case study on bcg matrix

• Sign up for free
• SafetyCulture

BCG Matrix: Examples and How to Use It

Learn about the BCG Matrix, a tool used by businesses to analyze their product portfolios and discover the advantages and disadvantages it presents.

What is BCG Matrix?

BCG Matrix, or Boston Consulting Group Matrix, is a strategic management tool that helps companies analyze their product portfolios. The matrix categorizes a company’s products or services into four categories: Stars, Cash Cows, Question Marks, and Dogs. Each category represents a different level of market share and growth potential. Businesses can use the BCG Matrix to make strategic product portfolio decisions. It can help them allocate resources, prioritize investment, and decide which products to invest in and which to divest.

There are several advantages to using the BCG matrix, including the following:

• The concept is clear and easy to understand.
• This tool assists in efficiently evaluating available opportunities and devising strategies to optimize their potential.
• It helps companies determine how to deploy cash resources best to maximize future growth and profitability.
• This matrix provides a framework for allocating resources across different products and allows a glance comparison of the product portfolio.

Limitations

Despite its many advantages, the BCG Matrix is not without its constraints. Some of its limitations include the following:

• The BCG Matrix employs two dimensions, namely relative market share , and market. growth rate, which doesn’t exclusively indicate profitability, attractiveness, or success
• The synergy between brands is ignored.
• Even businesses with a low market share have the potential to generate profits.
• Obtaining a high market share can come with high costs and doesn’t always result in increased profits.
• Dogs can occasionally provide a competitive edge for businesses or products.
• The model doesn’t account for small competitors with rapidly increasing market shares.

BCG Matrix vs. The Ansoff Growth Matrix

The BCG Matrix analyzes a company’s existing product portfolio based on market growth rate and market share. The matrix divides products into four categories: stars, cash cows, question marks , and dogs. It helps businesses decide about resource allocation and investment based on the potential for growth and profitability.

On the other hand, the Ansoff Growth Matrix focuses on analyzing a company’s growth opportunities based on two factors: products and markets. The matrix divides growth strategies into four categories: market penetration, market development, product development , and diversification.

The Ansoff Growth Matrix allows businesses to identify potential growth opportunities and make strategic product and market expansion decisions.

The Four Quadrants of The BCG Matrix

BCG Matrix consists of four quadrants, where products can fall, each with its characteristics and strategic implications. Below is a brief explanation of each:

Question Marks – Construction (High Growth, Low Market Share)

The product group known as the “Question Marks” has a low market share but is experiencing high growth. Although not currently very profitable, these products have the potential for market share growth and can become cash cows and, ultimately, stars with appropriate investments.

Stars – Holding (High Growth, High Market Share)

The product group under “Stars” has a significant market share and is experiencing rapid growth. Investing in this group is beneficial in maintaining their market share and further development.

Cash Cows – Harvesting (Low Growth, High Market Share)

“Cash Cows” have a high market share but minimal growth potential. The reason is that they’re operating in a mature market that lacks innovation and growth. However, they’re profitable and require minimal investment to maintain their position.

Revenue from these products can be used to invest in Stars or Question Marks.

Dogs – Divestment (Low Growth, Low Market Share)

“Dogs” have a small market share and operate in a slow-growing market. They don’t generate cash and don’t require large amounts of it either. They aren’t a good investment because they have low or negative cash returns and may need significant financial support. Their low market share also puts them at a cost disadvantage.

BCG Positions Through Product Lifecycle

One way to use the BCG matrix is to analyze the product lifecycle of each product in your portfolio. The product life cycle comprises four stages: introduction, growth, maturity, and decline. By understanding where each product is in its lifecycle, you can determine its appropriate position on the BCG matrix.

BCG Matrix Examples

Coca-Cola is a globally recognized consumer product company with multiple product lines that can be classified into various categories using the BCG Matrix. An example of this categorization for some of their products is provided below.

• Stars – Dasani, Coca-Cola’s bottled water brand, is currently in the product life cycle in the international market. The company can invest in marketing and advertising to boost market share and growth.
• Cash Cows – The brand “Coca-Cola” has established a strong presence in the carbonated soft drink market and is a significant revenue source.
• Question Marks –There is a potential opportunity in the Fanta and other beverages market, as consumers are becoming more health-conscious. Coca-Cola could either discontinue these products, improve quality, or invest in advertising to increase customer appeal.
• Dogs – Considering its low market share and lack of profitability, Coca-Cola may discontinue its Diet Coke product line, especially since its similar product, Coca-Cola Zero, is more prevalent among consumers.

How To Make BCG Matrix

Here are the steps to make a BCG matrix:

Step 1: Select the product or business unit

The BCG matrix is a helpful tool for analyzing business units, whether individual brands, products, or a firm as a whole. Choosing the particular unit to assess is crucial since the decision impacts the whole process.

Step 2: Define the market

Accurately defining the market is essential for understanding portfolio position. An incorrect market definition can lead to a misclassification of the product.

Step 3: Calculate the Relative Market Share

Based on revenue or unit volume, market share measures how much of a company’s total market it serves. In the BCG matrix, relative market share is used to compare a product’s sales to those of its main competitor for the same product.

Here’s how to compute the relative market share:

Relative Market Share = Product’s sales this year/Leading competitor’s sales this year

Relative market share can be calculated by comparing your firm’s brand market share to your competitors in a given industry. For example, if your competitor has a market share of 25% and you have a market share of 10%, your relative market share would be 0.4.

Step 4: Determine Market Growth Rate

You can determine the growth rate of an industry by using online resources or by analyzing the average revenue growth of leading companies. The market growth rate is typically presented as a percentage.

The calculation is as follows:  

(Product’s sales this year – Product’s sales last year) / Product’s sales last year

High-growing markets have a large pool of potential customers, creating numerous opportunities for companies to generate revenue.

Step 5: Draw the circles on a matrix

Once you have determined each product or business unit’s market share and growth rate, the next step is to draw the circles on a matrix. The BCG matrix is a simple two-by-two grid with a market share on the x-axis and a growth rate on the y-axis.

To draw the circles, you will need to determine the size of each circle based on the market share of the product or business unit. The larger the market share, the larger the circle. You can use software tools or manually create the circles.

Digitize the way you Work

Empower your team with SafetyCulture to perform checks, train staff, report issues, and automate tasks with our digital platform.

Efficiently Utilize the BCG Matrix Using SafetyCulture

Why use safetyculture.

SafetyCulture is a mobile-first operations platform adopted across industries such as manufacturing, mining, construction, retail, and hospitality. It’s designed to equip leaders and teams with the tools to do their best work– to the safest and highest standard. 

Our solution is designed to help drive improvements in your enterprise operations.

✓ Save time and reduce costs ✓ Stay on top of risks and incidents ✓ Boost productivity and efficiency ✓ Enhance communication and collaboration ✓ Discover improvement opportunities ✓ Make data-driven business decisions

FAQs About BCG Matrix

What is the purpose of a bcg portfolio analysis.

The BCG portfolio analysis is a method used to assess a company’s performance by examining its range of operations and products. It provides valuable insights for companies to make informed investment and product development decisions.

How do you calculate market growth?

Determining market growth involves computing the percentage rise in sales between consecutive years. The resulting figure is multiplied by the preceding year’s total sales value to establish the market worth.

What is the BCG Matrix in marketing?

In marketing, the BCG matrix is primarily used for resource allocation. Using this matrix, funds are allocated more efficiently. It identifies which products to prioritize to increase market share, highlighting underperforming products requiring a marketing budget reallocation.

What does Cash Cow mean?

A cash cow is a business asset that produces consistent and significant revenue over time. A cash cow is typically a product or service that may not be particularly innovative but is known for being dependable and profitable.

Rob Paredes

Related articles

• SOP Examples

Learn how SOPs are used in various industries and examples of how to write them comprehensively

• Find out more

• Construction Site Management

Learn about construction site management and its importance in project success.

• Disaster Recovery Planning

Safeguard all aspects of your business by developing and implementing an effective disaster recovery plan.

