. It is an incredible place and you will not be disappointed (Denmark is the happiest country in the world, after all). Well, I think that is enough background information for now.

I want to say that I look forward to posting and hopefully hearing from you. I will look to respond to readers as soon as possible, so feel free to leave any thoughts, critical or otherwise. Happy Sunday!