In the context of marketing, what does "cash cow" imply?

In marketing, the term "cash cow" refers to a product or business unit that generates a steady and substantial amount of revenue or profit with relatively low investment requirements. This term originated from the Boston Consulting Group's growth-share matrix, where products or business units are categorized based on their market growth and market share. A cash cow typically has a high market share in a mature market, allowing it to consistently produce more cash than is needed for its operations.

The characteristic of stable and strong profitability associated with a cash cow comes from its established presence in the market and its ability to maintain sales volume without the need for significant reinvestment. Businesses often use the cash generated by cash cows to fund other areas of the company, such as developing new products or entering new markets, which are typically not yet profitable but have significant growth potential.

This is why the correct understanding of a cash cow highlights its role as a source of financial stability within a business strategy.