Related pages

• Induction Software
• Construction Collaboration Software
• Workforce Optimization Software
• Care Management Software
• Visitor Management Software
• Construction Project Management
• Product Launch
• Change Impact Assessment Template
• Environmental Aspects and Impacts Register
• 5 Whys Template
• Agile Transformation Checklist
• CSR Audit Checklist

Boston Consulting Group (BCG) Matrix

A business planning tool used to evaluate the strategic position of a firm's’ brand portfolio

What is the Boston Consulting Group (BCG) Matrix?

The Boston Consulting Group Matrix (BCG Matrix), also referred to as the product portfolio matrix, is a business planning tool used to evaluate the strategic position of a firm’s brand portfolio . The BCG Matrix is one of the most popular portfolio analysis methods. It classifies a firm’s product and/or services into a two-by-two matrix. Each quadrant is classified as low or high performance, depending on the relative market share and market growth rate . Learn more about strategy in CFI’s Business Strategy Course .

Understanding the Boston Consulting Group (BCG) Matrix

The horizontal axis of the BCG Matrix represents the amount of market share of a product and its strength in the particular market. By using relative market share, it helps measure a company’s competitiveness .

The vertical axis of the BCG Matrix represents the growth rate of a product and its potential to grow in a particular market.

In addition, there are four quadrants in the BCG Matrix:

• Question marks : Products with high market growth but a low market share.
• Stars : Products with high market growth and a high market share.
• Dogs : Products with low market growth and a low market share.
• Cash cows : Products with low market growth but a high market share.

The assumption in the matrix is that an increase in relative market share will result in increased cash flow. A firm benefits from utilizing economies of scale and gains a cost advantage relative to competitors. The market growth rate varies from industry to industry but usually shows a cut-off point of 10% – growth rates higher than 10% are considered high, while growth rates lower than 10% are considered low.

Learn more about strategy in CFI’s Business Strategy Course .

The BCG Matrix: Question Marks

Products in the question marks quadrant are in a market that is growing quickly but where the product(s) have a low market share. Question marks are the most managerially intensive products and require extensive investment and resources to increase their market share. Investments in question marks are typically funded by cash flows from the cash cow quadrant.

In the best-case scenario, a firm would ideally want to turn question marks into stars (as indicated by A). If question marks do not succeed in becoming a market leader, they end up becoming dogs when market growth declines.

The BCG Matrix: Dogs

Products in the dogs quadrant are in a market that is growing slowly and where the product(s) have a low market share. Products in the dogs quadrant are typically able to sustain themselves and provide cash flows, but the products will never reach the stars quadrant. Firms typically phase out products in the dogs quadrant (as indicated by B) unless the products are complementary to existing products or are used for a competitive purpose.

The BCG Matrix: Stars

Products in the star quadrant are in a market that is growing quickly and one where the product(s) have a high market share. Products in the stars quadrant are market-leading products and require significant investment to retain their market position, boost growth, and maintain a competitive advantage .

Stars consume a significant amount of cash but also generate large cash flows. As the market matures and the products remain successful, stars will migrate to become cash cows. Stars are a company’s prized possession and are top-of-mind in a firm’s product portfolio.

The BCG Matrix: Cash Cows

Products in the cash cows quadrant are in a market that is growing slowly and where the product(s) have a high market share. Products in the cash cows quadrant are thought of as products that are leaders in the marketplace. The products already have a significant amount of investments in them and do not require significant further investments to maintain their position.

Cash flows generated by cash cows are high and are generally used to finance stars and question marks. Products in the cash cows quadrant are “milked” and firms invest as little cash as possible while reaping the profits generated from the products.

More Resources

Thank you for reading CFI’s guide to the BCG Matrix. To keep learning and advancing your career, the additional CFI resources below will be useful:

• Aggregate Supply and Demand
• Market Positioning
• Network Effect
• Substitute Products
• See all management & strategy resources
• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

Up to 50% off Online Finance Courses

• The Investment Banker Micro-degree
• The Project Financier Micro-degree
• The Private Equity Associate Micro-degree
• The Research Analyst Micro-degree
• The Portfolio Manager Micro-degree
• The Restructurer Micro-degree
• Fundamental Series
• Asset Management
• Markets and Products
• Corporate Finance
• Mergers & Acquisitions
• Financial Statement Analysis
• Private Equity
• Financial Modeling
• Try for free
• Pricing Full access for individuals and teams
• View all plans
• Public Courses
• Investment Banking
• Investment Research
• Equity Research
• Professional Development for Finance
• Commercial Banking
• Data Analysis
• Team Training
• Felix Continued education, eLearning, and financial data analysis all in one subscription
• Learn more about felix
• Publications
• Online Courses
• Classroom Courses
• My Store Account
• Learning with Financial Edge
• Certification
• Masters in Investment Banking MSc
• Find out more
• Diversity and Inclusion
• The Investment banker
• The Private Equity
• The Portfolio manager
• The real estate analyst
• The credit analyst
• Felix: Learn online
• Masters Degree
• Public courses

By Oliver Sealey |

 Reviewed By Rebecca Baldridge |

May 17, 2022

What is the BCG Matrix?

The Boston Consulting Group (BCG) designed its four-celled matrix, the BCG Matrix, to aid in long-term strategic planning. The matrix is used to assess the growth opportunities of different products/brands that an organization has in its portfolio based on relative market share and market growth rates across industries/sectors.

The matrix makes it possible to examine the business potential and market environment of different products and brands, which enables the company to decide where to invest, divest, or develop new products.

For credit analysts, the matrix can be a helpful framework for analyzing business risk , an essential part of deciding the credit-worthiness of a company.

In this article we’ll examine how the matrix categorizes products, giving examples. We’ll then see what actions companies can take having decided on the categories. Finally we’ll look at some of the limitations of the matrix.

Key Learning Points

• The BCG matrix is divided into four quadrants and is based on two parameters, relative market share and market growth rate
• The BCG Matrix includes four categories: stars, cash cows, question marks, and dogs
• To calculate the relative market share of a product, divide its market share by the market share of the product’s largest competitor
• This matrix can help businesses make good choices around their portfolio. For example, it can help companies decide which products should be their focus and which should be discontinued
• Care should be exercised around the use of the matrix. It can over-simplify concepts due to its two axis nature
• “High” and “low” market share and market growth determine which category a product ends up in, but deciding what “high” is can be difficult
• Defining the market can also be difficult. Deciding define the market broadly or more narrowly will make a big difference to the matrix and the categories it suggests for a company’s products.

BCG Matrix – Key Terminologies

The BCG matrix is divided into four quadrants and is based on two parameters – relative market share and the market growth rate. The horizontal axis of this matrix represents relative market share, while the vertical axis represents the market growth rate. The four cells of this matrix are designated stars, cash cows, question marks, and dogs. There are general actions associated with the 4 different types, but in the real world companies may of course decide to do something completely different if it suits their plans!

“High” and “Low”

The axes are categorized by “high” and “low”, which means there may be some difficult choices. When analyzing market growth, 10% is often used to decide a market is “high” growth. This can seem arbitrary. Imagine two markets, one with 10.1% growth, and another with 9.9% growth. Some judgement may be needed to decide what “high” and “low” mean in BCG market growth.

Market share is somewhat easier to analyze. The market share of all players in the market are compared. If the market share of the company being analyzed is greater than its next biggest rival, it’s deemed “high” (we’ll look at how that works in more detail later in this article).

Four Quadrants of the BCG Matrix

The four quadrants of the BCG Matrix are:

Exhibit high growth and command a high market share. A company should invest more in stars, as they are well-established products or brands in high-growth markets. Stars are leading brands in exciting markets. The Apple Watch in 2022 is a star. It’s selling around a third of smartwatches worldwide and has more than three times the market share of its nearest rival, Huawei. The market is predicted to grow by around 28% every year at this point, making it a very high-growth market. Despite being the market leader Apple will have to hold its position. This means it will have to spend a great deal on marketing, and making sure its product stays competitive. Because of this, as of 2022 the Apple watch probably isn’t the most cash-positive product in Apple’s portfolio. If Apple keep spending and making good choices, the watch market may mature and the Apple watch may become a cash cow. This would be the best outcome according to the BCG matrix.

