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This paper will attempt to provide a broad critique of the Boston Consulting Group Matrix in light of the ideas of Hackley (2009). In his book Marketing:A Critical Introduction, Hackley presents a framework for analysing marketing models. He suggests that well established marketing concepts should be re-evaluated from time to time, to determine if the marketing studies for that area are applicable to current practice, and revisit the functional, intellectual, ethical, and political relevance of the said concept.
I opted to evaluate the Boston Consulting Group model, which is an established tool of the strategic management field, used frequently in marketing circles to optimize product mix. Where alternative versions of the matrix have come up in recent studies, the traditional BCG Matrix continues to be popular and this paper intends to evaluate whether the support for the model is justified or needs to be rectified. Concept Overview
The Boston Consulting Group (BCG) Matrix was initially designed in the works of a leading management consulting firm, the Boston Consulting Group. Henderson (1970) first presented the concept of the Product Portfolio Matrix, the framework of which categorized products within a company's portfolio as “stars”, “cash cows”, “dogs”, or “question marks”. Also called the Growth-Share Matrix, the model presented by Henderson (1970), organized the products as per their respective growth rate, market share, and positive or negative cash flow. The Matrix was said to create further growth opportunities for the firm if more resources were invested in those products which generated positive cash flows.
The model described “Stars” as those which enjoy a large market share in a rapidly growing industry. Where these stars generate cash, the nature of the market mandates the business to invest cash in order to maintain the product’s market share. The model suggests that continued investment in these “stars” will eventually lead to these products in becoming “cash cows”
“Cash Cows” are products which have a large market share in a mature industry. Cash cows are therefore well established, and do not require much investment (marketing expenditures) to continue to generate cash flow. As these products generate cash flow, they are highly guarded. Over time, however, these cows may lose appeal in the market and may have to be retrenched.
“Question Marks” are products which have a low market share in a high growth industry. These products require significant cash investments to generate any kind of boost in sales. Strategies in the case of question marks may either lean towards expansion or retrenchment, depending on the market share growth enjoyed by the product.
Lastly, there are the “dogs” which are product lines with low market share in low-growth markets. The nature of the market usually results in these products being produced at a cost disadvantage, and as a result, the cash flow generated from these products is negligible. Businesses usually seek to divest these products, unless they serve an alternate strategic aim. Functional Critique
The BCG Matrix presents a strong framework as to how products can be managed from a strategic marketing perspective. At the core of it, the functionality of the BCG Matrix is focused around maximizing returns on investment and how best to deploy organizational resources (Cooper, Edgett, Kleinschmidt, 1999).
However, there have been several critiques of its applicability (Stalk and Stern, 1998). In particular, the model has been criticized for its polarities with respect to how the market growth and market shares have been presented. In the real world, products do not have a high or low share, and are often...