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CIPS L5M6 Exam - Topic 3 Question 8 Discussion
Topic #: 3
On the BCG Matrix, what is a cash cow?
Within the Boston Consulting Group [BCG] Matrix, a Cash Cow represents a product or business unit that holds a high market share in a low-growth market. These products typically generate strong and stable cash flows because they dominate their markets with little new competition. Although growth opportunities are limited, these units require minimal investment and often fund other parts of the business.
For example, a well-established soft drinks brand in a mature market is a classic cash cow. While sales are stable and market share is high, growth potential is low due to saturation. This differs from:
Stars [high share, high growth] which require significant investment.
Question Marks [low share, high growth] which may or may not succeed.
Dogs [low share, low growth] which are often candidates for divestment.
In category management, identifying cash cows helps procurement teams prioritise efficiency and cost management, ensuring these categories remain profitable without heavy strategic input.
[Ref: CIPS L5M6 Study Guide, p.117 -- BCG Matrix and procurement strategy]
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