Exhibit low market growth but command high market share. These are the ideal products to have, according to the BCG matrix. They are leading brands, in slower markets. It may seem counterintuitive that slower market growth would be seen as positive, but cash cows require little investment. The brand is dominant, and the fewer new buyers to the market will naturally gravitate to the brand. The market is less frenetic than before, and the company doesn’t have to spend as much cash winning the hearts and minds of all that growth!

The cash these products generate can be invested elsewhere. This is an important part of BCG, not immediately obvious from the diagram. The portfolio of a company should be a pipeline, with cash-positive products (primarily the cash cow) paying for the development of question marks and stars.

Coca-Cola has been a cash cow product for the Coca-Cola company for a long time. As of 2023, it holds around 46% of the soft drink market sales, far beyond its nearest rival. The market growth is modest, around 3.2% per year at this point. Coca-Cola has created excellent positive cashflows for the company, which they can use for other ventures such as their less mature food business. The part of Coca-Cola that doesn’t fit as well is the marketing spend. You’re probably aware of Coca-Cola adverts. A better BCG fit would have Coca-Cola not feeling the need to spend so much on marketing. Again, the real world means not everything fits nicely into a matrix.

Question Marks

Show high growth but command low market share. Question marks require significant investment to maintain or increase market share, but are excellent prospects for the company.

Question marks are usually recently introduced products with sound commercial prospects. With sufficient investment, they have the potential to become stars. If neglected, they may become dogs. Wise companies will know if they can’t build a question mark into a star. They’ll divest despite the exciting market.

It’s easy to think of examples of successful question marks, just think of any star or cash cow and rewind some years. It’s more interesting to think of a failed question mark. You could argue that Google Glass was a question mark that went wrong. Their wearable smart glasses were introduced around 2013. At that point, their market share of wearable tech was small, as not many wearable glasses were being sold compared to e.g. watches (this does rely on us putting glasses in with the broader “wearables” market, highlighting one issue of BCG: defining the market). But, the market was growing. It was arguably a case of “too early”, which is fairly common in tech. Google found the technology wasn’t quite good enough, and presumably was having to spend colossal amounts of money behind the scenes to develop, market and distribute the glasses. They ended up halting the production of the glasses in 2015.

Have both low growth and low market share. The bad performance may be due to high costs, inferior quality, or a lack of effective marketing.

Unless there is some hope of gaining market share, a company is wise to dispose of these products if they are a drain on cash. Dogs are often, but don’t have to be, cash negative.

Imagine you are the undisputed market leader in producing vinyl records in the 1990s. You probably have a great cash cow, but the years to come will reduce that to a dog. CDs and streaming will make your position obsolete and turn your product into a dog. It may be tempting to divest all dogs, but they may still be cash-generative. Vinyl now commands a premium price, so although they represent a slim minority of music sales it is still probably worth being in the market.

BCG Matrix – Advantages and Lim itations

The BCG matrix is very useful for manufacturing companies since an understanding of a product’s market position is imperative to understanding its growth potential.  The BCG matrix can also be used to assess the market share of a product relative to competing products. The matrix offers a useful framework for allocating resources to particular products.

However, the matrix does have certain limitations. First, markets may be less clearly defined than the matrix suggests. Moreover, it doesn’t offer information about what the competition is doing.  Second,  the market growth rate and relative market share are not the only indicators of profitability. Third, this four-quadrant approach may be overly simplistic considering the dynamic nature of markets and industries/sectors. Finally, a high market share does not always result in strong profits given that high costs may also be involved in maintaining that market share.

BCG Matrix – How to use the BCG Matrix

Using five parameters – the definition of the market, relative market share, market growth rate, cash generation, and usage of cash – a company should allocate its products to the relevant quadrant. Based on this allocation, the company can determine which products to invest in and which to discontinue.

It might be noted that defining the market is the most important step. If a market is incorrectly defined, the product could be incorrectly classified. The relative market share is calculated by dividing the selected product’s market share (or revenue) by the market share or revenue of the largest competitor in the sector. Moreover, it’s also necessary to calculate the market growth rate. This can be estimated by assessing the average revenue growth of the leading companies within the product sector.

BCG Matrix – Advantages and Limitations

The BCG matrix is very useful for companies since an understanding of a product’s market position is useful for understanding its growth potential.  The BCG matrix can also be used to assess the market share of a product relative to competing products. The matrix offers a useful framework for allocating resources to particular products and building a healthy pipeline in a product portfolio.

However, the matrix does have certain limitations. First, markets may be less clearly defined than the matrix suggests. We’ve seen in the examples that you could narrowly define the vinyl market, or put it as part of the wider music market.

Market growth rate and relative market share are not the only indicators of profitability. We saw that vinyl still has good cashflows for some companies, and question marks may not always be the best to build if it is a pointless drain on company resources with no future.

Finally, we need to be mindful that categorizing by “high” and “low” may lead to some products that are very similar being given different categories. Our earlier example of a 9.9 and 10.1% market growth is relevant here. Some judgment and discussion would be needed to get the most out of the matrix in this case.

Calculating Relative Market Share

The relative market share is used to compare a company’s brand market share with the market share of its largest competitor in the industry.  When we calculate relative market share, the market leader’s market share is used as the benchmark.

Relative Market Share Formula:

Relative Market Share = % market share of the company’s product divided by the market share of the largest competing product.

Below we’ve calculated the hypothetical relative market shares of two products from one company using the market share of the largest competitor in that industry. If you’d like to practice this yourself, please see the download attached to this article. This attachment has more products to practice on beyond what’s in the graphic below.

Brand B appears to be dominant in its market, far beyond the share of its nearest rival, rival 1. It is a star or cash cow, depending on the market growth.

Brand A is lagging. It operates in a different market to brand B, and can’t compete on share with its rival 1. It will be a question mark or dog.

The BCG matrix can be a helpful tool for thinking about a company’s portfolio. It creates clear categories and can create great discussions about the balance of products, their cashflows, and their future. It can also suggest sensible actions to create that balance. However, it should be treated with care. It is arguably too simple, reducing the world to two axes. It’s also important to think carefully about what the market is before starting the analysis.

For credit analysts, BCG can create a clear set of categories and language when putting together presentations on a company’s business risk.

If you’re interested in learning more about the world of business, you may be interested in our Investment Banking course . This course gives you the same training as new hires in the top investment banks and covers a wide range of subjects.

Additional resources

Porters Five Forces

Credit Risk

Financial Modeling Course

Share this article

Bcg matrix workout example.

Sign up to access your free download and get new article notifications, exclusive offers and more.

Recommended Course

• Search Search Please fill out this field.
• BCG Growth Share Matrix
• How It Works
• Limitations

The Bottom Line

• Corporate Finance
• Corporate Finance Basics

Understanding the BCG Growth Share Matrix and How to Use It

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Laura Porter / Investopedia

What Is the BCG Growth Share Matrix?

The Boston Consulting Group (BCG) growth share matrix is a planning tool that uses graphical representations of a company’s products and services to help the company decide what it should keep, invest more money in, or sell.

The company’s offerings are plotted in a four-square matrix. The y axis represents the rate of market growth, and the x axis represents market share.

The BCG growth share matrix was introduced by the Boston Consulting Group in 1970.

Key Takeaways

• The BCG growth share matrix is a tool used internally by management to assess the current value of a firm’s units or product lines.
• BCG stands for the Boston Consulting Group, a well-respected management consulting firm.
• The growth share matrix aids the company in deciding which products or units to keep, invest more in, or sell.
• The BCG growth share matrix includes four distinct categories: dogs, cash cows, stars, and question marks.
• The matrix helps companies decide how to prioritize their various business activities.

Understanding the BCG Growth Share Matrix

The BCG growth share matrix breaks down products into four categories known as dogs, cash cows, stars, and question marks. Each category quadrant has its own set of unique characteristics.

Dogs (or Pets)

A company is considered a dog and should be sold, liquidated, or repositioned if its product has a low market share and is at a low growth rate. Dogs are found in the lower right quadrant of the grid.

Dogs don’t generate much cash for the company because they have a low market share and little to no growth. They can turn out to be cash traps, tying up company funds for long periods, so they’re prime candidates for divestiture .

Products that are in low-growth areas but for which the company has a relatively large market share are considered cash cows. The company should milk the cash cow for as long as it can.

