New York University Stern School of Business

C55.0001: Introduction to Marketing

BCG Analysis Practice Problem

P&G recently conducted a performance evaluation of its five leading products and came
up with the following:
Market Largest Annual Growth
Share Competitor
Market Share
Pert Plus Shampoo 30 20 12%
Crisco Shortening 20 40 2%
Bounty Paper Towels 20 30 14%
Jif Peanut Butter 20 10 3%

You are the director of Strategic Planning at P&G.

a) Compute the relative market shares for the four SBUs.

b) Draw the BCG Portfolio Matrix Chart. (Remember to label the axes and label the
squares)
c) Classify the four SBUs based on the four squares in the BCG Matrix
d) Make a recommendation with your explanation about each SBU based on the
BCG analysis.
 Solution

a. Relative Market Shares:

PertPlus: 3/2=1.5
Crisco: 2/4=0.5
Bounty Paper Towels: 2/3=0.67
Jif: 20/10=2

b. BCG portfolio Matrix:

You should label carefully.
0.25 points each for labeling the X (Relative market Share) and Y axis (Annual Growth
rate): Total (0.5 points)

0.25 points for making the right cutoff on the X axis (Relative market share of 1) and the
right cutoff on the Y axis (Annual growth of 10%) (Total 0.5 points)

0.25 points each for the four boxes (Total 1 point)

c. Plot the SBUS in the box

(0.5 points for each correct answer)
Pertplus: Star
Crisco: Dog
Bounty: Question Mark
Jif: Cash Cow

d. Recommendations

PertPlus:
Hold on to the Star Status by maintaining share;
Build market share if gaining additional market share is not too expensive.

Crisco:
Divest, because company is doing poorly in a not too attractive market. P&G should
consider whether the Crisco business has any other strategic benefits.

Suppose the Crisco oil business helped to give cheap raw materials to their soap business
which is a star, then it may be worthwhile to hold on to this business even if it is a dog.

Bounty:
Build if the company believes it has the capability to make it a Star;
If the company does not believe it has the capability to make it a Star, then divest it.

Jif:
Hold on to the business if this is likely to produce cash revenues for a long period of
time. If the size of the total peanut butter business has been relatively stable for a fair
period of time and the cash flow is likely to continue for a while it is better to hold this
business.

Instead if the peanut butter market is beginning to shrink or maintaining share is turning
out to be too expensive, it might be better to harvest it.