The BCG growth -share matrix contains four distinct categories: “dogs,” ” cash cows ,” “stars,” and “question marks.”
A perfect example to demonstrate BCG matrix could be the BCG matrix of Pepsico. Cash Cows – With a market share of 58.8% in the US, Frito Lay is the biggest cash cow for Pepsico. Stars – Even though Pepsi’s share in the market has been reduced to 8.4%, it’s still the star for Pepsico because of its brand equity.
A dog is one of the four categories or quadrants of the BCG Growth-Share matrix developed by Boston Consulting Group in the 1970s to manage different business units within a company. A dog is a business unit that has a small market share in a mature industry.
The growth share matrix was built on the logic that market leadership results in sustainable superior returns. 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. High Growth , High Share .
Definition: Cash Cow is one of the four categories under the Boston Consulting Group’s growth matrix that represents a division which has a big market share in a low-growth industry or a sector. A cash cow is a term used in the Boston Consulting Group ( BCG ) matrix .
The Boston Consulting group’s product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning , to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products. It’s also known as the Growth /Share Matrix.
Although it is evident that the popularity of the BCG Matrix has declined since its heydays during the 1970s, it is still widely used as a corporate portfolio planning technique by practitioners (Pidun, Rubner, Krühler, Untiedt & Nippa, 2011).
The BCG matrix can be useful to companies if applied using the following general steps. Step 1 – Choose the Unit. Step 2 – Define the Market. Step 3 – Calculate Relative Market Share. Step 4 – Calculate Market Growth Rate. Step 5 – Draw Circles on the Matrix .
BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential. It classifies business portfolio into four categories based on industry attractiveness (growth rate of that industry) and competitive position (relative market share).
BCG Matrix (Growth Share Matrix): Definition, Examples Fanta, a Coca-Cola product, is one such example where the business units can be seen as a question mark. Coca-Cola is one such example of Cash Cows. Diet coke, a Coca-Cola product, is on such example of Dogs.
The BCG matrix is used to evaluate product portfolio of a competitive company. Both market share. and growth rate are crucial for the estimation of the value of a product. A large corporation can use it to. determine its key business units, such as; divisions or individual companies will give more benefits.
Relative market share offers a way to benchmark a firm’s or a brand’s share against that of its largest competitor, enabling managers to compare relative market positions across different product markets. In the BCG matrix , one axis represents relative market share ––a surrogate for competitive strength.