Cash cows are seen in the lower left quadrant. They’re typically leading products in mature markets .

These products often generate returns that are higher than the market’s growth rate. They sustain themselves from a cash flow perspective. These products should be taken advantage of for as long as possible.

The value of cash cows can be easily calculated because their cash flow patterns are highly predictable. Low-growth, high-share cash cows should be milked for cash to reinvest in high-growth, high-share stars with high future potential .

The matrix is not a predictive tool. It takes into account neither new, disruptive products entering the market nor rapid shifts in consumer demand.

Products that are in high-growth markets and that make up a sizable portion of that market are considered stars and should be invested in. Stars appear in the upper left quadrant.

Stars generate high income but also consume large amounts of company cash. A star eventually becomes a cash cow when the market’s overall growth rate declines if it can remain a market leader.

Question Marks

Questionable opportunities are those in high growth rate markets but in which the company doesn’t maintain a large market share. Question marks or problem children appear in the upper right portion of the grid.

Question marks typically grow fast but consume large amounts of company resources. Products in this quadrant should be analyzed frequently and closely to see if they’re worth maintaining.

Limitations of the Matrix

The matrix is a decision-making tool. It doesn’t necessarily take into account all the factors that a business must ultimately face. Increasing market share may be more expensive than the additional revenue gained from new sales. Product development can take years, so businesses must plan carefully for contingencies .

The matrix only classifies businesses as low and high, so it leaves midsize businesses out of the mix. Midsize companies often make up a big part of the market, so leaving them out means that the business environment isn’t truly reflected.

The BCG matrix assumes that all businesses operate independently of each other, but that isn’t always necessarily true. Certain players in the market, such as dogs, can end up giving others a boost—sometimes unintentionally.

Bruce Henderson founded BCG and created the concept of the growth matrix in 1970.

Example of a BCG Growth Share Matrix

We can apply the growth matrix to many companies in the real world. Apple ( AAPL ) is a great candidate. Let’s take a look at the products Apple has on the market according to the matrix categories:

• Star : iPhone
• Cash cow : Macbook
• Question mark : Apple TV

The company earned $383.28 billion in net sales in 2023, out of which almost $298.1 billion was attributed to its products section. The remaining $85.2 billion came from its services division.

• The majority of Apple’s sales come from its most popular product. The iPhone brought in $200.58 billion in sales for the year. It’s considered the company’s star.
• The cash cow for the company is its Mac products, notably the Macbook laptop, which is one of the most popular in this group. Sales for Mac products came in at $29.36 billion for the fiscal year (FY) .
• One of the question marks for Apple was its Apple TV streaming service. This falls under the Services category. The competition in the streaming world is intense, with traditional services like Netflix , Hulu, and Disney+ dominating the market. But others like YouTube and Vimeo are also eating away at market share. Apple’s Services division earned $85.2 billion in sales in 2023.
• Once a darling of the company, the iPad has become a dog. Apple’s tablet continues to show low growth as sales continue to decline. Sales for the year came in at $28.3 billion in 2023, compared with $29.29 billion in 2022.

What Are the 4 Quadrants of the BCG Matrix?

The BCG growth share matrix uses a 2×2 grid with growth on one axis and market share on the other. Each of the four quadrants represents a specific combination of relative market share and growth:

• Low growth, high share : Companies should milk these cash cows for cash to reinvest elsewhere.
• High growth, high share : Companies should significantly invest in these stars because they have high future potential.
• High growth, low share : Companies should invest in or discard these question marks, depending on their chances of becoming stars.
• Low share, low growth : Companies should liquidate, divest, or reposition these pets .

How Does the BCG Matrix Work?

The BCG growth share matrix considers a company’s growth prospects and available market share by assigning each business to one of these four categories. Executives can then decide where to focus their resources and capital to generate the most value, as well as where to cut their losses.

Is the BCG Matrix Used in the Real World?

The growth share matrix was used by about half of all Fortune 500 companies at the height of its success, according to BCG. It’s still central in business school teachings on business strategy.

The BCG growth share matrix is a business management tool that allows companies to identify which aspects of their business should be prioritized and which might be jettisoned. A company’s businesses can be categorized into one of four classifications—stars, pets, cash cows, and question marks—by constructing a 2×2 table along the dimensions of growth and market share.

Boston Consulting Group. “ BCG Classics Revisited: The Growth Share Matrix .”

Boston Consulting Group. “ What Is the Growth Share Matrix? ”

Apple. “ Condensed Consolidated Statements of Operation (Unaudited) ,” Page 1.

• Terms of Service
• Editorial Policy
• Privacy Policy

Text for Mobile

What is the BCG Matrix? Definition, Example, Template and Guide

How to use the bcg matrix model for your organization or business.

The ‘Boston Consulting group’s ‘abbreviation is the BCG matrix. This BCG matrix is designed to help long-term strategic planning for the benefit of the business and its growth opportunities by means of a review of its product portfolio to decide on the most suitable investment to obtain maximum Return on Investment. This also determines about discontinuing as well as developing products. It is also named the Growth Share Matrix.

How Do You Prepare a BCG Matrix?

BCG matrix is prepared by executing the following steps:

Step 1: Selection of the Product:

BCG matrix is utilised for this purpose by:

• Analysis of Business Units,
• Separation of brands, products or considering an organisation as a unit

Step 2: By defining and market study

Step 3: By comparison and by calculation of the relative market share

Step 4: a study of the market growth rate.

Step 5:  Draw the circles on a matrix.

What Are the Four Categories of BCG MATRIX?

It is primarily based on planning in a portfolio-dependent study and observation. So, a company’s business units can be classified into four categories:

• Question Marks

It is necessary to conceptualise better the above four processes related to the BCG matrix by making one for L’Oréal in the following sections.

How Do You Find a BCG MATRIX?

By following the steps indicated below, you can find a BCG matrix.

Step 1: Induction of BCG Matrix.

Step 2: Reach the Ribbon > Insert > Other Charts and click Bubble Chart.

Step 3: Change X-axis values.

Step 4: Click Edit to change the source of data.

Step 5: Change series X values.

Step 6: Selection of Relative Market Share values.

Step 7: Your BCG Matrix chart is a bit changed.

How to Find Market Growth Rate?

The growth rate of industries can be easily estimated using free online resources. Alternatively, it can be calculated by counting the reputed companies’ average growth rate of revenue. Usually, the Market growth rate is represented in percentage terms.

The market growth rate is usually estimated by the formula stated below:

(Product’s sales in the current year – Product’s sales of the previous year)/Product sales last year

High growth-rated markets are the ones where the total market share gained is expanding; this results in many advantages for all companies in gaining monetary profit.

Step 5: Drawing the Circles over a Matrix

After the above calculation, it needs only to plot the brands on the matrix. The x-axis represents or shows the relative market share, and the y-axis indicates the company’s growth rate. A similar circle can be plotted for each unit, brand, and Product, and the size of which must correspond ideally to the company’s revenue.

What do the Question Marks Signify In the BCG Matrix?

The feature of question marks represents a business to have high growth prospects but a low share in the market. They consume a significant amount of cash but with little return. Ultimately, ‘question marks ‘lose money. However, as these business units increase, they have the potentiality to upgrade into stars by entering a higher growth-oriented market.

How to Use a BCG Matrix?

After defining four categories of the BCG market, we can review the strategies of the company by using   each category as discussed below:

Stars: The location  of the products in this quadrant is highly attractive as they are located in a robust category, and these products are highly competitive. A huge potential has been found in this category for high revenue growth. This is due to its high market share and high growth rate. It is expensive to develop but is worth investment for promotion to the long extent of its Product Life Cycle. In the event of its success, a star may be a cash cow in the event of maturity, assuming they keep the same market share unchanged.

Strategic Choices, As Indicated Below:

• Vertical Integration,
• Horizontal Integration,
• Market Penetration,
• Market Development, And
• Product Development

Question Marks:  Most businesses start as question marks. Huge investments are necessary to achieve or protect market share. The question mark sector has the potential to become stars category and ultimately c ash cows but can also become dogs or exits. It requires high Investments for question marks; otherwise, this categor y may result in negative cash flow.

