Boston Consultancy Group (BCG Matrix)
This product portfolio matrix classifies product lines into four categories. The BCG models suggests that organisations should have a healthy balance of products within their range. The Boston Consultancy Group classified these products as following:
These are products which have low market shares and low market growth rates. The options for many companies is to phase these products out, however some organisation do go for the strategy of re-inventing and injecting new life into the product. (see Heinz Case Study)
Question Mark/Problem Child
These are products with low market share but operate in high market growth rates. The company puts a lot of resources in this product in the hope that it will eventually increase market share and generate cash returns in the future.
Stars have high market shares that operate in growing markets. The product at this stage should be generating positive returns for the company.
Cash Cow are products at the mature stage of the lifecycle, they generate high amounts of cash for the company, but growth rate is slowing. There are chances that the product may slip into decline, appropriate marketing mix strategies should be employed to try to prevent this from happening.B.C.G. analysis
It has been suggested that this article or section be merged into Growth-share matrix. (Discuss)
B.C.G. analysis is a technique used in brand marketing, product management, and strategic management to help a company decide what products to add to its product portfolio. It involves rating products according to their relative market share and market growth rate. The products are then plotted on a two dimensional map. Products with high market share but low growth are referred to as "cash cows". Products with high market share and high growth are referred to as "stars". Products with low market share in a low growth market are referred to as "dogs" and should usually be managed for value, that is as much money should be harvested from those products with low or no investments. Products with low market share but high market growth are referred to as "question marks" or "problem children". It is crucial for those products or brands to improve their market share before the market growth is consumed by the competition. The technique can also be applied to a portfolio of companies.
Each circle represents a product or brand. The size of the circle indicates the value of the sales of that product or brand.A "question mark" has the potential to become a "star" in the future if it is developed. A company should have a balanced portfolio. This implies having at least one "cash cow" which can generate revenue that can be used to develop one or more "question mark". This process, referred to as "milking your cash cow", is shown in the next diagram where the arrows represent cash flows.
BCG Matrix with Cash Flows
B.C.G. Analysis was originally developed by Bruce Henderson at the Boston Consulting Group in the early 1970sGrowth-share matrix
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It has been suggested that B.C.G._analysis be merged into this article or section. (Discuss)
The growth-share matrix is a chart created by the Boston Consulting Group in 1970 to help corporations analyze their business units or product lines, and decide where to allocate cash. It was popular for two decades, and is still used as an analytical tool. Cash generated by "cash cows" should be allocated to "stars", and possibly to "question marks".
• 1 The Chart
• 2 Practical Use of the Boston Matrix []
o 2.1 Relative market share
o 2.2 Market growth rate
• 3 Risks and criticisms
o 3.1 Alternatives
• 4 Other uses of the growth-share matrix
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