Page 5: Extension strategies
ASOS.com makes it easy for people to buy online as it has a huge range of own-brand, high street and designer labels on one website with a single basket check-out ordering service. Leading clothes designers and fashion houses choose to sell their clothes through ASOS.com because they know that this is a good way to reach a wide, international audience and generate revenue. ASOS.com is continually seeking to outperform its competitors and increase its market share. It does this by providing customers with choice, value, service and fashion credibility. It also needs to be aware of how the life cycle of its entire product range can be managed and extended to maximise revenues.
The Boston Matrix model helps ASOS.com to assess the value of product categories and plan strategies to manage them.
- Poor performers such as last season's items that are now in decline or products that fail to launch are referred to as Dogs sales are poor and profits low.
- Question Marks are new items that have been launched and may do well.
- Stars are the items that are growing quickly and could go on to make a lot of money.
- Cash Cows are items which are good earners and have been so for a while. For example, basic T-shirts and ASOS.com's own-label dresses continue to be popular year after year. These items have reached maturity and stayed there.
ASOS.com's challenges are to:
- convert the Question Marks and Stars into Cash Cows of the future by increasing or extending promotion
- manage the Dogs either by removing the item and cutting costs or reducing the price to sell quickly or re-using the materials in these garments to make new ones.
The profits earned from Cash Cows can be used to develop and promote Stars and Question Marks.