Like stars, the category of Question also does not always succeed; if, after a large investment, they cannot fetch profit and gain market share, they become the dog category. Therefore, careful observation and review are necessary before investing in this category.

Strategic Choices Are The Follows:

• Market Development,
• Product Development,
• Process of Investment.

Cash Cows:  In this category, cash generates profits by investing as little cash as possible. It needs low-cost support and needs to be managed for continued profits & cash flow. Large corporate or SBUs are considered efficient and innovative and should have the potential to become stars. It requires maintaining a healthy market status and should defend the market share of the business house or investors. The company should take advantage of sales volume and leverage the size of its operations. It can support other businesses too.

Strategic Choices: Product Development, Diversification

Dogs:  Low market share makes it a face of cost disadvantages, so they need enough cash to reach break-even, but they are rarely, if ever, worth investing. This Dog sector should be liquidated if there are fewer prospects for gaining market share. This is at a declining stage of the Product Life Cycle, requiring a minimum number of dogs in the company.

Advantages of BCG Matrix

• It is simple and easily understood.
• It can quickly and merely show the opportunities open to you,
• This can identify how corporate cash resources can be invested suitably to maximize a company’s growth and profitability.
• BCG Matrix can prepare a framework for allocating resources among different products

Limitations of BCG Matrix

This type of matrix has two-dimensional applications as given below:

• Relative market share and
• Market growth rate

Limitations are indicated below:

• BCG matrix is not the only indicator of the profitability of a business, attractiveness or success.
• It does not care for the effects of synergy from brand to brand.
• A company which has a minimum market share can become profitable as well.
• It has been observed that a High market share does not always produce high profits since there is also a high cost in obtaining a high market share.
• It has been observed that dogs may benefit the business or other products in achieving and gaining a competitive advantage.
• It does not care for small competitors with a fast-growing market share component.

Get Instant Help with your BCG Matrix Assignment

If you are a marketing student and given assignment writing tasks , say on (BCG) Boston matrix, then you can seek Boston matrix assignment help from the Assignment provider of Casestudyhelp.com.

Casestudyhelp.com provides 24×7 live support and online chat, as well as solves direct inquiries of the students of Business Law, Contractual Law and BCG Matrix Business case studies which help them in their BCG Matrix Assignment Help .

Why Choose Us?

We hope this writing by our Casestudyhelp.com will help students write on the BCG market and related studies. We can improve your writing skill. Our quality of work benefits us in maintaining a crowd of loyal customers. They provide us with excellent client perception.

• Our Product is 100 % Original–and is free of plagiarism. We use Free ‘Turnitin’ software for checking.
• We provide free Rework –we give all Rework and modifications free.
• 24/7 Customer Assistance–we provide round-the-clock customer assistance by our experts free of cost.

If you require any writing assignment help, please get in touch with us early.

Rule-Based BCG Matrix for Product Portfolio Analysis

• First Online: 23 August 2019

Cite this chapter

• Chih-Chung Chiu 3 &
• Kuo-Sui Lin 3  

Part of the book series: Studies in Computational Intelligence ((SCI,volume 850))

Included in the following conference series:

• International Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing

2785 Accesses

5 Citations

Product portfolio analysis is used for analyzing company products’ strategic market position, in order to decide which products should receive more or less investment. The Boston Consulting Group (BCG) growth-share matrix is the best known approach for product portfolio analysis. It is a strategic tool for identifying products’ strategic market positions and formulating resources allocation strategies. However, traditional BCG matrix is a static historic analysis, which different time frames are not considered. Thus, the main purpose of this study was to propose a new BCG method, which is a dynamic trend analysis method and different time frames are considered for product portfolio analysis. A numerical case study was conducted to demonstrate that the proposed BCG method has achieved the objectives of the study for company products’ portfolio analysis. First, the rule-based BCG method has contributed a new vague set based data collection method. Second, the rule-based BCG method has contributed a new application for identifying company products’ strategic market positions and resources allocation strategy formulation.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save.

• Get 10 units per month
• Download Article/Chapter or eBook
• 1 Unit = 1 Article or 1 Chapter
• Cancel anytime
• Available as PDF
• Read on any device
• Instant download
• Own it forever
• Available as EPUB and PDF
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info
• Durable hardcover edition

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

Towards decision analytics in product portfolio management.

Efficient DC Algorithm for the Index-Tracking Problem

A data-driven stochastic decision support system to investment portfolio problem under uncertainty

Wilson, R.M.S., Gilligan, C.: Strategic MARKETING MANAGEMENT: PLANNING, IMPLEMENTATION AND CONTROL, 3rd edn. Elsevier, Butterworth Heinemann, Oxford, England (2008)

Google Scholar  

Henderson, B.: Corporate Strategy. Abt Books Publisher, Cambridge (1979)

Atanassov, K.T.: Intuitionistic fuzzy sets. Fuzzy Sets Syst. 20 , 87–96 (1986)

Article   Google Scholar  

Atanassov, K.T.: On Intuitionistic Fuzzy Sets Theory. Springer, Berlin, Heidelberg (2012)

Book   Google Scholar  

Zadeh, L.A.: Fuzzy sets. Inf. Control. 8 , 338–356 (1965)

Gau, W.L., Buehrer, D.J.: Vague sets. IEEE Trans. Syst. Man, Cybernetics. 23 , 610–614 (1993)

Bustince, H., Burillo, P.: Vague sets are intuitionistic fuzzy sets. Fuzzy Sets Syst. 79 , 403–405 (1996)

Article   MathSciNet   Google Scholar  

Chen, S.M., Tan, J.M.: Handling multicriteria fuzzy decision-making problems based on vague set theory. Fuzzy Sets Syst. 67 , 163–172 (1994)

Lin, K.S., Chiu, C.C.: Multi-criteria group decision-making method using new score function based on vague set theory. In: Proceedings of International Conference on Fuzzy Theory and Its Applications (iFUZZY 2017, Pingtung, Taiwan), IEEE Xplore Digital Library. https://doi.org/10.1109/ifuzzy.2017.8311795

Boston Consulting Group: Perspectives on Experience, Boston. The Boston Consulting Group, MA (1974)

Chen, S.M.: Measures of similarity between vague sets. Fuzzy Sets Syst. 74 (2), 217–223 (1995)

Chen, S.M.: Similarity measures between vague sets and between elements. IEEE Trans. Syst., Man, Cybern.-Part B: Cybernetics. 27 (1), 153–158 (1997)

Henderson, B.: The Product Portfolio. https://www.bcg.com . Retrieved 8 Sept 2018

Download references

Author information

Authors and affiliations.

Department of Information Management, Aletheia University, 25103, New Taipei City, Taiwan (R.O.C.)

Chih-Chung Chiu & Kuo-Sui Lin

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Chih-Chung Chiu .

Editor information

Editors and affiliations.

Software Engineering and Information Technology Institute, Central Michigan University, Mt. Pleasant, MI, USA

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Switzerland AG

About this chapter

Chiu, CC., Lin, KS. (2020). Rule-Based BCG Matrix for Product Portfolio Analysis. In: Lee, R. (eds) Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing. SNPD 2019. Studies in Computational Intelligence, vol 850. Springer, Cham. https://doi.org/10.1007/978-3-030-26428-4_2

Download citation

DOI : https://doi.org/10.1007/978-3-030-26428-4_2

Published : 23 August 2019

Publisher Name : Springer, Cham

Print ISBN : 978-3-030-26427-7

Online ISBN : 978-3-030-26428-4

eBook Packages : Intelligent Technologies and Robotics Intelligent Technologies and Robotics (R0)

Share this chapter

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

What is a BCG Matrix and how to get the most out of it?

Trying to make high-level decisions about the future of your company can feel overwhelming. Trust us — we know first-hand what that feels like here at Miro. Companies often set up special committees that take months — or even years — and dozens of meetings before committing to a path.

But in the 21st century, the first mover’s advantage is more crucial than ever. You need to prioritize fast without letting biases affect how you invest your capital and effort.

That’s where the BCG (Boston Consulting Group) Matrix comes in. It’s a portfolio management tool that helps your company prioritize different businesses or products to get the best long-term results.

Let’s dive into everything you need to know about a BCG Matrix.

Try Miro’s BCG Matrix Template

• BCG Matrix definition: What is a Growth Share Matrix?

