BCG Matrix-The Growth Share Matrix

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The BCG matrix was first created by BCG founder in 1968, Bruce Handerson and about 500 fortune listed companies have been using it since long time.

The Boston consulting group portfolio was built to help the strategic management with long term effective planning and providing evidences about where company should invest or discontinue product development stages.

Since it inception around 50 years ago, Reeves Marton Senior partner of BCG group have said, BCG matrix still found to be useful tool helping companies in terms of understanding underlying potential(Martin, 2020).Currently it is known as money making tool that entails what should a business to do to achieve higher growth rate.

Matrix Creation

Based on the analysis and marketing growth, the matrix is divided into four segment. But before starting creating matrix, you first need to gather relative data on market share and growth rate of products and services.

The BCG matrix works upon a principle that each company must have portfolio containing both high growth products requiring cash investment and low growth products, throwing of cash (Chiu et.al, 2019)

In the BCG Matrix, one axis contains marketing growth rate, and second relative market share.

Market growth rate determine in which market product is sold quickly or slowly

Relative share market shows whether the product exhibits higher or lower share in the current market

That means each product should be assessed against the criterion listed above

Cash Cow

The product placed under this matrix will those who have high market share in a slow growing marketing. They are known for generating profit margin, profitable, and throw excessive cash without need for investment. In a nutshell we need cash and should not eradicate product from the market because of small errors

Stars

These products represents higher marketing share in growing market. Stars underlying it produce or promises huge benefits in the future. Therefore many essay helper advised to spend in these products if business want to incur maximum profit and attain leadership in among competitors.

Dogs

Products underlying in this matrix have low market share as well as marketing growth. If you find these products are not good for company, you can dispose it. If it is promising profits in the future, only then invest in these products

Question Marks

These products have high marketing growth but low share market. Since their growth is undermined or unclear, investing in these products will be in ambiguity. These products have potential to become stars, but they can equally burn cash(Mohajan, 2017).

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How Product Life Is Related To Boston Matrix

BCG matrix actually have great impact or based on product life cycle.

All the products introduced in the market comprises of question marks, that means no one can determine the product success. Those products having question marks maintain their position in leadership as in terms of market share will be called as stars. Similarly when market growth of the product turn down it will become cash cow but it can be dog if demand of the product in the market suddenly gets stop

Advantages
  • It provides ample opportunities and sophisticated way to look product success using different channels
  • It enables strategic management to allocated limited resources in a precise way.
  • It describes if the company portfolio is strong enough or not
  • It is easy to apprehend and use
Disadvantages
  • One can’t determine if marketing growth greatly entails the attractiveness of the products
  • A market share doesn’t brief where the cash generated through the products will be enough.(Madsen, 2017)
  • It doesn’t account external environmental factors affecting product success like Pestle analysis does
  • It just provides current position of business inside the market sphere

Real Life Example Of BCG Matrix

A commonly used example of BCG matrix is identifiable in the Coca company.

For instance in Coca Cola BCG matrix, Minute maid and Diet coke are placed in the question marks matrix as one can’t define the actual potential of these products. Water brand Kinley is attributing to Stars since they highly dominate European market. Titular drink is cash cow despite high market share, it accounts slow market growth. However Coca Cola itself is a dog has lessend soda sales.

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Conclusion

Whilst the greatest strategic management tools, BCG matrix is not suitable for all the business. Some companies find they don’t have enough products in each quadrant. In this blog we have defined in the BCG Matrix, one axis contains marketing growth rate, and second relative market share. Market growth rate determine in which market product is sold quickly or slowly. Relative share market shows whether the product exhibits higher or lower share in the current market. Based on the criterion, products strength will be analyzed. Despite this several companies still believe BCG matrix is best tool for their business.

References

Chiu, C. C., & Lin, K. S. (2019, July). Rule-based BCG matrix for product portfolio analysis. In International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (pp. 17-32). Springer, Cham.

Expert Program Management(2020).The BCG Matrix | Boston Matrix. Available at

https://expertprogrammanagement.com/2011/04/bcg-matrix-boston-matrix/ Data Accessed on 11 February 2021]

Madsen, D. O. (2017). Not dead yet: the rise, fall and persistence of the BCG Matrix. Problems and Perspectives in Management, 15(1), 19-34.

Martin.M(2020).What Is a BCG Matrix? Available athttps://www.businessnewsdaily.com/5693-bcg-matrix.html [Data Accessed on 11 February 2021]

Mohajan, H. (2017). An analysis on BCG Growth sharing matrix.

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