The Growth Share Matrix, also known as the BCG Matrix, is a portfolio management framework developed by the Boston Consulting Group’s founder in 1968.

It divides a company’s business units into categories based on their respective market shares and market sizes. To help you roughly estimate the profitability of a business, the matrix uses the two metrics of relative market share and market growth rate.

• Relative market share: Your share of the market compared to your largest competitor.
• Market growth rate: The rate at which a certain market grows in revenues compared to the previous year.

Based on these two metrics, you divide your company’s businesses or products into four categories:

• Stars: High market share in a high-growth market.
• Cash cow: High market share in a mature market.
• Dogs (or pets): Low market share in a market with a slow growth rate.
• Question marks: Currently low market share in a fast-growing market.

The different categories help you simplify complex decision-making about investment and business focus. Companies use the framework to decide which businesses or products to invest in to maximize growth potential and profitability.

While first created to manage product lines for manufacturing companies in the ‘60s and ‘70s, it’s equally relevant for tech startups that offer a variety of digital services. Just because you deal in pixels doesn’t mean you’re immune to regular business mistakes like overspending on a product with little potential.

The BCG Matrix can help you make sense of your portfolio of products and make smarter decisions about future investments in both R&D and marketing. If you’re struggling to visualize it, don’t worry. Below, we’ll cover a real example and showcase how the different categories work.

• BCG Matrix example

The table below shows a fictitious company’s product line, including necessary metrics for using the BCG Matrix.

It includes the revenues, the largest competitor’s market share — the local market leader — the product’s market share, and the market growth rate.

If we put these products through the BCG Matrix, #1 is a dog, #2 a cash cow, #3 a star, and #4 a question mark.

As you can see, the quadrants have nothing to do with the objective revenue numbers. It’s all about where the market is going and how your product’s doing within that market.

But before you dive in and create your own, you should understand the benefits and your ultimate goal for creating a BCG Matrix in the first place.

Why you should use a BCG Matrix — key benefits

You should use a BCG Matrix because it helps you prioritize business and products, cut waste, and create a robust portfolio.

Let’s break down these benefits.

Prioritize the right business or product quickly to establish a first-mover advantage

Instead of focusing on dying products or cash cows that sustain themselves without much effort, your company can focus on creating new winning products and businesses.

For example, your star product has the lion’s share of the market in a marketplace that’s growing at a rapid pace. Focusing on this business unit would be the smart move going forward.

Eliminate wasteful spending by cutting your losses

A dog product or product line can weigh down your company’s capital and manpower when you’d be better off selling it off and focusing on your winners.

By identifying a business as a dog — something with limited growth potential — you can cut your losses by selling the business or even, if it’s not profitable, simply closing it down.

For example, realizing that its TV business was a dog, Phillips decided to sell off its TV business unit in 2012. The company was coming off record deficits in 2011 and decided to cut its losses.

Since that decision, the company has refocused on other areas and regained healthy profitability.

It is one of the most iconic success stories of selling off and divesting from a “dog” product line in modern history.

Create a more robust and balanced portfolio

Ultimately, the goal isn’t to succeed in one area but to better balance your company’s investment of capital and effort across your entire portfolio. By placing bets on high-growth markets while maintaining healthy cash cows, you can future-proof your company.

If you’re looking for a similar tool to help you plan the journey of a single product, you could try impact mapping .

• What are the four quadrants of the BCG Matrix?

The four quadrants of the BCG Matrix are stars, dogs, cash cows, and question marks.

While we’ve roughly covered them above, let’s explore each category a bit closer, using real product examples.

A cash cow is a well-established business with stable brands in a mature market.

An example of a cash cow business is the domestic soft drink business in the U.S. for Coca-Cola, where the company maintains a 44% share of all revenue.

The market has long since matured and is growing at a fairly slow rate at about 5.1% , which is currently lower than the U.S. rate of inflation.

So, it’s a low-growth market with little potential for future growth, but the business is a winner — AKA a cash cow.

An example of a star is Amazon’s Amazon Web Services business that provides cloud services to B2B customers. The company has a 32% market share, and the public cloud industry is growing rapidly, forecasted to grow 21% in 2021 alone.

This type of market-leading product in an industry that’s virtually exploding is what we call a star .

Phillips’ television business — which we covered earlier — is an example of a dog, where the company had a low market share in a mature marketplace.

Question mark

Kia’s electric vehicle business is a good example of a question mark. Although it currently has a small market share of around 2.1% , the EV market is rapidly growing globally, at an expected average rate of 24.3% in the U.S. until 2028.

Because of the rapid growth of the market, there’s plenty of opportunity for new players to establish themselves.

• How to calculate relative market share in the BCG Matrix

Before you can categorize your businesses, you need real data to see where they stand in the marketplace. The relative market share is one of the key metrics you use in the BCG Matrix.

Let’s break down how to calculate it.

Find a reliable source for up-to-date marketplace data

There are a plethora of market research firms that sell industry data of varying levels of accuracy online.

Either find a firm that specializes in your industry and locations and offers the most accurate data, or establish your own in-house research team.

The important thing is to find a reliable source of the latest, up-to-date market information. Without accurate data, your product portfolio decisions are going to be more luck than judgment.

Identify your largest competitor’s market share

Examine the marketplace data and find your largest competitor for the specific product you’re researching.

Try to find its latest revenue numbers. The company may release revenue data by sector or even product in its quarterly reports. Get as specific as possible to use accurate numbers on the actual business area you want to compare.

Divide your market share by the largest competitor’s market share

The formula to find your relative market share is super simple — just divide your market share (or revenues) by that of your largest competitor.

For example, if your main competitor sells $600,000,000 in tablets and you sell $150,000,000 worth of tablets per year, your relative market share is 0.25.

The relative market share focuses on the importance of “owning” a market, which typically means stable income even without large marketing efforts.

• The role of the BCG Matrix in strategic management

Strategic management is the process of using objectives, procedures, and initiatives to make a company more competitive.

Instead of vague guesswork and thinking, you use formalized processes and real data to come up with objectives and strategies.

For example, this could be investing in researching competitors to explore where your products stand in the marketplace.

The BCG Matrix in itself isn’t the end-all-be-all of strategic management. It’s only a single tool in a larger process.

Start with a planning workshop and creating a big-picture strategy

Don’t try to create a BCG Matrix in a vacuum. Before your company will get anything of value out of it, you need the big picture figured out.

You wouldn’t try to build a house without setting up a robust foundation. So first, you should come up with a vision and strategic objectives for your company based on real data like market research.

A practical way to do this is to arrange a planning workshop with executives and key stakeholders involved with your entire portfolio.

Using a framework like OKR (Objective & Key Results) makes it easier to avoid wild guessing and personal biases.

Combine with strategic objectives to prioritize investments

If your objective is to focus on innovation, double down on stars and question mark businesses in rapidly growing markets, and move some of the marketing and R&D budgets away from stable cash cows.

If it’s to expand globally, focus on the market expansion of an existing cash cow product.

Revise and adapt as circumstances change

It’s important to understand that you’re not going to perfectly predict the path to bombastic success for your company in a single planning workshop and your first BCG Matrix.

As markets and competitors change, you need to adapt your plan and revise your BCG Matrix and priorities.

For example, as market growth peters off, a previous question mark could quickly become a dog, with no real prospects of becoming a winning product for your company.

• How to use the BCG Matrix to improve your marketing strategy

The BCG Matrix can also help you optimize your marketing strategy and grow your business with better promotions.

Let’s look at how.

Re-adjust budgets based on the growth Matrix quadrants

The first step is to use the BCG Matrix to recalibrate your marketing budget.

Ideally, you’d do this in a live meeting with every key stakeholder on board. Of course, if everyone doesn’t work in the same office, which is often the case, this can be difficult. But with our BCG Matrix Template , your team can remotely collaborate on a virtual board in real-time.

With a visual representation of where the products are in their market, it’s easier to accurately distribute the budget.

If you want to be more aggressive, you can focus on question marks and star products with growth potential rather than the safe and steady cash cows.

Adjust your marketing message based on the state of the market and your brand

If you’re pushing an up-and-coming product, you can’t use the same message as you use for markets where you’re already the go-to brand.

You need to adjust based on your place in the market. For example, Avis had a legendary marketing campaign where the company pointed out that it wasn’t the market leader.

By making the argument that “we work harder since we’re second,” Avis experienced rapid growth and established itself as a strong contender to Hertz in the rental car market.

The average consumer tends to default to familiar products and market leaders because it’s a “safe choice.” Find a unique angle to turn your underdog status into a perceived benefit, not a risk.

• Disadvantages of using the BCG Matrix

Just because you can use the BCG Matrix in various areas of your business doesn’t mean you should trust it blindly.

This framework has a number of limitations and issues that make it an imperfect tool for strategic planning.

A high market share doesn’t equal profitability

Just because your product has a high market share doesn’t mean it’s a profitable business. It could be a cut-throat market with high costs, leaving you with bad margins and poor cash generation.

Depending on variations in market size and product type, dogs can actually earn more than cash cows.

It doesn’t account for external factors

The BCG Matrix doesn’t leave room to account for crucial external factors outside the market. For example, the Covid-19 pandemic decimated the tourism sector as a whole, with over one trillion dollars in lost revenue in 2020.

If your company had a plan to expand your tour bus offerings, it’s probably a good idea to put that on hold, even if you could win market share.

Lack of middle ground — only classified low or high

The BCG Matrix tends to deal in extremes — a product either has a low market share or high, with no in-between.

But that’s an overly simplistic outlook on marketplace dynamics. For example, could you truly describe PepsiCo’s share of the U.S. beverage market as low? That’s what you’d have to do if you followed the BCG Matrix formula.

The model is simply too simple

Market growth rates and your relative market shares are important metrics, sure. But on their own, that’s not enough data to make a solid investment or other business decisions.

To make a truly educated decision about your company’s future, you must also consider overall market size, profit margins, operating costs, cash flow, and much more.

So for best results, use it in combination with other frameworks and data when planning budgets and marketing campaigns.

• Use the BCG Matrix as a starting point to make better long-term strategic decisions

The BCG Matrix alone isn’t a complete framework that will help you predict the future and always make the right business decisions.

But it’s a great starting point to help you live up to your strategic objectives over the long term.

It forces you to dig up data on your competition and put your products into context, which can help you identify new marketing opportunities.

It’s not a solution on its own, but it can become a valuable tool in your strategic management toolbox.

Are you ready to build your own BCG Matrix?

Use our bcg matrix template to get started., miro is your team's visual platform to connect, collaborate, and create — together..

Join millions of users that collaborate from all over the planet using Miro.

• Why you should use a BCG Matrix — key benefits

Keep reading

How to implement a governance framework that propels innovation.

How to facilitate cloud cost management with collaborative diagrams

How I do it in Miro: Networking diagramming with software engineer Andre Mocke

REVENUE DRIVEN FOR OUR CLIENTS

• Client Login
• 888-601-5359

Showing 1 - 10 out of 832 for:

• Learn BCG Matrix

What Is the BCG Matrix? (And How to Use It)

On this page, we’ll discuss the basics of the BCG matrix (also called the growth-share matrix) and how you can use  digital marketing  in conjunction with it. If you need help, call us today at  888-601-5359  to speak with a strategist.

Our digital marketing campaigns impact the metrics that improve your bottom line.

$10 billion, 7.14 million, what is the bcg matrix.

The BCG matrix, also known as the BCG growth-share matrix, growth market share matrix, or product portfolio matrix, helps businesses with the long-term planning of their products. This tool helps companies determine which products warrant discontinuing, development, or further investing.

Many businesses offer a variety of products to their customers, such as Johnson & Johnson. They offer a wide array of health and beauty products to customers. These products include soap and lotion for all ages, facial cleansers, make-up wipes, pain relievers, and allergy medication.

With all these products, Johnson & Johnson needs to monitor the success of each of these products to figure out whether they should invest more into the products, discontinue them, or create a new product to replace the old one. This is where the BCG matrix can help.

The four quadrants of the BCG matrix

The BCG matrix fits products into one of four categories. The placement is based on market growth and market share. Each product falls into a different quadrant, which helps your business decide how to deal with different products.

Dogs are products with low growth and low market share. These products are typically viewed as a waste. Money gets tied up in these products, but they do not produce enough of a profit to justify the investment.

Question Marks

Question Marks, also known as “Problem Child,” are products in a high growth market with low market shares. These products are called question marks because it is unclear which way they will swing. Will they rise into the Stars quadrant, or will they drop down to Dogs?

Products that are Stars have a high market share in high-growth markets. These products have the potential to become market leaders. They can eventually become Cash Cows, a quadrant that we’ll discuss next).

Cash Cows are products that have a high market share in low-growth market. These are products that drive revenue for your business.

These are the four quadrants of the BCG matrix. This matrix can help you see where your products fall and help you decide how to proceed next.

Learn about the 4 Ps of marketing

How to use the BCG matrix

You know what the BCG matrix is, as well as the four components that define the Boston Consulting Group’s matrix. The most value from the growth-share matrix, however, comes from understanding how to use it.

Learn more about using the BCG matrix, based on each quadrant, below:

Summary:  Dogs have a small chance of bringing your business a profit. Either remove Dog products or continue to offer them without any further investment from your business.

Many companies end up pumping money into Dogs and get little in return. Most businesses remove Dog products as these items generally drain resources and waste money.

Some Dog products can generate a small amount of revenue at a small cost, however.

While most Dog products are bad for business, some benefit your business. They won’t generate a large amount of revenue, but they can generate a little cash flow for your business.

This scenario happens with discontinued products.

If someone owns a car that is no longer manufactured, they will still need replacement parts for that car if something goes wrong, for example. While it won’t earn your business a rapid, daily income, Dogs can be a product that earns your business a small profit occasionally.

Summary:  Question Marks can become either Stars or Dogs, which is why they demand investing and development to deliver a return. Determine how much a Question Mark is worth to your business before proceeding.

Question Marks are tricky because you can invest a large sum of money into them and see no success. It requires a lot of time and investment to get these products into the Star quadrant. You need to invest a good chunk of money to get a return on these products.

This is a common issue that game developers face.

People who make games and apps create hundreds of games or apps, waiting for one to take off. Many of their games will drop down to Dogs, but it just takes one to rise up and become a Star (like Angry Birds).

When you have Question Mark products, you need to determine if they are worth the investment. These products can fall either way on the spectrum, so you need to prepare yourself for both possible outcomes.

Summary:  Stars require cash to produce cash. Invest in Stars, but ensure they deliver a return, to turn them into Cash Cows.

If you want to harness the full potential of Stars, you need to invest money in these products constantly. They bring in a lot of cash for your business, but they also consume a lot of cash in the process.

When you have Star products, you will have a better return on investment (ROI) than other products. Even though you have to pump a large sum of money into these products, they provide your business with a sizeable return.

Stars are important to your business because they ensure future growth. When you have products that are Stars, they turn into Cash Cows.

Summary:  Cash Cows perform consistently, especially when it comes to ROI. Milk these products by continuing to support and invest in their success.

Cash Cows are well-established products that people trust and buy consistently. Brand names like iPhones, Tide, Charmin, and Crest are all Cash Cows. These are household names of brands that have built their reputation to attract people to buy them.

When you have Cash Cows, your return is far greater than your investment. The brand name and product quality are well established, so you don’t need to invest much money in advertising that to your audience. They already trust your products and buy them consistently, so you get a greater return on the small investment you make into these products.

You want to milk Cash Cow products as much as possible. It is important that you don’t go overboard with milking them and cause your brand to collapse. You want to get as much as you can out of these products until their popularity fades.

Advantages and disadvantages of the BCG matrix

The BCG matrix is an easy tool to use for any type of business. It’s broken down simply to help businesses understand where their products stand. Like all strategies, though, the growth-share matrix has its advantages and disadvantages.

When you use the BCG matrix, you can see all your products laid out clearly. You can compare your successful products to your least successful products. This enables you to think about why that product succeeds and how you can apply that to your products that are struggling.

The Boston Consulting Group matrix makes it easy for you to review your products and compare one another. It helps you focus on products that are worth the time and investment. You can eliminate products that are wasting your company’s money and invest them somewhere else.

However, there are limitations to this method. The BCG matrix does not account for external factors that alter a product’s performance. It only looks at market share and growth.

There may be other factors that influence why your Dog products perform poorly or why your cash cows succeed. The matrix doesn’t account for this, which makes it difficult to know why your products perform well.

It also doesn’t account for the fact that some products help other products succeed. For instance, one of your Dog products may be the reason that a Cash Cow product succeeds. If you stop investing in the Dog product, it could hurt your Cash Cow’s performance.

The BCG matrix is a great starting point for your business. You can see where your products fall on the spectrum and analyze all other factors that affect their position. This will help you get the full picture of your product and where it stands in the market.

3 tips for using digital marketing with the BCG matrix

Digital marketing methods can help you promote your products better based on where they fall in the BCG matrix. Based on the matrix, you can use certain digital marketing strategies that work best for that product.

1. Use cost-effective marketing methods for Cash Cow products

Cash Cow products drive in the best revenue for your business, but you don’t want to invest too much in marketing them and take away from your profit. It’s still important that you cost-effectively market Cash Cow products because you can reach new potential customers.

You’ll want to use cost-effective digital marketing methods to help you market your products and keep the cost low. There are many campaigns you can run to save money and target new audiences.

One strategy,  social media marketing , is a great option for your business. This digital marketing method is free and is used by various businesses from many industries. Using this low-budget marketing method helps to expose your brand online and earn additional leads for your business.

You can create a social media profile on any social network to connect with your audience. When you do, you should always use the platform your audience uses the most. Using your leads’ most frequented networks will help engage your leads better and guide them towards conversion.

These social media platforms enable you to share content with your audience. You can create posts, share links, and share photos or videos with your audience. It’s a great and cost-effective way for you to connect with them and market your products.

You can also use a method like email marketing to connect with your audience. This method enables you to send information directly to interested leads.

Your business will obtain subscribers through your website by using an email sign-up bar. People who are interested in hearing from your business will subscribe. This builds a direct connection between you and your audience.

Email is a very cost-effective method for your business. For every $1 spent, you have the potential to earn $44! It’s a great way to generate a positive return on your investment.

By focusing on cost-effective methods, you can help your Cash Cow products continue to drive in revenue for your business.

2. Use PPC ads to generate buzz about Question Mark products

Question Mark products are tricky because they can lead to either success or failure. However, you don’t want to give up on these products, as they have the potential to earn a profit for your business. To help you see the interest in your Question Mark products,  pay-per-click (PPC) advertising  is a great option.

PPC ads are paid advertisements that appear above the organic listings in the search results. They are tagged with the word “ad” to indicate it is paid content.

To run a PPC campaign, you’ll need to select keywords you think your audience will use to find your ad. Next, you’ll bid for your ad’s placement. You’ll need to set your maximum bid, which is the amount you are willing to pay each time someone clicks on your ad.

Your  quality score  and maximum bid will determine the placement of your ads. Once you have your placement, you can launch your campaign.

PPC is a great option to help you figure out your Question Mark products because it drives in the most qualified leads. In fact,  65% of all high intent searches  result in clicking on an ad. People who are the most interested in your products will click on your ads.

This will help you see how many people are interested in your Question Mark products. If your PPC campaign performs well, you can pump more resources into your Question Mark products to help them become Stars. You will know that people are interested in this product, based on the PPC ad’s performance.

If your PPC ad does not perform well, there’s a good chance that your product will become a Dog. You can still try other strategies to see if you can make the product a Star, but it may be an opportunity for you to focus on a different product.

PPC can help your business figure out which Question Mark products will thrive in your market.

3. Use SEO to help people find Star products

Your star products are products that are thriving in your market. They require a good chunk of money, but they also drive terrific revenue for your business.  Search engine optimization (SEO)  is a great method to help your Star products continue to thrive.

When people look for products, they conduct searches. They turn to organic results to find the business that suits their needs best. When you invest in SEO, you can help more leads find your Star products.

Since your audience uses keywords to find information on the Internet, SEO mainly operates on keywords. You want to make sure you use the right keywords for your campaign to attract quality leads that are the most interested in your products.

This method will help you boost your website’s ranking in the search results. More leads will find your Star products and want to purchase them or learn more about them. Using SEO strategies ensures that your Star products continue to attract new leads and earn conversions for your business.

We foster and form long-term partnerships so that your business has long-term results .

Webfx can help you strengthen your digital marketing plan.

The BCG matrix helps your business shape your strategy for the future. A strong digital marketing plan can help you move products into different quadrants or strengthen them in their current quadrant. If you want to see the best results with your digital marketing campaign, you should partner with an experienced digital marketing company.

At WebFX, we have years of experience creating digital marketing plans that focus on helping your business strategy. We’re a full-service digital marketing company that utilizes various digital marketing methods to help you promote your products.

We have a team of 500 experts that are dedicated to your campaign. Our award-winning team of internet marketers will help you promote your products to your audience.

If you’re looking for a company that drives results, look no further. To date, we’ve driven over $10 billion in sales and over 24 million leads for our clients. We focus on driving success for our clients first.

Our clients love the work we do, too. In fact, we have over 1,100 client testimonials that attest to the quality of work we do for them. Check them out to see what its like to partner with a digital marketing expert like WebFX!

Start strengthening your business strategy today

A strong digital marketing plan can help you figure out where your products stand in the market. If you’re ready to start driving better results for your business, contact us online or call us today at  888-601-5359  to speak with a strategist.

We look forward to helping your business grow!

Table of Contents

• What is the BCG Matrix?
• The Four Quadrants of the BCG Matrix
• How to Use the BCG Matrix
• Advantages and Disadvantages of the BCG Matrix
• 3 Tips for Using Digital Marketing with the BCG Matrix
• WebFX Can Help You Strengthen Your Digital Marketing Plan
• Start Strengthening Your Business Strategy Today

Related Resources

• Business Jargon Fixes
• Flywheel Marketing: What is It and Why Should I Use It?
• How to Blend Science and Art for Strategic Marketing
• How to Create and Use Marketing Personas
• How to Sell to Everyone: the 4 Personality Types
• How to Set SMART Marketing Goals & Objectives
• How to Use Porter’s Five Forces for Marketing
• How to Use Psychology to Convert Customers Online
• Marketing Psychology: 7 Psychology Principles to Leverage

Marketing Tips for Niche Industries

• AI Tools for Healthcare: Examples & Overview
• An Introduction to Digital Marketing for Speech Therapists
• Augmented Reality in Manufacturing
• Automotive & Transportation
• Best Manufacturing Marketing Agencies
• Best Outreach Strategies for Apartment Managers
• Catering Marketing: 7 Must-Try Catering Marketing Ideas
• Check in with These 25+ Hotel Industry Statistics
• Childcare Marketing: 3 Best Childcare Marketing Ideas
• CPA Firm Marketing: How to Market Your Accounting Firm

Find Us Driving Revenue Nationwide

• Ann Arbor, MI
• Atlanta, GA
• Baltimore, MD
• Charlotte, NC
• Chicago, IL
• Cincinnati, OH
• Cleveland, OH
• Columbus, OH
• Ft Myers, FL

About the Program

• Duration : The internship spans a period of 4-7 months, according to your university's requirements, and ensures a deep dive into the consulting world.
• Real-World Exposure: Interns aren't merely observers; they're integral members of our case teams, making contributions to actual client projects and experiencing the day-to-day of a consultant's life.
• Evaluative Nature: On completion of the program, interns will be able to reflect on whether a career in consulting is for them, and if they would like to explore opportunities to join BCG on a full-time basis, as a permanent employee.
• Compensation: Interns are paid competitively, recognizing the value they bring and the intensive nature of the program.

Benefits of the Program

• Professional development: You’ll gain invaluable insights into the consulting industry, improve your analytical skills, and develop client-facing competencies
• Network expansion: You’ll connect with industry experts, experienced consultants, and a diverse group of peers
• Career pathway: Successful interns have a direct pathway to a rewarding career with BCG, one of the top three consulting firms globally

When to apply?

Who should apply, ready to apply, application process, online portal, bcg online experience, decision round, hear more from our bcgers .